Interesting - whatever institutions are purchasing the shares for Apple score when crazy "experts" say Apple did not meet "expectations" .. which are nuts. They are making Apple very pleased .. actually me since I have $2M invested in Apple ... about 8 years now (options and stock).
I have been waiting for a very serious break-out. .. then the Barron's story comes out this weekend saying stock should be 50% higher in their analysis (short term /now - much greater in couple years).
Investors have been scoring as Apple has soaked up its shares .. at cheap prices .. thanks to many negative comment "analysts" .. and CNBC nonsense.
I think that we will see a total breakout shortly - with China numbers that are showing explosive growth is happening now .. the apple phone program .. outstanding new phones and new products .. its a perfect storm for now/this Christmas. I do expect Barron's prediction to pan out this year ... as the truth comes out in the next couple weeks.. on to October with the new products.
Apple has backed this up by the "surprise" bond issuance last week for I believe a few more billion.... Apple knows the stock is breaking out and is buying up shares quickly as we speak.
"Given that Apple is really the only tech company to have any real success in selling products in China..."
Doesn't he mean 'non-Chinese' company? I thought a couple of their home-grown ones were doing okay...?
Depends on the definition of "success". Most of these companies receive some sort of subsidies (which are completely intransparent) and operating profits of 1-2% are considered an achievement. If they were facing the same investor expectations as Apple (where y-o-y growth of 50% causes the stock to drop), they would not even exist. It is (for now) a different economy with different rules, comparisons don't really work.
Also think great article.But the point about Amazon's stock,and earnings, doesn't seem right.While Amazon has a very high price relative to earnings,there is a lot of leverage there.It is easier for Amazon to multiply it's earnings,since it is starting from a much lower earnings base.Of course earnings may not pan out,but this a speculation on that.
if Usain Bolt were asked to beat his records in the way APPL is demanded to grow in ever higher percentages of growth by WS (no matter how big the previous number was), he would be running the 100m at 5.0 seconds now. Well, we will soon discover that Apple is running at some 6.0 seconds, when they get the fact that China, yes, China, is still growing their 4G network at a pace of 10%... per month, and most of that is being captured by iphones.
WS will then discover that they are making an incredible gift of AAPL to their future stock owners (current option holders, first of all among them the very AAPL execs). Then the stock will take off like a rocket. My guess is that will happen no later than the end of September.
And that, while they still don't get that AAPL is, at this very moment, disrupting the finance industry (with pay and direct financing), the music industry (again, with Music), the entertainment industry (with the TV), the health industry (with the Watch and healthKit), and the corporate computing business (with the partnership with former #1's of IBM and CSCO). While planning for longer term disruptions for the car industry. And with any of them doing more harm in their respective areas than what the iphone did to mobile... Gosh...
The article is like most financial analysis: BS. The sell of was mitigated by the Federal reserve this September and people anticipating a heavy interest increase. Word is the Fed is undercutting their fears.
classic shorting tactics. major negative ballyhoo to get folks to sell and lower the stock, then you buy back right when you know something huge is going to happen. If you are someone who was able to buy low originally and then sell high to start the short, you can win several times over.
It's highly unlikely that the new iPhones won't sell, that the Apple finance plan won't be popular, that the iPad Pro won't make a decent showing (just needs one good 'major company buys shit ton of the new iPad' story)
"Given that Apple is really the only tech company to have any real success in selling products in China..."
Doesn't he mean 'non-Chinese' company? I thought a couple of their home-grown ones were doing okay...?
Depends on the definition of "success". Most of these companies receive some sort of subsidies (which are completely intransparent) and operating profits of 1-2% are considered an achievement. If they were facing the same investor expectations as Apple (where y-o-y growth of 50% causes the stock to drop), they would not even exist. It is (for now) a different economy with different rules, comparisons don't really work.
I agree that Street reaction to Apple is twisted and atypical, but, remind me, how many years,
say, Amazon was a Street success and a ledger disaster...?
If Apple were actually facing a upcoming barrier of slowing growth and a collapse of demand in China, rather than buying back its own stock it would be scrambling to acquire other companies with an actual, apparent strategy the way Google has been almost blindly gobbling up its Alphabet soup over the past several years as Android has done nothing and every one of its hardware efforts have all imploded into embarrassing ruin.
Google needs to lose the Linux fanboys. Like you can literately feel where efforts in the company are being driven by people who haven't a clue what people want and are creating "knock off"'s of whatever the market leader in an area is doing and ... not really improving on it in any meaningful way.
Google's "Siri" alternative is stillborn, Google's Twitter alternative is comatose, Google's TwitchTV alternative... not even given a mention anywhere. Google is literately seeing momentum in some market where the competition isn't even making money, and offering yet another money-losing solution that is no better than what is already there.
Apple isn't doing this, and I'd seriously worry if they did. Apple keeps it's focus on hardware and solftware that people want, and doesn't sacrifice the build quality or user friendliness just to try and strangle a competitor.
Like this is what the Smartphone (and SmartTV) competition is all about. Users decide what they really want, and thus far, the market has decided that Apple is offering what people want, and Android is the Malware platform of choice. This is unchanged from how Apple has always been a market leader for Video, Photo and Music production, but not games. Windows PC's are cheap, primary targets of malware, and Game developers generally hate PC's as a platform because of piracy and rampant cheating that didn't matter before the days of Multiplayer-internet.
But people who have their heart and mind set in the "open source" land don't realize that it's a complete waste of time to re-implement software just because you disagree with the license philosophy. People don't use "The Gimp" because it's free any more than people use OpenOffice because it's free. They use the free alternatives because their workflows do not require Photoshop or Microsoft Office. In order to deal with clients that are Photoshop houses you aren't going to tell your client to use an alternative product because you're often not in the position to make that request... there are plenty of others who won't make that request.
Hence, Apple's software often is locked to the Mac... even if it doesn't have to be. Google and Linux/Android doesn't have this option, thus they are forever at the mercy of Open Source forkers who want to keep the product free of any commercial value.
Using "percentages of growth" and other logical/statistical fallacies, you can be disappointed with greatness and enraptured with failure, convincing investors to flee from mountains of strong profitability into the comforting arms of frivolously burning pits of the ashes of cash.
This seems to sum up the general stock market feeling about Apple.
The whole narrative about Apple's growth shines light on analysts' myopia with regard to which metrics to measure.
Consider: A company that has no profits needs to show that it is growing revenue and cash flow such that it will one day get out ahead of fixed costs and begin to see money flowing to the bottom line. For such companies, PROFITS are the goal post, and growth in revenue and cash flow are the yard markers.
A company that is profitable, but not yet sufficiently profitable to be able to scale its business, expand into adjacent markets, fend off competition, and retain the best employees needs to show growth to ensure the ongoing viability of the business. For such companies, market reach, a moat against competition is the goal post and profits are the yard markers.
Then there's a company like Apple, with sufficient cash and equivalents for any reasonable acquisition it can imagine, sufficient cash flow to fully fund operations, R&D, marketing, dividends, buybacks, and even environmental initiatives, with any profits generated only adding to the already too large cash pile. A cash pile that only detracts from the share value by diluting the percentage of each dollar paid for a share of the stock associated with the operating business. Cash is poison for such a company and growth of profits only makes the problem worse. So all the goal posts have been cleared, and yet analysts apply the same metrics to Apple as they do to companies for which growth is still relevant and necessary to the viability of their business.
If there is any reason to criticize Apple, it should be with respect to the company's mounting pile of unproductive cash and equivalents. Not for profit growth stalling at an already obscene level, beyond an amount the company is able to productively put to use.
The low on August 24th was $92. The high this year was about 134.50.
So it was down about 32% from its high
You're technically right, but I don't think any trades took place at that low. It seemed to have been some sort of 'flash crash' type thing on that crazy day when, e.g., the Dow plummeted by well over 1000 points (Apple is, therefore, far from the only company to which it happened).
People are scratching their heads still trying to deconstruct what happened.
Middle class are growing, and they have used to paying comparatively larger percentage of their salary for Smartphones. Which is slightly different to US or many other Western countries, i.e different valuation of things.
Once Apple worked out how to do finance across the globe, they will have a Phone as Services around the world, especially in places where Carrier dont offer much subsidies. ( Again China )
I would love to see Apple start an earnings announcement by displaying a chart showing a list of analysts and each analysts "guess" as to what Apples numbers were going to be this quarter. They should then remind everyone that Apple releases guidance as to what the numbers are likely to be next quarter - and Apple provides mid-quarter updates if there is any significant or material change or development that would dramatically affect the guidance.
And finally, they would caution that "with all that in mind, Analysts should have a pretty easy job estimating how many devices Apple will sell in a quarter - and although you our investors are free to take advice from anybody you like, WE would think twice about taking any kind of investment advice from any analyst who has missed significantly with their estimate despite the fact that we have them the right answer three months ago!!!
In other words, Apple should use the quarterly earnings conference to publicly rate the analysts. Apples own guidance should be in the chart with all of the analyst estimates and it should be made clear that an Apple "miss" only happens when Apples results fall short of their own guidance! If their results are lower than any of the analyst estimates, that is clearly a "miss" by the analyst and it's time the world realized that and punished the analyst that released the bad numbers instead of punishing Apple for the analysts mistake.
Super article. Regarding stock price It's ruled by the majority - if 9 of 10 analysts don't get it and the last person does, it will still be the 9 that sets the price. I guess it's democracy by the unaware
The whole narrative about Apple's growth shines light on analysts' myopia with regard to which metrics to measure.
Consider:
A company that has no profits needs to show that it is growing revenue and cash flow such that it will one day get out ahead of fixed costs and begin to see money flowing to the bottom line. For such companies, PROFITS are the goal post, and growth in revenue and cash flow are the yard markers.
A company that is profitable, but not yet sufficiently profitable to be able to scale its business, expand into adjacent markets, fend off competition, and retain the best employees needs to show growth to ensure the ongoing viability of the business. For such companies, market reach, a moat against competition is the goal post and profits are the yard markers.
Then there's a company like Apple, with sufficient cash and equivalents for any reasonable acquisition it can imagine, sufficient cash flow to fully fund operations, R&D, marketing, dividends, buybacks, and even environmental initiatives, with any profits generated only adding to the already too large cash pile. A cash pile that only detracts from the share value by diluting the percentage of each dollar paid for a share of the stock associated with the operating business. Cash is poison for such a company and growth of profits only makes the problem worse. So all the goal posts have been cleared, and yet analysts apply the same metrics to Apple as they do to companies for which growth is still relevant and necessary to the viability of their business.
If there is any reason to criticize Apple, it should be with respect to the company's mounting pile of unproductive cash and equivalents. Not for profit growth stalling at an already obscene level, beyond an amount the company is able to productively put to use.
A refreshing approach to the fundamentals, but I would question your last paragraph by saying that this cash situation is unprecedented in scale in the history of capitalism, and so will call for an unprecedented approach to a solution. It would be wise to expect that Apple is aware of this too.
First, the accumulated earnings are not ill-gotten gains, as I'm sure you agree, but won fairly by selling an enormous amount of desirable goods at a good margin, not excessive. Apple was "merely" founded on sound principles of understanding the true nature of personal computing for the maximum benefit of its customers. No other company rode the wave of computing as personal mind amplification the way Apple did and does, down to the device in hand or pocket, or on the lap or desktop, and the way these all work together.
So they have huge rewards for their perception and execution. They've done well and are doing well at extending the mind. What's next?
Extending the body is an obvious follow-up. Transportation is missing its intelligent designers. Traffic is a software problem. Accidents are a combination of bad or no software and very bad hardware. Effiencies thrown away in excess weight, heat, and manufacturing complexity are, if you really want to use this word, obscene.
When Steve Jobs said they wanted to view their cash reserves as dry powder, I believe they were thinking about entering a new branch of computing that's similar in scale to personal computing, but different in type. Transportation would be one such. Another might be intelligent environmental architecture, down the road a ways.
Either of these would soak up many billions. I resist strongly any implication that Apple is mindlessly hoarding that cash. I think rather that the scale of the next step is such that years of advance work will have to be done before the real spending begins.
You're technically right, but I don't think any trades took place at that low. It seemed to have been some sort of 'flash crash' type thing on that crazy day when, e.g., the Dow plummeted by well over 1000 points (Apple is, therefore, far from the only company to which it happened).
What a weird conception of what constitutes a 'valid' price. The price that sellers offer for any product, including shares of stock, is still the price, even if there were no trades, which I seriously doubt in the first place. In a market with high speed computerized trading, it's highly unlikely that none of those programs pounced automatically.
Middle class are growing, and they have used to paying comparatively larger percentage of their salary for Smartphones. Which is slightly different to US or many other Western countries, i.e different valuation of things.
I agree. Smartphones are much more of a status good in the third world than they are here in the US. The normal status goods here, probably cars is No. 1, are just too pricey for Chinese incomes. And as a culture newly converted to the religion of consumerism, the Chinese, like the Japanese in the 80s, are just completely dazzled by luxury brand names.
You're technically right, but I don't think any trades took place at that low. It seemed to have been some sort of 'flash crash' type thing on that crazy day when, e.g., the Dow plummeted by well over 1000 points (Apple is, therefore, far from the only company to which it happened).
People are scratching their heads still trying to deconstruct what happened.
But yes, the 32% is officially correct.
And that's why phrases such as "...price collapse of about 1/3...." should NEVER BE USED.
It's a useless fact.
More importantly, what is the time weighted or volume weighted price(s)?
Comments
Interesting - whatever institutions are purchasing the shares for Apple score when crazy "experts" say Apple did not meet "expectations" .. which are nuts. They are making Apple very pleased .. actually me since I have $2M invested in Apple ... about 8 years now (options and stock).
I have been waiting for a very serious break-out. .. then the Barron's story comes out this weekend saying stock should be 50% higher in their analysis (short term /now - much greater in couple years).
Investors have been scoring as Apple has soaked up its shares .. at cheap prices .. thanks to many negative comment "analysts" .. and CNBC nonsense.
I think that we will see a total breakout shortly - with China numbers that are showing explosive growth is happening now .. the apple phone program .. outstanding new phones and new products .. its a perfect storm for now/this Christmas. I do expect Barron's prediction to pan out this year ... as the truth comes out in the next couple weeks.. on to October with the new products.
Apple has backed this up by the "surprise" bond issuance last week for I believe a few more billion.... Apple knows the stock is breaking out and is buying up shares quickly as we speak.
"Given that Apple is really the only tech company to have any real success in selling products in China..."
Doesn't he mean 'non-Chinese' company? I thought a couple of their home-grown ones were doing okay...?
Depends on the definition of "success". Most of these companies receive some sort of subsidies (which are completely intransparent) and operating profits of 1-2% are considered an achievement. If they were facing the same investor expectations as Apple (where y-o-y growth of 50% causes the stock to drop), they would not even exist. It is (for now) a different economy with different rules, comparisons don't really work.
Also think great article.But the point about Amazon's stock,and earnings, doesn't seem right.While Amazon has a very high price relative to earnings,there is a lot of leverage there.It is easier for Amazon to multiply it's earnings,since it is starting from a much lower earnings base.Of course earnings may not pan out,but this a speculation on that.
WS will then discover that they are making an incredible gift of AAPL to their future stock owners (current option holders, first of all among them the very AAPL execs). Then the stock will take off like a rocket. My guess is that will happen no later than the end of September.
And that, while they still don't get that AAPL is, at this very moment, disrupting the finance industry (with pay and direct financing), the music industry (again, with Music), the entertainment industry (with the TV), the health industry (with the Watch and healthKit), and the corporate computing business (with the partnership with former #1's of IBM and CSCO). While planning for longer term disruptions for the car industry. And with any of them doing more harm in their respective areas than what the iphone did to mobile... Gosh...
The article is like most financial analysis: BS. The sell of was mitigated by the Federal reserve this September and people anticipating a heavy interest increase. Word is the Fed is undercutting their fears.
It's highly unlikely that the new iPhones won't sell, that the Apple finance plan won't be popular, that the iPad Pro won't make a decent showing (just needs one good 'major company buys shit ton of the new iPad' story)
"Given that Apple is really the only tech company to have any real success in selling products in China..."
Doesn't he mean 'non-Chinese' company? I thought a couple of their home-grown ones were doing okay...?
Depends on the definition of "success". Most of these companies receive some sort of subsidies (which are completely intransparent) and operating profits of 1-2% are considered an achievement. If they were facing the same investor expectations as Apple (where y-o-y growth of 50% causes the stock to drop), they would not even exist. It is (for now) a different economy with different rules, comparisons don't really work.
I agree that Street reaction to Apple is twisted and atypical, but, remind me, how many years,
say, Amazon was a Street success and a ledger disaster...?
Google needs to lose the Linux fanboys. Like you can literately feel where efforts in the company are being driven by people who haven't a clue what people want and are creating "knock off"'s of whatever the market leader in an area is doing and ... not really improving on it in any meaningful way.
Google's "Siri" alternative is stillborn, Google's Twitter alternative is comatose, Google's TwitchTV alternative... not even given a mention anywhere. Google is literately seeing momentum in some market where the competition isn't even making money, and offering yet another money-losing solution that is no better than what is already there.
Apple isn't doing this, and I'd seriously worry if they did. Apple keeps it's focus on hardware and solftware that people want, and doesn't sacrifice the build quality or user friendliness just to try and strangle a competitor.
Like this is what the Smartphone (and SmartTV) competition is all about. Users decide what they really want, and thus far, the market has decided that Apple is offering what people want, and Android is the Malware platform of choice. This is unchanged from how Apple has always been a market leader for Video, Photo and Music production, but not games. Windows PC's are cheap, primary targets of malware, and Game developers generally hate PC's as a platform because of piracy and rampant cheating that didn't matter before the days of Multiplayer-internet.
But people who have their heart and mind set in the "open source" land don't realize that it's a complete waste of time to re-implement software just because you disagree with the license philosophy. People don't use "The Gimp" because it's free any more than people use OpenOffice because it's free. They use the free alternatives because their workflows do not require Photoshop or Microsoft Office. In order to deal with clients that are Photoshop houses you aren't going to tell your client to use an alternative product because you're often not in the position to make that request... there are plenty of others who won't make that request.
Hence, Apple's software often is locked to the Mac... even if it doesn't have to be. Google and Linux/Android doesn't have this option, thus they are forever at the mercy of Open Source forkers who want to keep the product free of any commercial value.
This seems to sum up the general stock market feeling about Apple.
Consider:
A company that has no profits needs to show that it is growing revenue and cash flow such that it will one day get out ahead of fixed costs and begin to see money flowing to the bottom line. For such companies, PROFITS are the goal post, and growth in revenue and cash flow are the yard markers.
A company that is profitable, but not yet sufficiently profitable to be able to scale its business, expand into adjacent markets, fend off competition, and retain the best employees needs to show growth to ensure the ongoing viability of the business. For such companies, market reach, a moat against competition is the goal post and profits are the yard markers.
Then there's a company like Apple, with sufficient cash and equivalents for any reasonable acquisition it can imagine, sufficient cash flow to fully fund operations, R&D, marketing, dividends, buybacks, and even environmental initiatives, with any profits generated only adding to the already too large cash pile. A cash pile that only detracts from the share value by diluting the percentage of each dollar paid for a share of the stock associated with the operating business. Cash is poison for such a company and growth of profits only makes the problem worse. So all the goal posts have been cleared, and yet analysts apply the same metrics to Apple as they do to companies for which growth is still relevant and necessary to the viability of their business.
If there is any reason to criticize Apple, it should be with respect to the company's mounting pile of unproductive cash and equivalents. Not for profit growth stalling at an already obscene level, beyond an amount the company is able to productively put to use.
You're technically right, but I don't think any trades took place at that low. It seemed to have been some sort of 'flash crash' type thing on that crazy day when, e.g., the Dow plummeted by well over 1000 points (Apple is, therefore, far from the only company to which it happened).
People are scratching their heads still trying to deconstruct what happened.
But yes, the 32% is officially correct.
You want to explain this disruption to us?
On China,
Middle class are growing, and they have used to paying comparatively larger percentage of their salary for Smartphones. Which is slightly different to US or many other Western countries, i.e different valuation of things.
Once Apple worked out how to do finance across the globe, they will have a Phone as Services around the world, especially in places where Carrier dont offer much subsidies. ( Again China )
And finally, they would caution that "with all that in mind, Analysts should have a pretty easy job estimating how many devices Apple will sell in a quarter - and although you our investors are free to take advice from anybody you like, WE would think twice about taking any kind of investment advice from any analyst who has missed significantly with their estimate despite the fact that we have them the right answer three months ago!!!
In other words, Apple should use the quarterly earnings conference to publicly rate the analysts. Apples own guidance should be in the chart with all of the analyst estimates and it should be made clear that an Apple "miss" only happens when Apples results fall short of their own guidance! If their results are lower than any of the analyst estimates, that is clearly a "miss" by the analyst and it's time the world realized that and punished the analyst that released the bad numbers instead of punishing Apple for the analysts mistake.
A refreshing approach to the fundamentals, but I would question your last paragraph by saying that this cash situation is unprecedented in scale in the history of capitalism, and so will call for an unprecedented approach to a solution. It would be wise to expect that Apple is aware of this too.
First, the accumulated earnings are not ill-gotten gains, as I'm sure you agree, but won fairly by selling an enormous amount of desirable goods at a good margin, not excessive. Apple was "merely" founded on sound principles of understanding the true nature of personal computing for the maximum benefit of its customers. No other company rode the wave of computing as personal mind amplification the way Apple did and does, down to the device in hand or pocket, or on the lap or desktop, and the way these all work together.
So they have huge rewards for their perception and execution. They've done well and are doing well at extending the mind. What's next?
Extending the body is an obvious follow-up. Transportation is missing its intelligent designers. Traffic is a software problem. Accidents are a combination of bad or no software and very bad hardware. Effiencies thrown away in excess weight, heat, and manufacturing complexity are, if you really want to use this word, obscene.
When Steve Jobs said they wanted to view their cash reserves as dry powder, I believe they were thinking about entering a new branch of computing that's similar in scale to personal computing, but different in type. Transportation would be one such. Another might be intelligent environmental architecture, down the road a ways.
Either of these would soak up many billions. I resist strongly any implication that Apple is mindlessly hoarding that cash. I think rather that the scale of the next step is such that years of advance work will have to be done before the real spending begins.
You're technically right, but I don't think any trades took place at that low. It seemed to have been some sort of 'flash crash' type thing on that crazy day when, e.g., the Dow plummeted by well over 1000 points (Apple is, therefore, far from the only company to which it happened).
What a weird conception of what constitutes a 'valid' price. The price that sellers offer for any product, including shares of stock, is still the price, even if there were no trades, which I seriously doubt in the first place. In a market with high speed computerized trading, it's highly unlikely that none of those programs pounced automatically.
On China,
Middle class are growing, and they have used to paying comparatively larger percentage of their salary for Smartphones. Which is slightly different to US or many other Western countries, i.e different valuation of things.
I agree. Smartphones are much more of a status good in the third world than they are here in the US. The normal status goods here, probably cars is No. 1, are just too pricey for Chinese incomes. And as a culture newly converted to the religion of consumerism, the Chinese, like the Japanese in the 80s, are just completely dazzled by luxury brand names.
You're technically right, but I don't think any trades took place at that low. It seemed to have been some sort of 'flash crash' type thing on that crazy day when, e.g., the Dow plummeted by well over 1000 points (Apple is, therefore, far from the only company to which it happened).
People are scratching their heads still trying to deconstruct what happened.
But yes, the 32% is officially correct.
And that's why phrases such as "...price collapse of about 1/3...." should NEVER BE USED.
It's a useless fact.
More importantly, what is the time weighted or volume weighted price(s)?