I don't think a new iPhone 7 will make a lick of difference. I believe there's a fundamental sea change in the smart phone market. The days of premium $700 phones are numbered and not a 'smart' buy. People are happy to get by with decent $300 phones that do 90% of what an iPhone does. Only your hard core Apple enthusiast will ooh and ahh and make the latest design, a must have upgrade.
The sky is not falling, but when the iPhone makes up 70% of Apple's revenues, you have to wonder how hard and fast Apple stock can crash.
I disagree 100% with your assessment. If you are leasing an iPhone from Apple you are literally paying pennies a day for something you use every day for many hours a day. People are willing to pay a few pennies more a day for the best. The smartphone has been the most important item in most people's lives after their house and maybe their car. You really think people are not willing to pay $20 a month for that?
If you buy a cheap $300 phone it will be worthless in 18 months. That means you are paying $17 a month to use a cheap phone. Do you really think people are unwilling to pay $5 more to get an iPhone? That's literally 15 cents more per day.
Your assessment is also wrong because for the last 4 quarters the averaging selling price of iPhones YoY have gone up. People are willing to pay for quality.
The majority of iPhone YoY growth is in China. And we know what's happening there. And Apple will be challenged to penetrate other emerging markets like India and S.America where price is so important. Why do you assume a $300 phone to be worthless in 18 months. I know people are still doing fine with their Nexus 5. Why pay a lease, when you can buy an unlocked phone. The Moto X and G are perfectly usable phones. They won't be able to do ForceTouch, but these are niceties, not necessities.
Yes, people will pay for quality. But I would argue mid-level phones have improved dramatically to the point where many will say it's good enough. The smartphone may be the most important item in people's lives, but it's also become a commodity.
I am indeed predicting a YoY decline in revenue for the March quarter and maybe even the June quarter. That would be enough for the market to give Apple a PE of 9. With small declines in revenue I could see profits to be estimated at $50 billion. $50 billion x 9 = $450 billion market cap. That gives you a share price of about $84. But panic and macro news probably drops this to $80.
Just out of curiosity, do you have an opinion about the Slingshot Theory of AAPL manipulation? In this case, if I were bullish on the Report coming out in a couple of weeks, and I were an unethical manipulator, I might try to do everything I can to lower the price of the stock in the time between now and the earnings report. The further down I can drive the stock, the more profit I see after the strong earnings report. As described here: http://fortune.com/2012/10/08/meet-one-of-the-guys-tugging-on-the-apple-slingshot/
The reason I ask is you’re apparently a newcomer to AI, only 20 posts, but you’re doing everything you can to persuade people to sell. I’m not saying your are a slingshot manipulator, but your behavior is definitely consistent with being one.
Why are you all even spending time on this? Don't you know that whatever rumor exists about Apple, the usual opposite is the general truth? How many years previous has this false fire drill persisted?
The majority of iPhone YoY growth is in China. And we know what's happening there. And Apple will be challenged to penetrate other emerging markets like India and S.America where price is so important. Why do you assume a $300 phone to be worthless in 18 months. I know people are still doing fine with their Nexus 5. Why pay a lease, when you can buy an unlocked phone. The Moto X and G are perfectly usable phones. They won't be able to do ForceTouch, but these are niceties, not necessities.
Yes, people will pay for quality. But I would argue mid-level phones have improved dramatically to the point where many will say it's good enough. The smartphone may be the most important item in people's lives, but it's also become a commodity.
The USA was in a massive recession in 2008-2009. That did not stop people from buying iPhones. Neither will this recession in China stop people from buying iPhones. Smartphones are an integral part of the modern lifestyle. No way people will cheap out on smartphones unless they literally can't afford it.
An 18 month Android phone is worthless on the resale market. That is what I meant. So if you take that $300 phone you are getting hit with $18 a month of depreciation. That $300 phone is costing you $18 a month. At T-mobile you can lease an iPhone6 for $23 a month. Do you seriously think people are not willing to spend that extra $5 to get an iPhone?
Just out of curiosity, do you have an opinion about the Slingshot Theory of AAPL manipulation? In this case, if I were bullish on the Report coming out in a couple of weeks, and I were an unethical manipulator, I might try to do everything I can to lower the price of the stock in the time between now and the earnings report. The further down I can drive the stock, the more profit I see after the strong earnings report. As described here: http://fortune.com/2012/10/08/meet-one-of-the-guys-tugging-on-the-apple-slingshot/
The reason I ask is you’re apparently a newcomer to AI, only 20 posts, but you’re doing everything you can to persuade people to sell. I’m not saying your are a slingshot manipulator, but your behavior is definitely consistent with being one.
If I persuaded 1,000 on this forum to sell Apple shares that would not even drop the price a fraction of a cent. I really have no motivation to recommend people to sell other than it seems like a no brainer at this point. When I gave my recommendation to sell the price was about $99.50. Now its $97.25. IMO, $80 is pretty much in the bag. No sense even fight it at this point. The smart thing to do is take advantage of this knowledge.
Long-term I think Apple will reach all time highs within 18 months. Just no reason to buy shares at near $100 when it is plain as day this gets to $80
The majority of iPhone YoY growth is in China. And we know what's happening there. And Apple will be challenged to penetrate other emerging markets like India and S.America where price is so important. Why do you assume a $300 phone to be worthless in 18 months. I know people are still doing fine with their Nexus 5. Why pay a lease, when you can buy an unlocked phone. The Moto X and G are perfectly usable phones. They won't be able to do ForceTouch, but these are niceties, not necessities.
Yes, people will pay for quality. But I would argue mid-level phones have improved dramatically to the point where many will say it's good enough. The smartphone may be the most important item in people's lives, but it's also become a commodity.
The USA was in a massive recession in 2008-2009. That did not stop people from buying iPhones. Neither will this recession in China stop people from buying iPhones. Smartphones are an integral part of the modern lifestyle. No way people will cheap out on smartphones unless they literally can't afford it.
An 18 month Android phone is worthless on the resale market. That is what I meant. So if you take that $300 phone you are getting hit with $18 a month of depreciation. That $300 phone is costing you $18 a month. At T-mobile you can lease an iPhone6 for $23 a month. Do you seriously think people are not willing to spend that extra $5 to get an iPhone?
You're looking at it from an Apple user/fan standpoint. I see value in an iPhone, but there are millions who don't.
iPhones continue to go up in price with little real world benefit, while lower costs phones do the job. With respect to that $5 difference, there are just as many options where the Android phone is even cheaper. A Moto G for instance, can be had for $180, unlocked.
As I said from the outset, Apple is not doomed. I just hope they don't fall asleep at the wheel, be complacent or lose sight of user and sentiments.
You're looking at it from an Apple user/fan standpoint. I see value in an iPhone, but there are millions who don't.
iPhones continue to go up in price with little real world benefit, while lower costs phones do the job. With respect to that $5 difference, there are just as many options where the Android phone is even cheaper. A Moto G for instance, can be had for $180, unlocked.
As I said from the outset, Apple is not doomed. I just hope they don't fall asleep at the wheel, be complacent or lose sight of user and sentiments.
Sorry you are wrong. If people only cared about price everyone would be driving $13k Nissa Versa. But the average cost of a USA car is close to $30k. And according to hundreds of survey's people think their smartphone is more essential and important than even their car. You really think they would risk having a crappy phone for saving a mere $5 month? These are the same people who buy $5 coffee at Starbucks every day without even thinking.
The iPhone user base will be close to 600,000,000 this year. Do you seriously think a huge chunk of that user base will buy a Moto G instead of an iPhone? LOL. No.
Stop comparing a MotoG to an iPhone6. They are not even in the same stratosphere.
That's exactly correct. Very few of the working class/middle class in China even own Chinese stocks. So this drop in the Chinese stock market should not effect consumer spend.
Apple is worth $540 billion. They hold $150 billion in net cash so the true value net of cash is $390 billion. Last year they made $53 billion in profits. So based on last years profits Apple is at a PE of 7. That's significantly lower than companies like IBM and HP which have had shirking profits and revenue for years.
....That $300 phone is costing you $18 a month. At T-mobile you can lease an iPhone6 for $23 a month. Do you seriously think people are not willing to spend that extra $5 to get an iPhone?
Yes. If everyone was willing to pay the extra money for an iPhone then why doesn't everyone buy an iPhone?
You're looking at it from an Apple user/fan standpoint. I see value in an iPhone, but there are millions who don't.
iPhones continue to go up in price with little real world benefit, while lower costs phones do the job. With respect to that $5 difference, there are just as many options where the Android phone is even cheaper. A Moto G for instance, can be had for $180, unlocked.
As I said from the outset, Apple is not doomed. I just hope they don't fall asleep at the wheel, be complacent or lose sight of user and sentiments.
Sorry you are wrong. If people only cared about price everyone would be driving $13k Nissa Versa. But the average cost of a USA car is close to $30k. And according to hundreds of survey's people think their smartphone is more essential and important than even their car. You really think they would risk having a crappy phone for saving a mere $5 month? These are the same people who buy $5 coffee at Starbucks every day without even thinking.
The iPhone user base will be close to 600,000,000 this year. Do you seriously think a huge chunk of that user base will buy a Moto G instead of an iPhone? LOL. No.
Stop comparing a MotoG to an iPhone6. They are not even in the same stratosphere.
You are correct that the Moto G and the iPhone are not really in the same league. But read again what @satchmo said.
They are not comparing a Moto G feature for feature, performance, and build quality to the iPhone.
What I think satchmo is saying that for $180 unlocked, there is a perfectly capable smartphone for sale for people that fits their needs. satchmo said a Moto G for instance. It is just one example of one phone, of which there are many...
For instance, a 32 gig unlocked Nexus 6P which has been widely reviewed as one of the best recent flagship Android phones is $499. That same $499 can buy you brand new two-year old 32 gig unlocked iPhone 5s. So depending on who you are, you might find much better value in the Nexus.
I don't think that a huge chunk of people buy the Moto G specifically, but clearly most people choose a non-iPhone, especially globally. That is the issue that is being raised here.
Actually, it's the crashing Chinese stock market (2 times this week so far) that is driving down AAPL now. The rumors about the supply chain noise didn't help earlier.
Exactly! Chinese market is impacting WS badly.. Everything I have has been down every day this week. It's not just APPL. It's obvious Wall Street is very nervous in all sectors right now because of China's multiple market crashes.
Wall Street is jittery because the economy sucks right now. When you have the fed raising interest rates in such a bear market you also realize that the government doesn't know what the hell is going on. So as an investor you see interest rates going the wrong way and you see strong evidence of a damaged economy still you have to be cautious.
Wall Street is jittery because the economy sucks right now. When you have the fed raising interest rates in such a bear market you also realize that the government doesn't know what the hell is going on. So as an investor you see interest rates going the wrong way and you see strong evidence of a damaged economy still you have to be cautious.
The US economy looks pretty healthy. But yes raising interest rates this year is pure stupidity
Exactly! Chinese market is impacting WS badly.. Everything I have has been down every day this week. It's not just APPL .. AI just sensationalizing APPL news for the sake of CLICK BAIT instead of reporting the truth. It's obvious Wall Street is very nervous in all sectors right now because of China's multiple market crashes.
Wall Street is jittery because the economy sucks right now. When you have the fed raising interest rates in such a bear market you also realize that the government doesn't know what the hell is going on. So as an investor you see interest rates going the wrong way and you see strong evidence of a damaged economy still you have to be cautious.
The economy has been propped up, first under Bush, then under Obama, and there is no rational basis for any of the current levels. Fed policy has created the bubble we're in again and Congress has encouraged recklessness to prevent the crash the US should have gone through and emerged from on a stronger footing back in 2008.
Wall Street is jittery because the economy sucks right now. When you have the fed raising interest rates in such a bear market you also realize that the government doesn't know what the hell is going on. So as an investor you see interest rates going the wrong way and you see strong evidence of a damaged economy still you have to be cautious.
The economy has been propped up, first under Bush, then under Obama, and there is no rational basis for any of the current levels. Fed policy has created the bubble we're in again and Congress has encouraged recklessness to prevent the crash the US should have gone through and emerged from on a stronger footing back in 2008.
There is no evidence for this.
The US economy is doing well in and of itself, and even better relative to other major economies. The fundamentals look pretty good: low unemployment, low inflation, still historically low interest rates, strong dollar, declining deficits, a pretty reasonably valued stock market (despite the recent drops), historically low stock price volatility (with the average VIX in the teens in the past couple of years), historically high corporate profits, and a real estate sector that has bounced back. Corporate investment is lower than it should be at home; it would be higher if the stupid tax laws would be fixed.
Of course, the only people who don't believe any of this are the conspiracy theorists (and their ilk), mostly from the Right. When presented with such facts, they tell you, predictably, that the numbers must be wrong. No cognitive dissonance there.
The 4s gave us Siri and came at a time that iPhone was really becoming popular (it had just come to Verizon in Feburary of 2011). The 5 and 6 were screen size changes. Whaf is the 7 going to bring that people didn't get with the 6S? I'm skeptical that a new look or something like wireless charging or losing the headphone jack will cause a massive upgrade. If we're going down the path of D&G then I think we have to go all the way. None of this iPhone 7 will be the savior nonsense.
Smaller footprint would be my guess. The 6/6+ are perfect phones except they are too big to fit in many people's pockets and hands.
And it won't take much for the 7 to beat iPhone6s unit sales. They just need to get their historical 90% retention ratings and another 20% of buyers switching from Android.
But yes peak iPhone is coming within the next 5 years or so. Apple really needs to focus on expanding their services to grow revenue from here on out. LiveTV, Cloud, home security, connected home, gaming, movie streaming, search, advertising, banking, and social should all be on Apple's radar. They need to expand to more services. It is much easier to add 10% to services revenue instead of adding 10% unit sales.
That's the crazy thing, there are so many places they can and should have been investing in that the consumer would have willingly wanted and paid for Apple like quality, but they got beat to the punch and seem to be giving up on some of this stuff now. I mean in 2 years who cares if they come out with a TV service if someone has already cornered the market (ie Netflix). The tell was in when they started paying the dividend and buying back stock.....not enough organic ideas to use the cash.
You've repeated this $80 quite a few times (I lost count), but you don't say how you arrive at it. Why not $85? Why not $75? Are you predicted a YOY decline in the March quarter, or are you predicting flat earnings and a declining P/E? You're implying flat profits and a declining P/E, but you don't seem to be confident enough to be explicit. Just to be clear, I don't know that you're wrong, but I haven't seen any analysis behind your $80 figure. It looks like you're basing this number on intuition.
I am indeed predicting a YoY decline in revenue for the March quarter and maybe even the June quarter. That would be enough for the market to give Apple a PE of 9. With small declines in revenue I could see profits to be estimated at $50 billion. $50 billion x 9 = $450 billion market cap. That gives you a share price of about $84. But panic and macro news probably drops this to $80.
IBM has had 20 or so straight qtrs of revenue declines and has a p/e of 9. IBM has an EBITDA multiple of 7.5x vs Apple at 4.75x. That's what i struggle with.....IBM valued at higher multiples than Apple. Frankly if Apple is only worth 4.75x EBITDA, either the entire market is a bubble or the company truly has lost any ability to innovate and is on the cusp of one of the greatest implosions in market history.
The strange thing is the buybacks above $100 with the internal data that sales are slowing so much. Why destroy the billions of shareholder value by buying over inflated stock. Just hold the cash and wait for the crash.
I think Apple should increase its dividend - at least to match Microsoft's which is slightly higher. (0.5% or so higher yield)
Ideally, match Microsoft when adjusted for PE, but that would probably involve quadrupling Apple's current dividend yield. But make it a permanent dividend hike, because I don't like one time dividends.
So with all of this said, what do we do now if we own the stock ? sell at 96 and then jump in later or wait the ship.
By the way on IBM, here at big blue most of the employees are moving to apple macbook pros, I hope that is going on at other big companies. Plus IBMers are eligible for a free Watch which will include health apps apple is developing with cafewell that will use IBM Watson. Not sure if we are guinea pigs for those new products of apps and back end health, but looks like they want to go there in the future as another source to push the watch sales and ecosystem.
I also do not agree with why IBM is values better then apple as fall as multiples, makes no sense.
So with all of this said, what do we do now if we own the stock ? sell at 96 and then jump in later or wait the ship.
Doing nothing, i.e., waiting it out may be the only strategy. You certainly don't want to to buy high and sell low.
I agree, I waited this long for earnings report and in my gut I think we will be fine especially since the bars have been knocked so low, then there is the next watch and 4 inch phone. I know quite a few who do not want a big phone and their iPhone is getting old. I also know plenty who never buy first products and may buy watch2 if it adds neat stuff. Runners will get it if it has a GPS and that would kill Garmin.
Comments
Why do you assume a $300 phone to be worthless in 18 months. I know people are still doing fine with their Nexus 5. Why pay a lease, when you can buy an unlocked phone. The Moto X and G are perfectly usable phones. They won't be able to do ForceTouch, but these are niceties, not necessities.
Yes, people will pay for quality. But I would argue mid-level phones have improved dramatically to the point where many will say it's good enough. The smartphone may be the most important item in people's lives, but it's also become a commodity.
An 18 month Android phone is worthless on the resale market. That is what I meant. So if you take that $300 phone you are getting hit with $18 a month of depreciation. That $300 phone is costing you $18 a month. At T-mobile you can lease an iPhone6 for $23 a month. Do you seriously think people are not willing to spend that extra $5 to get an iPhone?
Long-term I think Apple will reach all time highs within 18 months. Just no reason to buy shares at near $100 when it is plain as day this gets to $80
iPhones continue to go up in price with little real world benefit, while lower costs phones do the job. With respect to that $5 difference, there are just as many options where the Android phone is even cheaper. A Moto G for instance, can be had for $180, unlocked.
As I said from the outset, Apple is not doomed. I just hope they don't fall asleep at the wheel, be complacent or lose sight of user and sentiments.
The iPhone user base will be close to 600,000,000 this year. Do you seriously think a huge chunk of that user base will buy a Moto G instead of an iPhone? LOL. No.
Stop comparing a MotoG to an iPhone6. They are not even in the same stratosphere.
Apple is worth $540 billion. They hold $150 billion in net cash so the true value net of cash is $390 billion.
Last year they made $53 billion in profits. So based on last years profits Apple is at a PE of 7. That's significantly lower than companies like IBM and HP which have had shirking profits and revenue for years.
You are correct that the Moto G and the iPhone are not really in the same league. But read again what @satchmo said.
They are not comparing a Moto G feature for feature, performance, and build quality to the iPhone.
What I think satchmo is saying that for $180 unlocked, there is a perfectly capable smartphone for sale for people that fits their needs. satchmo said a Moto G for instance. It is just one example of one phone, of which there are many...
For instance, a 32 gig unlocked Nexus 6P which has been widely reviewed as one of the best recent flagship Android phones is $499. That same $499 can buy you brand new two-year old 32 gig unlocked iPhone 5s. So depending on who you are, you might find much better value in the Nexus.
I don't think that a huge chunk of people buy the Moto G specifically, but clearly most people choose a non-iPhone, especially globally. That is the issue that is being raised here.
Sorry satchmo if I put words in your mouth.
The US economy is doing well in and of itself, and even better relative to other major economies. The fundamentals look pretty good: low unemployment, low inflation, still historically low interest rates, strong dollar, declining deficits, a pretty reasonably valued stock market (despite the recent drops), historically low stock price volatility (with the average VIX in the teens in the past couple of years), historically high corporate profits, and a real estate sector that has bounced back. Corporate investment is lower than it should be at home; it would be higher if the stupid tax laws would be fixed.
Of course, the only people who don't believe any of this are the conspiracy theorists (and their ilk), mostly from the Right. When presented with such facts, they tell you, predictably, that the numbers must be wrong. No cognitive dissonance there.
IBM has had 20 or so straight qtrs of revenue declines and has a p/e of 9. IBM has an EBITDA multiple of 7.5x vs Apple at 4.75x. That's what i struggle with.....IBM valued at higher multiples than Apple. Frankly if Apple is only worth 4.75x EBITDA, either the entire market is a bubble or the company truly has lost any ability to innovate and is on the cusp of one of the greatest implosions in market history.
The strange thing is the buybacks above $100 with the internal data that sales are slowing so much. Why destroy the billions of shareholder value by buying over inflated stock. Just hold the cash and wait for the crash.
Ideally, match Microsoft when adjusted for PE, but that would probably involve quadrupling Apple's current dividend yield.
But make it a permanent dividend hike, because I don't like one time dividends.