Ignorance is bliss. You don't become a $200 Billion+ revenue corporation by being an ignorant CEO. You not buying in on Apple during the iPod phase is the true ignorance.
BTW Apple old days of double digit growth are from a different CEO that was a lot more aggressive than the current one. I am sure TC was very good at operations during that time, but he is playing it "safe" now, like the good operation guy he is.
I think so too. Interesting the difference here between the defence of a new CEO (/manager) and a soccer site I post on where the last charismatic leader took the team to untold heights and the new guy has destroyed that legacy in 6 months. There there is nothing but criticism of the new guy - here Jobs is clearly replaceable by an accountant type.
no there is no rational for such a decline after market. I could understand the stock maybe being flat to slightly down, but down 8%? That's just ridiculous. There was nothing in these numbers or future guidance that warrant an 8% drop.
You apparently don't understand how the stock market works.
Stock prices are always correct, it is principally impossible to have "incorrectly" priced stocks.
Stock prices reflect what people think, and people's thoughts can be and are manipulated, especially ill-informed pundits. An Icahn can talk the price up, and others can make money shorting after "analysts" claim some arbitrary "expectation". If the expectations are always wrong, what is the basis for listening to them?
OK, "to wall street" maybe that's true to a degree.
But honestly, on sales in the $10s of billions, a .7% YoY margin swing is not remotely considered a price mover. Plenty of other concepts are in play here. Especially when they improved by a similar amount (.9%) over the previous quarter (which already answers your question, "when will margins hold steady or rise?" They just rose .9% QoQ). I could check to see if that is a trend over multiple quarters, but those micro-movements are probably not as important as you're making them out to be.
Down .7% YoY, up .9% QoQ (they came in at a 37% margin the previous quarter).... that says, "they are sustaining margins" to me (yeah, I still need my glasses, sadly). Small shifts are not the issue at all. The swing from 40% to 37% (Q4 '12 ~ Q4 '13) was probably more meaningful, but easily explained, as sustaining those kinds of margins (40% and above) is frankly unrealistic and dangerous over a longer term. It prevents managed shifts in pricing and supply to remain competitive. Especially in a market where you are pretty much the only company earning a significant slice of the overall pie. And, most of that movement happened in one quarter the year before, not over time as a rapidly declining trend. No, Apple still enjoys record quarters in all metrics pretty much across the board...
So, regardless of what "wall street" obsesses on in the immediate, I disagree that "it's all about margins", just like I disagree that "it's all about growth potential"... those alone aren't what give the stock its fundamental value.
Looking at the bigger picture, Apple stock should be doing fine, so I suspect it will be back up in pretty short order here. Watch the next few hours and days. I may be golden or I may eat crow. We'll see!
You're not getting it. It is an incremental movement when considered q to q but it a move downward when looked at yoy. What is supposed to be Apple's best quarter and, for all intent and purpose, the quarter where you would expect margins to be sustained from the last q. When you say that +.9 balances out -.7... are you kidding? Really? Start adding up the difference between earnings from each quarter and then you will find out that the two don't even come close to cancelling each other out.
You've proved my point by saying that 40% or greater margins are not sustainable. Exactly what Wall Street is hearing.
So, next year, let's say it drops another .7%... even if the q to q is up .9%... then what happens.
Except Apple changed how they provide guidance. They used to sandbag and provide guidance that they could easily beat. Now they provide guidance that is more realistic. So Wall Street shouldn't expect them to blow past guidance.
This is a huge improvement for Apple and I'm impressed with how consistent they've been in their guidance. Hopefully the 'ta-da' days of Steve are long gone- it makes for way too much speculation. It is somewhat tolerable for a smaller company, but with Apple being the biggest kid on the block now too many investors will get burned.
If you believe firmly that Apple will remain within its guidance, the answer is pretty obvious. Any time the stock price is based on expectations that are higher than Apple's guidance- sell. As long as Apple continues to be right you'll make good money, and Apple is always right, right?
I agree the dip is more than it should be, but at the same time the numbers would have me a little worried if I were heavy in Apple. AI obviously focuses on 'blowout' and 'record' *number* of sales- which are true and staggeringly impressive at near 80m devices. What they don't point out is that the 'record' $13.1b in profit is just about the same they made in the same quarter last year (it was actually slightly less than last year $13,072 this year vs $13,078 last)- with fewer sales and lower revenues.
So if Apple can only hold on to flat profits when they have record sales, what happens as the margins continue to be under heavy pressure (and god forbid subsidies go away in which case their margins will outright collapse) and the rate of growth of the market continues to slow down or even flatten?
Apple has so many potential upsides, but also quite a few lurking pitfalls, so it is prone to gyrations on which way the wind is blowing.
One upside I see a little neglected is the growing impact of iTunes revenue. Don't get me wrong, with 56% of their sales coming from iPhone, Apples valuation is still pretty much all about the phone- but iTunes snuck in with an impressive 8% of sales. If Apple can continue to foster iTunes so it becomes a larger and larger percentage of their valuation, that could lead to great things for Apple (especially since the p/e will be free to climb beyond the constraints of a 'hardware company').
Well, that would all be a great narrative if it didn't fly directly in the face of facts and recent history.
Under Tim Cook, Apple has enjoyed the most significant growth in its entire history. Yes. That's a fact (never mind the price of the stock on any given day). It was under Tim Cook's leadership that the company rocketed into its "most valuable company" status, which it also enjoys today. (Or did, I'm not sure if the $50 drop after hours changed that or not).
I don't know where you get these wild speculations about TC "playing it safe" etc. The Mac Pro release is HARDLY a 'safe play', ya think?
Herby, your posts are becoming more and more filled with supposition and invention, and starting to appear a lot more troll-like to me. What's up with that?
I get tired of this old saw that TC was CEO during Apple's most significant growth period.
Let's go back a few years and have a look at Sculley. Apple did very well under him as well... until it didn't. Sculley kept going back to the SJ well, until it went dry. He just never had the Steve Jobs touch.
Right now it seems to me that Tim is also still going back to the SJ well.
Let's hope that Tim knows that one thing in a hundred that will sustain Apple's fortunes.
My favourite quote from Steve:
"People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying "no" to 1,000 things."
Can't believe some of the comments on this site , what does Apple have to do ? Apple keeps on making incredible products ! Who else is doing what Apple Is doing ? All these companies are competing against one company!!!!! Sampson/ Sony/ Motor roller/ Blackberry/ Nokia / and many more .
and Apple standalone
I've been using Apple products for 3 years now and I'm glad I made the switch ! And I can't wait for my new Mac pro [URL]
I get tired of this old saw that TC was CEO during Apple's most significant growth period.
Let's go back a few years and have a look at Sculley. Apple did very well under him as well... until it didn't. Sculley kept going back to the SJ well, until it went dry. He just never had the Steve Jobs touch.
Right now it seems to me that Tim is also still going back to the SJ well.
Let's hope that Tim knows that one thing in a hundred that will sustain Apple's fortunes.
My favourite quote from Steve:
"People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying "no" to 1,000 things."
I'm not hewing with an old saw. Just responding to a post that demanded the reminder.
As for your favorite SJ quote, it's one of mine as well. Look at what TC said today about the ongoing potential for their future.... it mirrors that philosophy beautifully, and makes it clear that they too agree that this spirit instilled by SJ is exactly what makes Apple unique among companies (and what we most appreciate about them)...
TC today: "Innovation is deeply embedded in everybody here. There's so much of the world that is full of very complex products, We have zero issue coming up with things we want to do. We must focus on the very few that deserve all our energy. We've always done that and we continue to do that."
In other words, saying "no" a thousand times for every "yes" continues apace... and it isn't just TC making the decisions about that next big thing. He has a fantastic, seasoned team alongside, and that's why I remain very positive about their prospects.
?I don't think we could have asked for a better "post-Steve" transition. It's more than three years on, and they're doing alright so far. I'm taking the less cynical view here. I'm all for giving them the space to create and innovate. They won't always get it perfect, or hit every note, but I have high expectations for the crew that remains, and expect great things from them.
Incremental for the most part, but still great.
And I believe Apple will continue to thrive throughout. If they just keep doing what they're doing, hitting their stride, we have plenty of excitement ahead, I'm sure.
Apple the only company that would lose 100 billion in market cap on a 10% earnings beat. The funny think is, it was only down 5% until Cook and Oppenheimer opened their financially obtuse mouths -- that added another 5%. I thought Cook was supposed to be a supply chain genius? He still can't anticipate demand for iPhones this late in the product cycle? Complete incompetence at the one thing that was supposed to be his forte.
What's sad is that Apple will have demand for 80mil iPhone 4.5" & 5" iPhones during the 2014 holiday qtr and hey'll make 60mil so they can get all the headlines. Kinda tired of that game. I think the fact they only sold a few million more iPhone 5s' compared to 5's in the year ago quarter, especially with the Touch ID, is evidence that the 4" iPhone is loooong in the tooth, no matter what features they add to it. Time to expand the iPhone options, because if they don't, look for less than 40mil sold a year from now. The next 3 qtrs are gonna be rough I believe, but a few rumors of Iwatch, itv, and larger screen iPhones should keep the stock treading water in the $400's. I think anything below $500 is a great buying opportunity, if you're willing to hold for 1.5 years. I can't imagine being under $700 in June of 2015.
I'm not hewing with an old saw. Just responding to a post that demanded the reminder.
As for your favorite SJ quote, it's one of mine as well. Look at what TC said today about the ongoing potential for their future.... it mirrors that philosophy beautifully, and makes it clear that they too agree that this spirit instilled by SJ is exactly what makes Apple unique among companies (and what we most appreciate about them)...
TC today: "Innovation is deeply embedded in everybody here. There's so much of the world that is full of very complex products, We have zero issue coming up with things we want to do. We must focus on the very few that deserve all our energy. We've always done that and we continue to do that."
In other words, saying "no" a thousand times for every "yes" continues apace... and it isn't just TC making the decisions about that next big thing. He has a fantastic, seasoned team alongside, and that's why I remain very positive about their prospects.
?I don't think we could have asked for a better "post-Steve" transition. It's more than three years on, and they're doing alright so far. I'm taking the less cynical view here. I'm all for giving them the space to create and innovate. They won't always get it perfect, or hit every note, but I have high expectations for the crew that remains, and expect great things from them.
Incremental for the most part, but still great.
And I believe Apple will continue to thrive throughout. If they just keep doing what they're doing, hitting their stride, we have plenty of excitement ahead, I'm sure.
I had absolutely no fear for Apple's near term future when Sculley took over either. It's Apple's long term health that I wonder about... as I did then.
You can have the best team in the world... but if they don't have the vision to see that one more thing...
Apple provides a range for earnings and they beat the middle of that range. The analysts are jackasses. If you could pick up an undervalued stock at a bargain basement price by badmouthing and floating bad data, would you do the same? That's a very large incentive to poison the well and pick up AAPL at a discount.
What people fail to take into account is Apple's market cap. Next Christmas, Apple will need to sell near 8 million more iPhones than this past qtr just to grow at a healthy 15%. 8 million additional iPhones is about the number of S4's Samsung sold this past qtr. Very, very hard to do with saturated markets, without some amazing new phone, or a new line of revenue. They need to invest heavily in ipayments and iTV, and offer 3 different size iPhones. That's where their growth will be found.
I had absolutely no fear for Apple's near term future when Sculley took over either. It's Apple's long term health that I wonder about... as I did then.
You can have the best team in the world... but if they don't have the vision to see that one more thing...
And you know the current team doesn't have the vision? I suppose they could release some half baked thing ala Galaxy gear just to prove they're innovating but I'd rather have them release things when they're ready, not just to scratch wall streets itch.
Comments
Well Gill Amelio did. Or so thought Jobs.
I think so too. Interesting the difference here between the defence of a new CEO (/manager) and a soccer site I post on where the last charismatic leader took the team to untold heights and the new guy has destroyed that legacy in 6 months. There there is nothing but criticism of the new guy - here Jobs is clearly replaceable by an accountant type.
51M.
no there is no rational for such a decline after market. I could understand the stock maybe being flat to slightly down, but down 8%? That's just ridiculous. There was nothing in these numbers or future guidance that warrant an 8% drop.
You apparently don't understand how the stock market works.
Stock prices are always correct, it is principally impossible to have "incorrectly" priced stocks.
Please don't trade if you don't understand this.
Stock prices are always correct…
Hoo boy.
Stock prices reflect what people think, and people's thoughts can be and are manipulated, especially ill-informed pundits. An Icahn can talk the price up, and others can make money shorting after "analysts" claim some arbitrary "expectation". If the expectations are always wrong, what is the basis for listening to them?
But with the terrible no growth Q2 guidance, tomorrow Apple would test $450.
I used to work at IBM, I don't share your sentiments...anyone there 12 years is a lost cause for the most part.
Erm...Tim was there 12 years...just sayin'
OK, "to wall street" maybe that's true to a degree.
But honestly, on sales in the $10s of billions, a .7% YoY margin swing is not remotely considered a price mover. Plenty of other concepts are in play here. Especially when they improved by a similar amount (.9%) over the previous quarter (which already answers your question, "when will margins hold steady or rise?" They just rose .9% QoQ). I could check to see if that is a trend over multiple quarters, but those micro-movements are probably not as important as you're making them out to be.
Down .7% YoY, up .9% QoQ (they came in at a 37% margin the previous quarter).... that says, "they are sustaining margins" to me (yeah, I still need my glasses, sadly). Small shifts are not the issue at all. The swing from 40% to 37% (Q4 '12 ~ Q4 '13) was probably more meaningful, but easily explained, as sustaining those kinds of margins (40% and above) is frankly unrealistic and dangerous over a longer term. It prevents managed shifts in pricing and supply to remain competitive. Especially in a market where you are pretty much the only company earning a significant slice of the overall pie. And, most of that movement happened in one quarter the year before, not over time as a rapidly declining trend. No, Apple still enjoys record quarters in all metrics pretty much across the board...
So, regardless of what "wall street" obsesses on in the immediate, I disagree that "it's all about margins", just like I disagree that "it's all about growth potential"... those alone aren't what give the stock its fundamental value.
Looking at the bigger picture, Apple stock should be doing fine, so I suspect it will be back up in pretty short order here. Watch the next few hours and days. I may be golden or I may eat crow. We'll see!
You're not getting it. It is an incremental movement when considered q to q but it a move downward when looked at yoy. What is supposed to be Apple's best quarter and, for all intent and purpose, the quarter where you would expect margins to be sustained from the last q. When you say that +.9 balances out -.7... are you kidding? Really? Start adding up the difference between earnings from each quarter and then you will find out that the two don't even come close to cancelling each other out.
You've proved my point by saying that 40% or greater margins are not sustainable. Exactly what Wall Street is hearing.
So, next year, let's say it drops another .7%... even if the q to q is up .9%... then what happens.
Erm...Tim was there 12 years...just sayin'
Let's hope Tim doesn't prove his point.
Except Apple changed how they provide guidance. They used to sandbag and provide guidance that they could easily beat. Now they provide guidance that is more realistic. So Wall Street shouldn't expect them to blow past guidance.
This is a huge improvement for Apple and I'm impressed with how consistent they've been in their guidance. Hopefully the 'ta-da' days of Steve are long gone- it makes for way too much speculation. It is somewhat tolerable for a smaller company, but with Apple being the biggest kid on the block now too many investors will get burned.
If you believe firmly that Apple will remain within its guidance, the answer is pretty obvious. Any time the stock price is based on expectations that are higher than Apple's guidance- sell. As long as Apple continues to be right you'll make good money, and Apple is always right, right?
I agree the dip is more than it should be, but at the same time the numbers would have me a little worried if I were heavy in Apple. AI obviously focuses on 'blowout' and 'record' *number* of sales- which are true and staggeringly impressive at near 80m devices. What they don't point out is that the 'record' $13.1b in profit is just about the same they made in the same quarter last year (it was actually slightly less than last year $13,072 this year vs $13,078 last)- with fewer sales and lower revenues.
So if Apple can only hold on to flat profits when they have record sales, what happens as the margins continue to be under heavy pressure (and god forbid subsidies go away in which case their margins will outright collapse) and the rate of growth of the market continues to slow down or even flatten?
Apple has so many potential upsides, but also quite a few lurking pitfalls, so it is prone to gyrations on which way the wind is blowing.
One upside I see a little neglected is the growing impact of iTunes revenue. Don't get me wrong, with 56% of their sales coming from iPhone, Apples valuation is still pretty much all about the phone- but iTunes snuck in with an impressive 8% of sales. If Apple can continue to foster iTunes so it becomes a larger and larger percentage of their valuation, that could lead to great things for Apple (especially since the p/e will be free to climb beyond the constraints of a 'hardware company').
Well, that would all be a great narrative if it didn't fly directly in the face of facts and recent history.
Under Tim Cook, Apple has enjoyed the most significant growth in its entire history. Yes. That's a fact (never mind the price of the stock on any given day). It was under Tim Cook's leadership that the company rocketed into its "most valuable company" status, which it also enjoys today. (Or did, I'm not sure if the $50 drop after hours changed that or not).
I don't know where you get these wild speculations about TC "playing it safe" etc. The Mac Pro release is HARDLY a 'safe play', ya think?
Herby, your posts are becoming more and more filled with supposition and invention, and starting to appear a lot more troll-like to me. What's up with that?
I get tired of this old saw that TC was CEO during Apple's most significant growth period.
Let's go back a few years and have a look at Sculley. Apple did very well under him as well... until it didn't. Sculley kept going back to the SJ well, until it went dry. He just never had the Steve Jobs touch.
Right now it seems to me that Tim is also still going back to the SJ well.
Let's hope that Tim knows that one thing in a hundred that will sustain Apple's fortunes.
My favourite quote from Steve:
"People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying "no" to 1,000 things."
Let's hope Tim doesn't prove his point.
The decade and a half at Apple thereafter has already disproven it.
Apple keeps on making incredible products !
Who else is doing what Apple Is doing ?
All these companies are competing against one company!!!!!
Sampson/ Sony/ Motor roller/ Blackberry/ Nokia / and many more .
and Apple standalone
I've been using Apple products for 3 years now and I'm glad I made the switch !
And I can't wait for my new Mac pro [URL]
I get tired of this old saw that TC was CEO during Apple's most significant growth period.
Let's go back a few years and have a look at Sculley. Apple did very well under him as well... until it didn't. Sculley kept going back to the SJ well, until it went dry. He just never had the Steve Jobs touch.
Right now it seems to me that Tim is also still going back to the SJ well.
Let's hope that Tim knows that one thing in a hundred that will sustain Apple's fortunes.
My favourite quote from Steve:
"People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying "no" to 1,000 things."
I'm not hewing with an old saw. Just responding to a post that demanded the reminder.
As for your favorite SJ quote, it's one of mine as well. Look at what TC said today about the ongoing potential for their future.... it mirrors that philosophy beautifully, and makes it clear that they too agree that this spirit instilled by SJ is exactly what makes Apple unique among companies (and what we most appreciate about them)...
TC today: "Innovation is deeply embedded in everybody here. There's so much of the world that is full of very complex products, We have zero issue coming up with things we want to do. We must focus on the very few that deserve all our energy. We've always done that and we continue to do that."
In other words, saying "no" a thousand times for every "yes" continues apace... and it isn't just TC making the decisions about that next big thing. He has a fantastic, seasoned team alongside, and that's why I remain very positive about their prospects.
?I don't think we could have asked for a better "post-Steve" transition. It's more than three years on, and they're doing alright so far. I'm taking the less cynical view here. I'm all for giving them the space to create and innovate. They won't always get it perfect, or hit every note, but I have high expectations for the crew that remains, and expect great things from them.
Incremental for the most part, but still great.
And I believe Apple will continue to thrive throughout. If they just keep doing what they're doing, hitting their stride, we have plenty of excitement ahead, I'm sure.
I'm going to have to sell my 2000 shares I bought in 1994 now.
Bummer!
Super Sarcasm!
Wall St - You Greedy Douchbags!
ROFLMAO!
What's sad is that Apple will have demand for 80mil iPhone 4.5" & 5" iPhones during the 2014 holiday qtr and hey'll make 60mil so they can get all the headlines. Kinda tired of that game. I think the fact they only sold a few million more iPhone 5s' compared to 5's in the year ago quarter, especially with the Touch ID, is evidence that the 4" iPhone is loooong in the tooth, no matter what features they add to it. Time to expand the iPhone options, because if they don't, look for less than 40mil sold a year from now. The next 3 qtrs are gonna be rough I believe, but a few rumors of Iwatch, itv, and larger screen iPhones should keep the stock treading water in the $400's. I think anything below $500 is a great buying opportunity, if you're willing to hold for 1.5 years. I can't imagine being under $700 in June of 2015.
Woe is me...
I bought my 2000 shares back in 1994.
I guess I'm doomed now!
Super Sarcasm!!!
Dirty Wall St Ratbags - after seeing the Wolf Of Wall Street, does anyone really have to wonder what the heck is going on there...
"Greedy Wall St Scumbags."
LMAO!
I'm not hewing with an old saw. Just responding to a post that demanded the reminder.
As for your favorite SJ quote, it's one of mine as well. Look at what TC said today about the ongoing potential for their future.... it mirrors that philosophy beautifully, and makes it clear that they too agree that this spirit instilled by SJ is exactly what makes Apple unique among companies (and what we most appreciate about them)...
TC today: "Innovation is deeply embedded in everybody here. There's so much of the world that is full of very complex products, We have zero issue coming up with things we want to do. We must focus on the very few that deserve all our energy. We've always done that and we continue to do that."
In other words, saying "no" a thousand times for every "yes" continues apace... and it isn't just TC making the decisions about that next big thing. He has a fantastic, seasoned team alongside, and that's why I remain very positive about their prospects.
?I don't think we could have asked for a better "post-Steve" transition. It's more than three years on, and they're doing alright so far. I'm taking the less cynical view here. I'm all for giving them the space to create and innovate. They won't always get it perfect, or hit every note, but I have high expectations for the crew that remains, and expect great things from them.
Incremental for the most part, but still great.
And I believe Apple will continue to thrive throughout. If they just keep doing what they're doing, hitting their stride, we have plenty of excitement ahead, I'm sure.
I had absolutely no fear for Apple's near term future when Sculley took over either. It's Apple's long term health that I wonder about... as I did then.
You can have the best team in the world... but if they don't have the vision to see that one more thing...
The decade and a half at Apple thereafter has already disproven it.
... as a supply chain guy... sure.
What people fail to take into account is Apple's market cap. Next Christmas, Apple will need to sell near 8 million more iPhones than this past qtr just to grow at a healthy 15%. 8 million additional iPhones is about the number of S4's Samsung sold this past qtr. Very, very hard to do with saturated markets, without some amazing new phone, or a new line of revenue. They need to invest heavily in ipayments and iTV, and offer 3 different size iPhones. That's where their growth will be found.