Optimistic note sounded on Apple's earnings, with concerns about Q3 guidance & 5G iPhone w...
As expected, a $58 billion earnings result that beat Wall Street consensus are driving analysts to discuss Apple's future, with eyes focused on a higher than expected revenue range for the third fiscal quarter, and ongoing concern about iPhone sales.
"Most importantly, Apple's Q3 revenue guidance was much better than expected, at $52.5-54.5B vs. our expectation of $50-52B (and consensus at $52.1B)," Sacconaghi said. This guidance is allegedly "credible" but worthy of skepticism, as it "implies the most benign sequential Q3 iPhone revenue decline in history...right after Apple just experienced the worst Q2 sequential iPhone revenue decline in history."
The firm expects Apple's real-world Q3 revenue to slot in at $53.3 billion, and is holding to a "market perform" rating with a $190 stock target.
Olson is giving Apple stock an "overweight" rating and raising his target from $201 to $230.
Bernstein
"Apple's fiscal Q2 was fine," wrote Bernstein analyst Toni Sacconaghi. A 5 percent revenue decline was "consistent with expectations," he noted, and earnings per share (EPS) was 10 cents over consensus but in line with Bernstein estimates."Most importantly, Apple's Q3 revenue guidance was much better than expected, at $52.5-54.5B vs. our expectation of $50-52B (and consensus at $52.1B)," Sacconaghi said. This guidance is allegedly "credible" but worthy of skepticism, as it "implies the most benign sequential Q3 iPhone revenue decline in history...right after Apple just experienced the worst Q2 sequential iPhone revenue decline in history."
The firm expects Apple's real-world Q3 revenue to slot in at $53.3 billion, and is holding to a "market perform" rating with a $190 stock target.
Piper Jaffray
Michael Olson remarked on "strong fundamental performance," but said that Piper expects "limited excitement around this year's iPhone launches." Investors will probably be placated, he continued, by healthy services revenue until "anticipation for 5G iPhones begins to build" in the second half of 2019.Olson is giving Apple stock an "overweight" rating and raising his target from $201 to $230.
Comments
I think they are wrong for 3 reasons.
1) 5G offers no known new application to give added user value. For example, LTE was big because it enabled the ability to stream video etc. but 5G does not enable any new functionality to the user apart from saying everything will be faster.
2) 5G does not work over medium or long distances and telecom executives say it will “never exist outside of cities”. So no new technology or service will be able to rely on 5G speeds if it is to work in rural areas.
3) 5G promises to be inefficient, make devices run hot and drain batteries much quicker. As devices heat up, processors will get throttled and the overall user experience on 5G will be worse and sometimes even feel slower than LTE.
Now faster speeds when your in densely populated areas would be a good upgrade once the chips can meet a certain standard of efficiency. But 5G is certain not going to drive a smartphone super sales cycle. These days, people in general upgrade when their phone breaks and not just for new technologies.
I think Tim was smart to “punt” Katie Huberty’s question. I think he’s smart enough, and user experienced focused enough, to have some degree of skepticism about the early 5G experience and real world user benefits. And equally smart enough to keep such thoughts to himself.
Unsurprisingly, none of the above analysts are talking about the direct-license agreement between Apple and Qualcomm which removes Qualcomm’s ability to earn money from Apple’s suppliers for Apple’s products.
The same goes for Apple’s license costs. A clear indication of those costs were provided yesterday.
Why are the analysts being silent about these announcements?
5G will give the mobile phone companies a way to increase rates. The play will be to buy the last LTE phone that is in production by Apple (before the 1st 5G phone). You will have more than enough speed, better battery life, and be able to stay on your rate plan. That said the public is going to eat 5G up because they will be convinced they need it.
A whole lotta people, maybe even most new buyers, will think there's some big advantage, if not immediately then very soon especially when the sales person gets done wowing 'em with the possibilities. Yeah, 5G is gonna be a "thing", and folks are going to want it even if it's doesn't factually offer real world benefits to them personally at the moment. Rational is one thing but how many times have you decided something "rationally" only to weeble wobble in the showroom or in front of the retailers display when it comes time to close the purchase?
1. Marketing
2. Marketing
3. Marketing
Not having 5G would be a serious impediment. So serious that Apple preferred to settle with QC (at lightning speed) than plough ahead with a cause that Apple itself brought. 5G will be the buzzword this year end and all of next year.
Yes, Apple signed a 6 years long agreement with Qualcomm for chips without telling anybody which chips. Everybody is assuming 5G instead of all the 4G/LTE chips Apple needs to support older devices.
Qualcomm isn’t the only winner here.
What was surprising was the speed at which it all came to fruition, especially following TC's comments earlier this year on there not being any settlement talks.
Yet the knockoffs will brag about 5G front and center. Samsung will market 5G specs(if they haven't already) and the iKnockoff Knights will say "Apple is falling behind".
I've already read arguments here that "Apple is falling behind" by not adding fake 5G to iPhone.
For those longs… smart move indeed as Spam said.