Someone picks out a set of numbers and wins the lottery. After they win they start talking about how they were analyzing trends in previous lottery wins/numbers and came up with a mathematical formula that allowed them to predict the winning lottery numbers this time.
Trying to turn blind luck into a claim of knowledge/foresight is rather pathetic.
Next quarter Apple will issue a more conservative guidance and it'll be back to the usual where the analysts are always wrong.
That said, Apple will obviously adjust their business plan because of this. I doubt we'll see drastic changes (like Apple chasing market share by selling dirt cheap devices like the Android vendors do). But they could do some basic price adjustments. Apple always discounts previous generation iPhones when the new models are announced. Perhaps they perform the typical $100 price drop immediately (announce it now or at the earnings call). Then drop it by $100 again in the Fall when the new iPhone debuts. You'd have phones like the XS starting at $799 and the XR at only $549 while the brand-new iPhone now starts at $899 instead of $999. Being able to announce the next generation iPhone while also announcing that it's cheaper than last years iPhone would sound pretty good at the keynote.
I think the companies that should really be worried are Samsung and the Android vendors. If Apple does do a few price adjustments, then what does that do to their business? The majority of high-end smartphone buyers already choose the iPhone (its sales slaughter the Galaxy S, Note or anything Huawei makes). People don't have an issue paying a premium for an iPhone over their competitors. What happens if that premium is reduced or even eliminated by a $100-200 price adjustment?
I think this is worse for everyone else because nobody knows what Apple is going to do. And anything Apple does in the smartphone world sends ripples through the entire industry.
The overreliance on China for manufacturing and growth put company earnings at risk. What bugs me is Tim Cook was on an advisory council to the White House, so he should’ve seen the tariffs and trade issues coming from far away and spent more time trying to insulate Apple from the inevitable.
What could he have done? Magically create a new market for iPhone? Like every other multi-national CEO and mainstream economist, they advised against a trade war. But our current US President prefers to listen to his "gut" rather than intelligent advice. He thinks "trade wars are easy to win". His gut tells him so.
The trade war with China intensified fairly quickly. Strong words on both sides. Just as the US has gung-ho "patriots" joining the President in his MAGA nonsense, so do the Chinese. From what I've read, anti-American sentiment has grown rapidly - individual citizens have begun buying more Chinese goods - some companies have begun actively forbidding the use of Apple smartphones at work. Some folks describe the sales slide as a side effect of a cooling Chinese economy - I don't think so. It's an anti-American sentiment that has developed solely because of the Trump tariffs.
This is almost right. I might add that Chinese government led by Xi was hiding the hostile actions by Trump administration. Most Chinese do not have the feeling before the December arrest of Huawei CFO. Huawei CFO is a citizen. Chinese government cannot hide this news. The news caused Chinese people to boycott Apple products. Apple essentially lost December sales in China.
Someone picks out a set of numbers and wins the lottery. After they win they start talking about how they were analyzing trends in previous lottery wins/numbers and came up with a mathematical formula that allowed them to predict the winning lottery numbers this time.
Trying to turn blind luck into a claim of knowledge/foresight is rather pathetic.
Next quarter Apple will issue a more conservative guidance and it'll be back to the usual where the analysts are always wrong.
That said, Apple will obviously adjust their business plan because of this. I doubt we'll see drastic changes (like Apple chasing market share by selling dirt cheap devices like the Android vendors do). But they could do some basic price adjustments. Apple always discounts previous generation iPhones when the new models are announced. Perhaps they perform the typical $100 price drop immediately (announce it now or at the earnings call). Then drop it by $100 again in the Fall when the new iPhone debuts. You'd have phones like the XS starting at $799 and the XR at only $549 while the brand-new iPhone now starts at $899 instead of $999. Being able to announce the next generation iPhone while also announcing that it's cheaper than last years iPhone would sound pretty good at the keynote.
I think the companies that should really be worried are Samsung and the Android vendors. If Apple does do a few price adjustments, then what does that do to their business? The majority of high-end smartphone buyers already choose the iPhone (its sales slaughter the Galaxy S, Note or anything Huawei makes). People don't have an issue paying a premium for an iPhone over their competitors. What happens if that premium is reduced or even eliminated by a $100-200 price adjustment?
I think this is worse for everyone else because nobody knows what Apple is going to do. And anything Apple does in the smartphone world sends ripples through the entire industry.
Apple need to adjust their business plan long term according to it lost all China market. Don't blame Chinese people. This is superficial. From what I see US Congress has been hostile to Chinese for over one hundred years. And this has been reintensified quickly recently,
While everyone is reacting to the here and now, remember Wall St. is forward looking. The concern is that this is the beginning of a trend of reduced earnings and struggles with selling product in developing markets.
Apple has saturated the the market for premium phones. iPhone owners are delaying replacing their phones. Developing markets can’t afford Apple’s premium priced iPhones and overwhelming turn to Android phones. Is Apple capable of delivering a truly new and innovative product that can propel revenue growth? They missed a huge opportunity with smart speakers and are playing catch-up. Can they develop services offerings that are compelling and revenue/profit rich? These are the factors driving the share price.
the trade issues with China will eventually work their way through. But for now there is much uncertainty, which is always a negative on Wall St. Apple is at risk relying on China for manufacturing and this needs to be addressed. The Chinese market is not a free market and Apple cannot count on growth there due to government interventions.
Overall Apple will continue to be a highly successful enterprise but they will struggle with the double digit growth the market became accustomed over the past decade.
Wall Street hasn't been forward-looking in over 20 years.
The value of a share of stock is the net present value of all FUTURE earnings. If that’s not forward looking I don’t know what is
I agree that's the ideal. However, that isn't how Wall Street has been responding to anything for a very long time.
You couldn't be more wrong. Markets can -- and often do -- under- or over-react, but it is simply not factual to suggest that the sine qua non of markets is capitalizing future cash flows (earnings being a proxy).
Don't ignore the fact that markets have been quite positive about Apple. In fact, more so than being negative: after all, it's the same market that gave Apple a stock price of $230+ per share and a market cap of $1.1 trillion.
I find that people always complain about the market when their choice of stocks/portfolios suck.
While everyone is reacting to the here and now, remember Wall St. is forward looking. The concern is that this is the beginning of a trend of reduced earnings and struggles with selling product in developing markets.
Apple has saturated the the market for premium phones. iPhone owners are delaying replacing their phones. Developing markets can’t afford Apple’s premium priced iPhones and overwhelming turn to Android phones. Is Apple capable of delivering a truly new and innovative product that can propel revenue growth? They missed a huge opportunity with smart speakers and are playing catch-up. Can they develop services offerings that are compelling and revenue/profit rich? These are the factors driving the share price.
the trade issues with China will eventually work their way through. But for now there is much uncertainty, which is always a negative on Wall St. Apple is at risk relying on China for manufacturing and this needs to be addressed. The Chinese market is not a free market and Apple cannot count on growth there due to government interventions.
Overall Apple will continue to be a highly successful enterprise but they will struggle with the double digit growth the market became accustomed over the past decade.
Wall Street hasn't been forward-looking in over 20 years.
The value of a share of stock is the net present value of all FUTURE earnings. If that’s not forward looking I don’t know what is
Yeah, in macroeconomics 101 maybe. In the real world, the market is irrational and driven mostly by emotion and herd mentality. Shares are valued what they are because that’s what people value them at. It’s not directly tied to any actual metric in practice.
That's a nonsensical statement. But you're free to believe it, of course.
While everyone is reacting to the here and now, remember Wall St. is forward looking. The concern is that this is the beginning of a trend of reduced earnings and struggles with selling product in developing markets.
Apple has saturated the the market for premium phones. iPhone owners are delaying replacing their phones. Developing markets can’t afford Apple’s premium priced iPhones and overwhelming turn to Android phones. Is Apple capable of delivering a truly new and innovative product that can propel revenue growth? They missed a huge opportunity with smart speakers and are playing catch-up. Can they develop services offerings that are compelling and revenue/profit rich? These are the factors driving the share price.
the trade issues with China will eventually work their way through. But for now there is much uncertainty, which is always a negative on Wall St. Apple is at risk relying on China for manufacturing and this needs to be addressed. The Chinese market is not a free market and Apple cannot count on growth there due to government interventions.
Overall Apple will continue to be a highly successful enterprise but they will struggle with the double digit growth the market became accustomed over the past decade.
Wall Street hasn't been forward-looking in over 20 years.
The value of a share of stock is the net present value of all FUTURE earnings. If that’s not forward looking I don’t know what is
I agree that's the ideal. However, that isn't how Wall Street has been responding to anything for a very long time.
You couldn't be more wrong. Markets can -- and often do -- under- or over-react, but it is simply not factual to suggest that the sine qua non of markets is capitalizing future cash flows (earnings being a proxy).
Don't ignore the fact that markets have been quite positive about Apple. In fact, more so than being negative: after all, it's the same market that gave Apple a stock price of $230+ per share and a market cap of $1.1 trillion.
I find that people always complain about the market when their choice of stocks/portfolios suck.
Joke's on you! The medical industry cleaned out my portfolio years ago
Clearly something happened within the last month or so that Apple execs didn’t see coming.
This to me is the MOST concerning thing. It suggests to me that it’s not trade (old news, if anything tariffs have been delayed), it’s not the government or Huawei (Chinese competitors have been gaining share for a year now), it’s not the dollar (which is no worse than what it has been in the past six months), it’s not the slowing of the Chinese economy (this is also old news).
IMHO, it could well be the product and the price. Especially the XR, starting at $750 (for a laughable 64GB). Frankly, when it was introduced, my reaction was “meh, some candy-colored overpriced crap”. Apple did something similar before (5s? 6s?) and those colored phones did not do well, IIRC. And, while I did buy the Xs Max, I can’t say it does anything different or better than the X that I bought last year. Interestingly, two people in my family have no interest upgrading from their iPhone 8, and one had to be bribed to switch to my X (so that I could get the Xs Max).
I think the XR — I have not seen one in the wild yet! — could well be history in the next product iteration. And Apple had better get on the 5G game asap, or the next product cycle could be tough too.
The trade tariffs may be "old news", but the effect it - along with the recently intensified witch hunt of Huawei - has had on the Chinese is not. I submit that the Chinese consumer has turned much more against American products than folks, including executives at AAPL, thought. The average AAPL Chinese consumer thinks the US initiated trade war and pursuit of Huawei is completely unjustified and is doing his/her bit to fight back against the "American aggressor". How? By buying Chinese (e.g. Huawei) and shunning American products.
Apple is "collateral damage" in Trump's ill-conceived trade war that only his simple mind thinks is "easy to win".
I don't think it's product and price at all. If that were the case, how do you explain the record or near record sales in other regions? IMHO, you're letting your personal opinion of Apple's products cloud overall judgement. BTW, the "colored" phone that didn't do well was the 5c. If you bought an Xs Max this year and an X last year, you're clearly in the minority (of people with too much money and too little sense). And, at the very least, if you're being disingenuous by saying it does nothing different/better: it has a friggin' bigger screen! That's *different*.
Finally, according to AAPL, the Xr was Apple's best-selling phone this xmas quarter. That alone invalidates your opinion that its destiny will be similar to the 5c.
Another pointless and ill-informed set of thoughts.
One, it is the job of a CEO to sniff out such changes in consumer sentiment, especially in a market that accounts for 20% of his revenue.
Three, there is no "trade war." Yet. It's pure hyperbole. Look up the facts. Not one of Apple's products is subject to tariffs yet. And the two countries are in negotiations.
Four, you may think a "friggin' bigger screen!" is what matters, but others may not. Similarly -- and ironically, on the topic of "too much money and too little sense" -- you may think that price does not matter bit a lot of others may think otherwise. And, on the topic of price, Cook himself -- if you bothered to look up actual facts -- complained about "fewer carrier subsidies" leading to fewer upgrades: what do you think this is, if not the market's responsiveness to price!? (Also, something that did not happen overnight -- carrier subsidies started to disappear a couple of years ago).
Five, being the "best-selling this Christmas quarter" is a meaningless statement. Best-selling in terms of what -- aggregate revenue? Units sold? Relative to the Xs and the Xs Max? Relative to 2017? 2016? Don't just re-spout cheap corporate-speak.
While everyone is reacting to the here and now, remember Wall St. is forward looking. The concern is that this is the beginning of a trend of reduced earnings and struggles with selling product in developing markets.
Apple has saturated the the market for premium phones. iPhone owners are delaying replacing their phones. Developing markets can’t afford Apple’s premium priced iPhones and overwhelming turn to Android phones. Is Apple capable of delivering a truly new and innovative product that can propel revenue growth? They missed a huge opportunity with smart speakers and are playing catch-up. Can they develop services offerings that are compelling and revenue/profit rich? These are the factors driving the share price.
the trade issues with China will eventually work their way through. But for now there is much uncertainty, which is always a negative on Wall St. Apple is at risk relying on China for manufacturing and this needs to be addressed. The Chinese market is not a free market and Apple cannot count on growth there due to government interventions.
Overall Apple will continue to be a highly successful enterprise but they will struggle with the double digit growth the market became accustomed over the past decade.
Wall Street hasn't been forward-looking in over 20 years.
Mike is correct, although I wouldn’t limit the timeline quite so much. Wall Street has been all about chasing shiny objects for quite some time. Sometimes those objects are justifiably polished. Oftentimes they’re all hype. In between we have a fundamental problem that this editorial gets to: market reactions to quarterly data, and not just actual quarterly performance, but rather performance as compared to prior predictions and estimates.
Reacting to quarterly data is the opposite of forward-looking. Reacting to quarterly data filtered through prior estimates is just silly. Stock prices for an unprofitable company that loses less money than predicted go up. Stock prices for a profitable company that makes less than predicted go down. That’s insane.
Forunately, Apple issues the predictions and reports as required for fiduciary compliance, but they don’t run the business (as many others do) just to hit quarterly targets that make Wall Street happy. Way too much of the time, Wall Street is just TMZ in starched shirts and ties, chattering incessantly about the ephemeral and the profoundly irrelevant.
The overreliance on China for manufacturing and growth put company earnings at risk. What bugs me is Tim Cook was on an advisory council to the White House, so he should’ve seen the tariffs and trade issues coming from far away and spent more time trying to insulate Apple from the inevitable.
What could he have done? Magically create a new market for iPhone? Like every other multi-national CEO and mainstream economist, they advised against a trade war. But our current US President prefers to listen to his "gut" rather than intelligent advice. He thinks "trade wars are easy to win". His gut tells him so.
The trade war with China intensified fairly quickly. Strong words on both sides. Just as the US has gung-ho "patriots" joining the President in his MAGA nonsense, so do the Chinese. From what I've read, anti-American sentiment has grown rapidly - individual citizens have begun buying more Chinese goods - some companies have begun actively forbidding the use of Apple smartphones at work. Some folks describe the sales slide as a side effect of a cooling Chinese economy - I don't think so. It's an anti-American sentiment that has developed solely because of the Trump tariffs.
Yeah, so much for free markets. The President already threatened tariffs on Apple products. I don’t believe Presidents can singlehandedly alter the economy on the upside, but this one sure can damage one.
Apple is still, even after the announcement, one of the most profitable companies in the world. Investors should consider that.
Yeah, in macroeconomics 101 maybe. In the real world, the market is irrational and driven mostly by emotion and herd mentality. Shares are valued what they are because that’s what people value them at. It’s not directly tied to any actual metric in practice.
That's a nonsensical statement. But you're free to believe it, of course.
It's not nonsensical. It's happened many times before in history. It works in both directions too: herd mentality pushes stock prices up and up, and they can do the opposite at the drop of a hat. Tell me that isn't based on communal sentiment. We've seen the same thing play out in the dot com bubble, bitcoin, and now the FAANG stocks. When things are good, they're soooo good, and then the sentiment turns and things are equally as bad.
At its core, yes share prices are supposed to be tied to models and metrics. I'm talking about in practice, where things are more often based on feelings and seem to follow groupthink. You can't tell me you actually think the market behaves rationally?
It suddenly all makes sense. Apple has to have been out of the market for some time, principally because they wanted at all costs to avoid any appearance of taking advantage of this down market. And that absence in turn explains why Apple dropped so precipitously, and then refused to rebound.
But hi-ho, look where that leaves them now! They’ve literally pre-announced their earnings, because they waited until the quarter was over – which means they aren’t subjected to the requirement to hold off buying AAPL in advance of earnings!
And THAT means that not only are they going to be back in the market, but they are going to be back in with a vengeance – just when AAPL bottoms out with news of a (fairly moderate, all things considered) earnings miss. And not only that, but they’re back in the market when most of the short term profiteers have been wrung out of AAPL. And finally, they have inadvertently kept their powder dry to the tune of at least $130 B, which means that over the next three full months Apple can buy back AAPL until the cows come home!
Folks, if I wasn’t on fixed income, I’d be buying AAPL like crazy during this dip, because it’s now practically a sure bet Apple will be!
There's no evidence that Apple spend more $Billions on stock buybacks will be driving the price higher than it otherwise would, and it's not stock that Apple holds as an asset either. I don't see the win-win for investors but whatever. I don't currently directly own shares of any of the techs.
In my opinion, you make the error that Apple is attempting to increase stock price.
Apple's primary goal is to retire as much stock as possible until they are net cash neutral, and that's proposed to be a seven year path. Apple's product roadmap, and now, some minor/major marketing adjustments, will provide the stock price growth. Earnings per share would expected to grow with this plan.
With stock prices this low, Apple may well decide to accelerate their plans.
It suddenly all makes sense. Apple has to have been out of the market for some time, principally because they wanted at all costs to avoid any appearance of taking advantage of this down market. And that absence in turn explains why Apple dropped so precipitously, and then refused to rebound.
But hi-ho, look where that leaves them now! They’ve literally pre-announced their earnings, because they waited until the quarter was over – which means they aren’t subjected to the requirement to hold off buying AAPL in advance of earnings!
And THAT means that not only are they going to be back in the market, but they are going to be back in with a vengeance – just when AAPL bottoms out with news of a (fairly moderate, all things considered) earnings miss. And not only that, but they’re back in the market when most of the short term profiteers have been wrung out of AAPL. And finally, they have inadvertently kept their powder dry to the tune of at least $130 B, which means that over the next three full months Apple can buy back AAPL until the cows come home!
Folks, if I wasn’t on fixed income, I’d be buying AAPL like crazy during this dip, because it’s now practically a sure bet Apple will be!
There's no evidence that Apple spend more $Billions on stock buybacks will be driving the price higher than it otherwise would, and it's not stock that Apple holds as an asset either. I don't see the win-win for investors but whatever. I don't currently directly own shares of any of the techs.
In my opinion, you make the error that Apple is attempting to increase stock price.
Apple's primary goal is to retire as much stock as possible until they are net cash neutral, and that's proposed to be a seven year path. Apple's product roadmap, and now, some minor/major marketing adjustments, will provide the stock price growth. Earnings per share would expected to grow with this plan.
With stock prices this low, Apple may well decide to accelerate their plans.
Long game vs. short game.
It's no error when no one, including you, can point to any positive effect outside of a marginal dividend increase whether long or short game. No reason to have that conversation again is there, or do you have something more substantive as evidence of the buybacks efficacy now?
I think Apple should start to go for market share (means lower cost devices) again, this would also increase services (app sales). Currently it looks like most iPhone sales are coming from existing customers that upgrade (or don't upgrade). I don't believe selling iPhone 7 / iPhone 8 at discount helps, because they look old and are comparatively expensive when you look at full screen display devices from other manufacturers. An iPhone SE with full screen display and Face ID would be great. A lower cost iPhone X sized device should also drive sales.
No way. Competing on price is a losing game.
I don't think they need to compete (= match the price of the competition). But the problem is, the new models just got more expensive than ever and a small device is missing at all. The XR is nice (I own one) but quite big and heavy. They definitely need a successor for the iPhone SE.
It suddenly all makes sense. Apple has to have been out of the market for some time, principally because they wanted at all costs to avoid any appearance of taking advantage of this down market. And that absence in turn explains why Apple dropped so precipitously, and then refused to rebound.
But hi-ho, look where that leaves them now! They’ve literally pre-announced their earnings, because they waited until the quarter was over – which means they aren’t subjected to the requirement to hold off buying AAPL in advance of earnings!
And THAT means that not only are they going to be back in the market, but they are going to be back in with a vengeance – just when AAPL bottoms out with news of a (fairly moderate, all things considered) earnings miss. And not only that, but they’re back in the market when most of the short term profiteers have been wrung out of AAPL. And finally, they have inadvertently kept their powder dry to the tune of at least $130 B, which means that over the next three full months Apple can buy back AAPL until the cows come home!
Folks, if I wasn’t on fixed income, I’d be buying AAPL like crazy during this dip, because it’s now practically a sure bet Apple will be!
There's no evidence that Apple spend more $Billions on stock buybacks will be driving the price higher than it otherwise would, and it's not stock that Apple holds as an asset either. I don't see the win-win for investors but whatever. I don't currently directly own shares of any of the techs.
In my opinion, you make the error that Apple is attempting to increase stock price.
Apple's primary goal is to retire as much stock as possible until they are net cash neutral, and that's proposed to be a seven year path. Apple's product roadmap, and now, some minor/major marketing adjustments, will provide the stock price growth. Earnings per share would expected to grow with this plan.
With stock prices this low, Apple may well decide to accelerate their plans.
Long game vs. short game.
Do we actually have any evidence that Apple repurchases shares based on stock movement versus on a pre-timed schedule to avoid any potential legal liabilities stemming from accusations of stock manipulation?
It suddenly all makes sense. Apple has to have been out of the market for some time, principally because they wanted at all costs to avoid any appearance of taking advantage of this down market. And that absence in turn explains why Apple dropped so precipitously, and then refused to rebound.
But hi-ho, look where that leaves them now! They’ve literally pre-announced their earnings, because they waited until the quarter was over – which means they aren’t subjected to the requirement to hold off buying AAPL in advance of earnings!
And THAT means that not only are they going to be back in the market, but they are going to be back in with a vengeance – just when AAPL bottoms out with news of a (fairly moderate, all things considered) earnings miss. And not only that, but they’re back in the market when most of the short term profiteers have been wrung out of AAPL. And finally, they have inadvertently kept their powder dry to the tune of at least $130 B, which means that over the next three full months Apple can buy back AAPL until the cows come home!
Folks, if I wasn’t on fixed income, I’d be buying AAPL like crazy during this dip, because it’s now practically a sure bet Apple will be!
There's no evidence that Apple spend more $Billions on stock buybacks will be driving the price higher than it otherwise would, and it's not stock that Apple holds as an asset either. I don't see the win-win for investors but whatever. I don't currently directly own shares of any of the techs.
In my opinion, you make the error that Apple is attempting to increase stock price.
Apple's primary goal is to retire as much stock as possible until they are net cash neutral, and that's proposed to be a seven year path. Apple's product roadmap, and now, some minor/major marketing adjustments, will provide the stock price growth. Earnings per share would expected to grow with this plan.
With stock prices this low, Apple may well decide to accelerate their plans.
Long game vs. short game.
It's no error when no one, including you, can point to any positive effect outside of a marginal dividend increase whether long or short game. No reason to have that conversation again is there, or do you have something more substantive as evidence of the buybacks efficacy now?
Have you any evidence otherwise?
Apple pulled back on buybacks in Q1; now buybacks at current stock prices look like a bargain.
I'm still waiting for someone to suggest what Apple could do with all that cash that they have and are generating.
The only options are mergers or acquisitions. Apple continues adding infrastructure and employees without a dent in that cash.
Yeah, in macroeconomics 101 maybe. In the real world, the market is irrational and driven mostly by emotion and herd mentality. Shares are valued what they are because that’s what people value them at. It’s not directly tied to any actual metric in practice.
That's a nonsensical statement. But you're free to believe it, of course.
It's not nonsensical. It's happened many times before in history. It works in both directions too: herd mentality pushes stock prices up and up, and they can do the opposite at the drop of a hat. Tell me that isn't based on communal sentiment. We've seen the same thing play out in the dot com bubble, bitcoin, and now the FAANG stocks. When things are good, they're soooo good, and then the sentiment turns and things are equally as bad.
At its core, yes share prices are supposed to be tied to models and metrics. I'm talking about in practice, where things are more often based on feelings and seem to follow groupthink. You can't tell me you actually think the market behaves rationally?
Of course markets under- and over-react. All the time. (See my reply to Mike W., just above my reply to yours). Of course there's sentiment, irrationality, and herd behavior that pops up now and then.
But to say -- as you did -- that "...in the real world, the market is irrational and driven mostly by emotion and herd mentality" is simply untrue.
Yeah, in macroeconomics 101 maybe. In the real world, the market is irrational and driven mostly by emotion and herd mentality. Shares are valued what they are because that’s what people value them at. It’s not directly tied to any actual metric in practice.
That's a nonsensical statement. But you're free to believe it, of course.
It's not nonsensical. It's happened many times before in history. It works in both directions too: herd mentality pushes stock prices up and up, and they can do the opposite at the drop of a hat. Tell me that isn't based on communal sentiment. We've seen the same thing play out in the dot com bubble, bitcoin, and now the FAANG stocks. When things are good, they're soooo good, and then the sentiment turns and things are equally as bad.
At its core, yes share prices are supposed to be tied to models and metrics. I'm talking about in practice, where things are more often based on feelings and seem to follow groupthink. You can't tell me you actually think the market behaves rationally?
Of course markets under- and over-react. All the time. (See my reply to Mike W., just above my reply to yours). Of course there's sentiment, irrationality, and herd behavior that pops up now and then.
But to say -- as you did -- that "...in the real world, the market is irrational and driven mostly by emotion and herd mentality" is simply untrue.
Markets appear irrational when viewed in the aggregate. Individual buy-sell-hold decisions are completely rational.
This final point is possibly the most important one to keep in mind when we compare Apple to other smartphone vendors. Apple’s revenue while highly dependent on iPhone over the years does not end with the iPhone. While it is true that no other single product has done for Apple as much as the iPhone, the product offering as an aggregate still puts Apple ahead of all other vendors who might be selling higher volumes but have no direct way to monetize from their users once the sale has occurred. The only exception being Xiaomi, but with the caveat that its monetization helps recuperate the initial loss on hardware. All other Android vendors are mostly working to drive value to Google rather than themselves.
Even Samsung, a brand that offers a much broader range of products, even broader than Apple, is still struggling to benefit from the user base to drive not just services revenue but also cross-device stickiness.
Apple’s strong reliance on iPhone revenue makes it hard to not see Apple as a smartphone vendor but measuring its future opportunity only on iPhone sales is shortsighted."
Three, there is no "trade war." Yet. It's pure hyperbole. Look up the facts. Not one of Apple's products is subject to tariffs yet. And the two countries are in negotiations.
Four, you may think a "friggin' bigger screen!" is what matters, but others may not. Similarly -- and ironically, on the topic of "too much money and too little sense" -- you may think that price does not matter bit a lot of others may think otherwise. And, on the topic of price, Cook himself -- if you bothered to look up actual facts -- complained about "fewer carrier subsidies" leading to fewer upgrades: what do you think this is, if not the market's responsiveness to price!? (Also, something that did not happen overnight -- carrier subsidies started to disappear a couple of years ago).
Five, being the "best-selling this Christmas quarter" is a meaningless statement. Best-selling in terms of what -- aggregate revenue? Units sold? Relative to the Xs and the Xs Max? Relative to 2017? 2016? Don't just re-spout cheap corporate-speak.
Just curious: How many XRs have you seen?
One man's pointless and ill-informed set of thoughts is another's spot-on well-informed set of thoughts.
One: it is the CEO's job to stay on top of trends. The change in sentiment in Chinese consumers vis a vis Apple products came suddenly and as a result of the Chinese government sharing more tariff-related matters with its population (see another person's post adding to mine). Chinese resentment was intensified by the perceived witch hunt of Huawei (see recent arrest of CEO's daughter in CA). Huawei's recent popularity is a direct result of people shunning iPhones.
Two: Nike doesn't compete with Huawei - see previous comment.
Three: complete and utter nonsense. If there's no trade war, what are the soybean farmers complaining about and why do they need subsidies from the federal government? Just because Apple hasn't been affected in terms of tariffs, doesn't mean it can't be affected by nationalist consumers.
Four: A bigger screen doesn't matter to me. I'm not the one who bought an Xs Max right after buying an X. What, you buy stuff by reflex rather than thinking about what features/benefits it provides you over what you already have? I simply corrected your factually inaccurate portrayal of the XsMax not being any different from the X. Obviously it has a bigger screen. Yes, I read what Cook wrote. Fewer subsidies seems like a made-up scape goat - until you take off your US-centric blinders. I don't presume to know what subsidies carriers provide (or no longer provide) in other countries. Do you?
Five: iPhone Revenue. Revenue. It was in Tim Cook's letter - pay attention.
In my opinion, you make the error that Apple is attempting to increase stock price.
Apple's primary goal is to retire as much stock as possible until they are net cash neutral, and that's proposed to be a seven year path. Apple's product roadmap, and now, some minor/major marketing adjustments, will provide the stock price growth. Earnings per share would expected to grow with this plan.
With stock prices this low, Apple may well decide to accelerate their plans.
Long game vs. short game.
I'm not sure I follow the logic. Why is being cash neutral a goal? Not arguing - just trying to understand. Same thing with regards to earnings per share: why would raising EPS be a worthwhile pursuit? If increased EPS doesn't translate to increased share price, then of what benefit is it to investors that their shares now "earn" a larger percent of total earnings? As far as I know, it doesn't even affect dividends directly - or does it in Apple's case?
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I have a better example.
Someone picks out a set of numbers and wins the lottery. After they win they start talking about how they were analyzing trends in previous lottery wins/numbers and came up with a mathematical formula that allowed them to predict the winning lottery numbers this time.
Trying to turn blind luck into a claim of knowledge/foresight is rather pathetic.
Next quarter Apple will issue a more conservative guidance and it'll be back to the usual where the analysts are always wrong.
That said, Apple will obviously adjust their business plan because of this. I doubt we'll see drastic changes (like Apple chasing market share by selling dirt cheap devices like the Android vendors do). But they could do some basic price adjustments. Apple always discounts previous generation iPhones when the new models are announced. Perhaps they perform the typical $100 price drop immediately (announce it now or at the earnings call). Then drop it by $100 again in the Fall when the new iPhone debuts. You'd have phones like the XS starting at $799 and the XR at only $549 while the brand-new iPhone now starts at $899 instead of $999. Being able to announce the next generation iPhone while also announcing that it's cheaper than last years iPhone would sound pretty good at the keynote.
I think the companies that should really be worried are Samsung and the Android vendors. If Apple does do a few price adjustments, then what does that do to their business? The majority of high-end smartphone buyers already choose the iPhone (its sales slaughter the Galaxy S, Note or anything Huawei makes). People don't have an issue paying a premium for an iPhone over their competitors. What happens if that premium is reduced or even eliminated by a $100-200 price adjustment?
I think this is worse for everyone else because nobody knows what Apple is going to do. And anything Apple does in the smartphone world sends ripples through the entire industry.
Don't ignore the fact that markets have been quite positive about Apple. In fact, more so than being negative: after all, it's the same market that gave Apple a stock price of $230+ per share and a market cap of $1.1 trillion.
I find that people always complain about the market when their choice of stocks/portfolios suck.
That's a nonsensical statement. But you're free to believe it, of course.
Another pointless and ill-informed set of thoughts.
One, it is the job of a CEO to sniff out such changes in consumer sentiment, especially in a market that accounts for 20% of his revenue.
Two, other US consumer products are doing fine in China. As an example, Nike -- another quintessentially American product -- is doing fine in China, and the CEO made a statement to that effect just ten days ago.
Three, there is no "trade war." Yet. It's pure hyperbole. Look up the facts. Not one of Apple's products is subject to tariffs yet. And the two countries are in negotiations.
Four, you may think a "friggin' bigger screen!" is what matters, but others may not. Similarly -- and ironically, on the topic of "too much money and too little sense" -- you may think that price does not matter bit a lot of others may think otherwise. And, on the topic of price, Cook himself -- if you bothered to look up actual facts -- complained about "fewer carrier subsidies" leading to fewer upgrades: what do you think this is, if not the market's responsiveness to price!? (Also, something that did not happen overnight -- carrier subsidies started to disappear a couple of years ago).
Five, being the "best-selling this Christmas quarter" is a meaningless statement. Best-selling in terms of what -- aggregate revenue? Units sold? Relative to the Xs and the Xs Max? Relative to 2017? 2016? Don't just re-spout cheap corporate-speak.
Just curious: How many XRs have you seen?
Reacting to quarterly data is the opposite of forward-looking. Reacting to quarterly data filtered through prior estimates is just silly. Stock prices for an unprofitable company that loses less money than predicted go up. Stock prices for a profitable company that makes less than predicted go down. That’s insane.
Forunately, Apple issues the predictions and reports as required for fiduciary compliance, but they don’t run the business (as many others do) just to hit quarterly targets that make Wall Street happy. Way too much of the time, Wall Street is just TMZ in starched shirts and ties, chattering incessantly about the ephemeral and the profoundly irrelevant.
Apple is still, even after the announcement, one of the most profitable companies in the world. Investors should consider that.
At its core, yes share prices are supposed to be tied to models and metrics. I'm talking about in practice, where things are more often based on feelings and seem to follow groupthink. You can't tell me you actually think the market behaves rationally?
Apple's primary goal is to retire as much stock as possible until they are net cash neutral, and that's proposed to be a seven year path. Apple's product roadmap, and now, some minor/major marketing adjustments, will provide the stock price growth. Earnings per share would expected to grow with this plan.
With stock prices this low, Apple may well decide to accelerate their plans.
Long game vs. short game.
Apple pulled back on buybacks in Q1; now buybacks at current stock prices look like a bargain.
I'm still waiting for someone to suggest what Apple could do with all that cash that they have and are generating.
The only options are mergers or acquisitions. Apple continues adding infrastructure and employees without a dent in that cash.
But to say -- as you did -- that "...in the real world, the market is irrational and driven mostly by emotion and herd mentality" is simply untrue.
https://techpinions.com/digging-a-little-deeper-on-apple-revenue-warning/54212
"Apple vs. Other Smartphone Vendors
This final point is possibly the most important one to keep in mind when we compare Apple to other smartphone vendors. Apple’s revenue while highly dependent on iPhone over the years does not end with the iPhone. While it is true that no other single product has done for Apple as much as the iPhone, the product offering as an aggregate still puts Apple ahead of all other vendors who might be selling higher volumes but have no direct way to monetize from their users once the sale has occurred. The only exception being Xiaomi, but with the caveat that its monetization helps recuperate the initial loss on hardware. All other Android vendors are mostly working to drive value to Google rather than themselves.
Even Samsung, a brand that offers a much broader range of products, even broader than Apple, is still struggling to benefit from the user base to drive not just services revenue but also cross-device stickiness.
Apple’s strong reliance on iPhone revenue makes it hard to not see Apple as a smartphone vendor but measuring its future opportunity only on iPhone sales is shortsighted."
One man's pointless and ill-informed set of thoughts is another's spot-on well-informed set of thoughts.
One: it is the CEO's job to stay on top of trends. The change in sentiment in Chinese consumers vis a vis Apple products came suddenly and as a result of the Chinese government sharing more tariff-related matters with its population (see another person's post adding to mine). Chinese resentment was intensified by the perceived witch hunt of Huawei (see recent arrest of CEO's daughter in CA). Huawei's recent popularity is a direct result of people shunning iPhones.
Two: Nike doesn't compete with Huawei - see previous comment.
Three: complete and utter nonsense. If there's no trade war, what are the soybean farmers complaining about and why do they need subsidies from the federal government? Just because Apple hasn't been affected in terms of tariffs, doesn't mean it can't be affected by nationalist consumers.
Four: A bigger screen doesn't matter to me. I'm not the one who bought an Xs Max right after buying an X. What, you buy stuff by reflex rather than thinking about what features/benefits it provides you over what you already have? I simply corrected your factually inaccurate portrayal of the XsMax not being any different from the X. Obviously it has a bigger screen.
Yes, I read what Cook wrote. Fewer subsidies seems like a made-up scape goat - until you take off your US-centric blinders. I don't presume to know what subsidies carriers provide (or no longer provide) in other countries. Do you?
Five: iPhone Revenue. Revenue. It was in Tim Cook's letter - pay attention.
iPhone XRs? Two.
I'm not sure I follow the logic. Why is being cash neutral a goal? Not arguing - just trying to understand. Same thing with regards to earnings per share: why would raising EPS be a worthwhile pursuit? If increased EPS doesn't translate to increased share price, then of what benefit is it to investors that their shares now "earn" a larger percent of total earnings? As far as I know, it doesn't even affect dividends directly - or does it in Apple's case?