Wall Street: Apple is "magical growth story" in tech, defies gravity

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Comments

  • Reply 21 of 39
    zoetmbzoetmb Posts: 2,654member
    There's one part of Apple's great success that disturbs me. And that's the fact that full-function computers are becoming a minority of their business.



    If you look at the JP Morgan projections for 2012, they're projecting only about 19 million total Macs, but over 37 million iPad sales, 80 million iPhone sales and 37 million iPod sales.



    While the gross margin on Macs is probably far greater than the lowered-priced devices, how much investment is Apple going to make in improvements to Mac hardware and the Mac-OS as it becomes such a relatively small part of their business? According to these projections, Macs will be only 21% of revenue in fiscal 2012. Phones will be 42%. iPads will be almost 19%.
  • Reply 22 of 39
    d-ranged-range Posts: 396member
    Quote:
    Originally Posted by zoetmb View Post


    There's one part of Apple's great success that disturbs me. And that's the fact that full-function computers are becoming a minority of their business.



    If you look at the JP Morgan projections for 2012, they're projecting only about 19 million total Macs, but over 37 million iPad sales, 80 million iPhone sales and 37 million iPod sales.



    While the gross margin on Macs is probably far greater than the lowered-priced devices, how much investment is Apple going to make in improvements to Mac hardware and the Mac-OS as it becomes such a relatively small part of their business? According to these projections, Macs will be only 21% of revenue in fiscal 2012. Phones will be 42%. iPads will be almost 19%.



    21% of revenue sounds pretty healthy to me, and Mac marketshare is still on the rise, as it has been for over a decade. I think the profit margins on Apples desktop and laptop business are pretty sweet as well, so I don't see their iOS success as a problem for their computer business. They're not going to let that slide, risking that they lose iPhone/iPad market share some day in the future, with nothing to offset it.



    If Apples Mac business keeps growing faster than the rest of the PC industry like it has been doing the last few years, Apple will be one of the biggest, if not _the_ biggest computer manufacturer in a few years. I think they are still very much aware of that and value their Mac business. The last generation MacBooks more or less show that, with great specifications, new technology (Thunderbolt), for a reasonable price (comparable to other competitors in the same segment).
  • Reply 23 of 39
    Quote:
    Originally Posted by zoetmb View Post


    There's one part of Apple's great success that disturbs me. And that's the fact that full-function computers are becoming a minority of their business.



    If you look at the JP Morgan projections for 2012, they're projecting only about 19 million total Macs, but over 37 million iPad sales, 80 million iPhone sales and 37 million iPod sales.



    While the gross margin on Macs is probably far greater than the lowered-priced devices, how much investment is Apple going to make in improvements to Mac hardware and the Mac-OS as it becomes such a relatively small part of their business? According to these projections, Macs will be only 21% of revenue in fiscal 2012. Phones will be 42%. iPads will be almost 19%.



    I think you can rest assured that Steve understands that trucks are required to bring race cars

    to market!
  • Reply 24 of 39
    alandailalandail Posts: 755member
    Quote:
    Originally Posted by zoetmb View Post


    There's one part of Apple's great success that disturbs me. And that's the fact that full-function computers are becoming a minority of their business.



    If you look at the JP Morgan projections for 2012, they're projecting only about 19 million total Macs, but over 37 million iPad sales, 80 million iPhone sales and 37 million iPod sales.



    While the gross margin on Macs is probably far greater than the lowered-priced devices, how much investment is Apple going to make in improvements to Mac hardware and the Mac-OS as it becomes such a relatively small part of their business? According to these projections, Macs will be only 21% of revenue in fiscal 2012. Phones will be 42%. iPads will be almost 19%.



    No need to worry, It's all based on OS X.
  • Reply 25 of 39
    Quote:
    Originally Posted by xsu View Post


    It's all about leadership. Steve Job is one of those rare individual who has a great vision, stubbornly focused on realizing that vision, strong willed enough to crush any opposition to that vision, and charismatic enough to get other people to share his vision.



    That's the reason for Apple's success, and probably will cause Apple a great deal of transitional pain when someone else has to take over the position.



    Quote:
    Originally Posted by Garamond View Post


    I shudder at the very thought



    One of the attributes of true leadership is to surround yourself with people whose capabilities excel where yours are deficient.



    Steve has done that!



    It is interesting to listen to the Apple earnings call:



    Apple 2Q 2011 Earnings Call



    Notice how Peter Oppenheimer and Tim Cook perform at one aspect of their jobs.



    Impressive how both Peter and Tim control the conversation.



    I was particularly impressed with how Tim Cook:



    1) addressed the Japan tragedy, first from a human perspective, then form a business perspective.



    2) addressed Samsung, first as a valued supplier, then from the uncomfortable position of suing them as a competitor.



    I believe that Steve's biggest legacy will be the "Apple" team that he has assembled -- to assure that "Apple" company and image will prosper after he leaves.
  • Reply 26 of 39
    dualiedualie Posts: 334member
    One analyst now represents all of Wall Street. Interesting. And there is nothing "magical" about sound fiscal policy and inspired design based on quality science.
  • Reply 27 of 39
    kibitzerkibitzer Posts: 1,114member
    Quote:
    Originally Posted by Dick Applebaum View Post


    One of the attributes of true leadership is to surround yourself with people whose capabilities excel where yours are deficient.



    Steve has done that!



    Couldn't agree more, Dick. Cook was absolutely unflappable, despite an IED or two planted by a couple analysts along the course of the Q&A. It was hilarious to hear the initially confident voices of a couple more aggressive analysts trail away to mumbles as Tim's brief, calm replies left them totally flustered. Not a word wasted. Not a remark indicating anything other than that the question was anticipated, the issue well under management and a response well-prepared.
  • Reply 28 of 39
    brucepbrucep Posts: 2,823member
    Quote:
    Originally Posted by SailorPaul View Post


    It's not magic. Apple innovates, executes and controls costs. Most oher major companies only focus on cost cutting



    Quote:
    Originally Posted by magicj View Post


    No, it's magic. I popped open my iPad and it had little baby unicorns inside.



    Quote:
    Originally Posted by BrooksT View Post


    It is magic. Pretty much every other company of Apple's size can barely stay out of its own way, let alone innovate and create new multi-billion-dollar markets every few years. How do you keep a company of that size nimble and agile and willing to take risks? It has to be magic, because if there was a simple explanation everyone else would be doing it.



    Quote:
    Originally Posted by Suddenly Newton View Post


    OMG. Did J.P. Morgan call Apple's growth "magical"? And the haters laughed when Steve used that word.



    Quote:
    Originally Posted by boeyc15 View Post


    So what is the latest on the amount of Apple's cash stash? Did anyone ask during the call?



    Quote:
    Originally Posted by addabox View Post


    65.8 billion, cash + securities.



    magic

    magic

    worst earthquake in decades and mearly a blip on the apple cash hoard

    apple does one simple thing

    they create a fantastic product

    bring it on out and then they go back and make it better

    in a hundred tiny ways . we notice that .

    the innovations from that first product gets spread around to all its products like sony does .



    apple now sells more in a 1/4 than they use to in a whole year

    apple 1/4 profit is more that some past year totals



    ad apple is has tied alll the parts together

    all apples pods pads mbp mba tav mb mp all sync with each other

    and we will at some point sync with each other

    we as apple freaks already have a Facebook world pre built in .

    ANDS when apple turns us on ....watch out . ....



    apple will in 5 yrs have 90 peta bytes of capacity from its farms to play with

    storm clouds so large and vast that companies will buy time from apple

    apple will host its own parties on medical and or educational lessons .

    picture 1.75 million. doctors world wide seeing new medical procedure done live from their ipads mbp iphones .

    for free .



    so by 2020 when all of apples magical devices are matured and tired . but still make money apple will be a software seller . apple will still sell the dreams apple will still allow us to make our own dreams

    in a simple way

    simple

    yes

    apple has made all its products simple to use

    no app for that





    peace





    9





    go apple
  • Reply 29 of 39
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by BrooksT View Post


    It is magic. Pretty much every other company of Apple's size can barely stay out of its own way, let alone innovate and create new multi-billion-dollar markets every few years. How do you keep a company of that size nimble and agile and willing to take risks? It has to be magic, because if there was a simple explanation everyone else would be doing it.



    Those that build a solid foundation can build a taller building with more ease.



    (trying to make some pithy comment and failing.)





    Quote:
    Originally Posted by Suddenly Newton View Post


    OMG. Did J.P. Morgan call Apple's growth "magical"? And the haters laughed when Steve used that word.



    That was J.P. Morgan. I read the word ?magic" and assumed it was J.K. Rowling.





    Quote:
    Originally Posted by zoetmb View Post


    While the gross margin on Macs is probably far greater than the lowered-priced devices, how much investment is Apple going to make in improvements to Mac hardware and the Mac-OS as it becomes such a relatively small part of their business? According to these projections, Macs will be only 21% of revenue in fiscal 2012. Phones will be 42%. iPads will be almost 19%.



    Besides what the others have said, Macs are growing at a great rate because of their other products. It?s their ecosystem.



    The best way to strengthen your ecosystem? Keep connecting them. The Mac line is going no where but up. Remember, this is the company that created mDP so it could have a smaller DP port for their Macs. This is the company that just integrated Intel?s LightPeak into the mDP port. This is the company that uses milled chunks of aluminium for their casings.
  • Reply 30 of 39
    Quote:
    Originally Posted by brucep View Post


    magic

    magic

    worst earthquake in decades and mearly a blip on the apple cash hoard

    apple does one simple thing

    they create a fantastic product

    bring it on out and then they go back and make it better

    in a hundred tiny ways . we notice that .

    the innovations from that first product gets spread around to all its products like sony does .



    apple now sells more in a 1/4 than they use to in a whole year

    apple 1/4 profit is more that some past year totals



    ad apple is has tied alll the parts together

    all apples pods pads mbp mba tav mb mp all sync with each other

    and we will at some point sync with each other

    we as apple freaks already have a Facebook world pre built in .

    ANDS when apple turns us on ....watch out . ....



    apple will in 5 yrs have 90 peta bytes of capacity from its farms to play with

    storm clouds so large and vast that companies will buy time from apple

    apple will host its own parties on medical and or educational lessons .

    picture 1.75 million. doctors world wide seeing new medical procedure done live from their ipads mbp iphones .

    for free .



    so by 2020 when all of apples magical devices are matured and tired . but still make money apple will be a software seller . apple will still sell the dreams apple will still allow us to make our own dreams

    in a simple way

    simple

    yes

    apple has made all its products simple to use

    no app for that





    peace





    9





    go apple



    +++ Brilliant!



    There is no app for that!
  • Reply 31 of 39
    Quote:
    Originally Posted by solipsism View Post


    Those that build a solid foundation can build a taller building with more ease.



    (trying to make some pithy comment and failing.)



    Yeth!



    Try thith:



    "Houth built on a firm foundation, * it will latht -- oh yeth, oh yeth"



    * not "thtinking, thinking thand...
  • Reply 32 of 39
    paxmanpaxman Posts: 4,729member
    Quote:
    Originally Posted by BrooksT View Post


    It is magic. Pretty much every other company of Apple's size can barely stay out of its own way, let alone innovate and create new multi-billion-dollar markets every few years. How do you keep a company of that size nimble and agile and willing to take risks? It has to be magic, because if there was a simple explanation everyone else would be doing it.



    It is all about a very clearly defined mindset that has very little to do with business but which entirely informs every decision made. I think SJ has alluded to it many times when he talks about core values and about being the largest start up around. There are lots of other factors, of course but being able to stay true to your core values is at the heart of things. How Apple has managed to scale up production and sales to the point that they have and yet still be able to stay true to their core values is pretty close to magical, however, and the reason SJ has been recognized as Godfather of CEO's.
  • Reply 33 of 39
    Quote:
    Originally Posted by Dick Applebaum View Post


    One of the attributes of true leadership is to surround yourself with people whose capabilities excel where yours are deficient.



    Steve has done that!



    It is interesting to listen to the Apple earnings call:



    Apple 2Q 2011 Earnings Call



    Notice how Peter Oppenheimer and Tim Cook perform at one aspect of their jobs.



    ...



    I believe that Steve's biggest legacy will be the "Apple" team that he has assembled -- to assure that "Apple" company and image will prosper after he leaves.





    Agree.



    This is also how he ran another computer hardware / software company that you may have heard of, transforming it into an animated movie studio. His splitting his week 2 1/2 days each was a bit weird, though.
  • Reply 34 of 39
    Quote:
    Originally Posted by magicj View Post


    No, it's magic. I popped open my iPad and it had little baby unicorns inside.



    AWWWWW.. That's so cuuuuuutte!!!
  • Reply 35 of 39
    vexorgvexorg Posts: 69member
    Quote:
    Originally Posted by BrooksT View Post


    It is magic. Pretty much every other company of Apple's size can barely stay out of its own way, let alone innovate and create new multi-billion-dollar markets every few years. How do you keep a company of that size nimble and agile and willing to take risks? It has to be magic, because if there was a simple explanation everyone else would be doing it.



    Well put. I spent years in a company that went from dynamic startup to established company to lumbering bureaucracy. Along the way, innovation gave way to a culture of not rocking the boat, with extreme risk aversion responsible for most decisions.



    Not only does Apple execute really well, but their competitors' lack of vision and poor execution only serves to enhance Apple's mystique.



    One thing's for sure - I wouldn't want to play chess (or poker) against AAPL senior management.
  • Reply 36 of 39
    Quote:
    Originally Posted by addabox View Post


    65.8 billion, cash + securities.



    That's a lotta cheese!
  • Reply 37 of 39
    This phenomenal growth is real, their PE is still very low, unlike the speculative stocks of the dot com era.



    They sure have good management because it's not easy to manage this type of growth..... some really smart people over there in Cupertino.
  • Reply 38 of 39
    Quote:
    Originally Posted by Granmastak View Post


    This phenomenal growth is real, their PE is still very low, unlike the speculative stocks of the dot com era.



    They sure have good management because it's not easy to manage this type of growth..... some really smart people over there in Cupertino.



    I'll say their p/e is low. It looks to me, as of market close on April 21, like 16-17 will be the new 'normal' p/e for Apple. Here's a list of highest and lowest p/e's since Oct. 2009. Notice that for each quarter, p/e tends to peak in either the run-up to earnings or just after earnings.It's hard to imagine what catalysts between now and September would be able to raise it much beyond 18 if yesterday's blowout earnings couldn't do it.Is there any possibility that the qqq rebalancing is still having an effect?



    Apple P/E:

    (eps:9?)

    Oct. 22,2009:22.80

    Oct. 30,2009:20.94

    Jan. 19,2010:23.90



    (eps:10.24)

    Jan. 27,2010:20.30

    Feb. 4,2010:18.75

    Apr 15,2010:24.30



    (eps:11.78)

    Apr. 23,2010:22.99

    May 7, 2010:20.02

    June 18,2010:23.26



    (eps:13.28)

    July 27,2010:19.88

    Aug 24,2010:18.06

    Oct. 18,2010:23.94



    (eps:15.15)

    Oct. 20,2010:20.50

    Nov. 17,2010:19.83

    Jan. 14,2011:23.00



    (eps:17.92)

    Jan 21,2011:18.23

    Jan. 26,2011:19.19

    Feb. 16,2011:20.26

    Apr. 15,2011:18.27



    (eps:20.98)

    Apr. 21,2011:16.72
  • Reply 39 of 39
    Quote:
    Originally Posted by joshdean View Post


    I'll say their p/e is low. It looks to me, as of market close on April 21, like 16-17 will be the new 'normal' p/e for Apple. Here's a list of highest and lowest p/e's since Oct. 2009. Notice that for each quarter, p/e tends to peak in either the run-up to earnings or just after earnings.It's hard to imagine what catalysts between now and September would be able to raise it much beyond 18 if yesterday's blowout earnings couldn't do it.Is there any possibility that the qqq rebalancing is still having an effect?



    Apple P/E:

    (eps:9?)

    Oct. 22,2009:22.80

    Oct. 30,2009:20.94

    Jan. 19,2010:23.90



    (eps:10.24)

    Jan. 27,2010:20.30

    Feb. 4,2010:18.75

    Apr 15,2010:24.30



    (eps:11.78)

    Apr. 23,2010:22.99

    May 7, 2010:20.02

    June 18,2010:23.26



    (eps:13.28)

    July 27,2010:19.88

    Aug 24,2010:18.06

    Oct. 18,2010:23.94



    (eps:15.15)

    Oct. 20,2010:20.50

    Nov. 17,2010:19.83

    Jan. 14,2011:23.00



    (eps:17.92)

    Jan 21,2011:18.23

    Jan. 26,2011:19.19

    Feb. 16,2011:20.26

    Apr. 15,2011:18.27



    (eps:20.98)

    Apr. 21,2011:16.72



    I'd be willing to tolerate a 24!
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