I completely agree with everything said in the article and yes, some of the reporting is so wrong it almost looks intentional. But perhaps the crux of the Ives message is correct, even if the details are totally wrong. iPhone revenue is down this year and wearables/home/accessories + services revenue growth is only just making up for it. If iPhone revenue continues declining but the other two growth categories start flattening off, can Apple keep growing? Or it's possible that iPhone sales only look slow this year because of the large jump last year. At the very least, it's a reasonable question, even if CNBC framed it completely wrong.
Nope. The message, as usual, is myopic, especially since Apple no longer publishes iPhone numbers, thus making the assumption that iPhone sales are permanently declining ridiculous on the face of it.
It doesn’t take much digging to find out that iPhone sales, along with smartphone sales generally, started peaking 4 years ago. A clue to the actual facts about the iPhone's prospects can be found in a more detailed analysis of the one piece of information Apple still supplies: revenue. Apple breaks out revenue for iPhone, iPad, Mac, Other, and Services. I've got a chart that looks at all these areas. Guess what: Yes, there was a big pullback in iPhone revenue in 2019. But that's CLEARLY an outlier, caused by the huge impact of the Trump Trade War on Apple sales in China (a negative $8 Billion in fy '19 comparative revenue). Disregarding that blip, the trajectory of iPhone revenue is up, not flat, and certainly not down!
It is, however, flattening, which is to be expected as we hit peak smartphone.
As you say, Apple publishes iPhone revenue figures and that was what I was referring to. I'm not sure how you can call the last data point in the line a blip and disregard it. Besides, even if we assume you are right and iPhone revenue is flattening off, my point still stands. Can Apple's other categories grow fast enough to offset iPhones in the company's next phase?
Does the iPhone need to be offset? Isn't it OK that the rocket ran out of fuel and we're back to travelling at a speed that is still quite fast?
There seems to be an assumption that growth rates will, can and must continue indefinitely for a company to remain "successful." That assumption doesn't seem sound, to me.
If you're a shareholder then yes, it does need to be offset. I agree that there is room in the market for different companies, those that are growing, shrinking, profitable, not, but if you have X dollars to invest then they either need to replace the revenue stream or find one that is smaller but more profitable or their share price will decline.
And yet people will still trust these people with their money
The not educated taking advice from the deliberately clueless.
It’s why I don’t play in the market. Its a losers game where the house holds the cards and always wins.
1. Analysts do not handle investments nor do they manage portfolios so your concerns about “trusting hem with your money” needn’t trouble you.
2. Intelligent investors who are patient normally succeed. Greedy retail investors who fantasize they are hedge fund traders get slaughtered. The house does not hold all the cards. Your lack of knowledge betrays your swagger.
Quiet down.
I just know from what I’ve seen. In my whole life, nearly 60 years now, I have never known anyone who has come out ahead investing. Long term, short term, single stocks, mutual funds, going on their own, working with a trained and licensed investment professional, it did not matter. At best they didn’t lose too much. Usually they lost most of what they invested.
Some people claim they can do well in the stock market. Some people claim they can win at blackjack. I don’t believe either of them.
I completely agree with everything said in the article and yes, some of the reporting is so wrong it almost looks intentional. But perhaps the crux of the Ives message is correct, even if the details are totally wrong. iPhone revenue is down this year and wearables/home/accessories + services revenue growth is only just making up for it. If iPhone revenue continues declining but the other two growth categories start flattening off, can Apple keep growing? Or it's possible that iPhone sales only look slow this year because of the large jump last year. At the very least, it's a reasonable question, even if CNBC framed it completely wrong.
Nope. The message, as usual, is myopic, especially since Apple no longer publishes iPhone numbers, thus making the assumption that iPhone sales are permanently declining ridiculous on the face of it.
It doesn’t take much digging to find out that iPhone sales, along with smartphone sales generally, started peaking 4 years ago. A clue to the actual facts about the iPhone's prospects can be found in a more detailed analysis of the one piece of information Apple still supplies: revenue. Apple breaks out revenue for iPhone, iPad, Mac, Other, and Services. I've got a chart that looks at all these areas. Guess what: Yes, there was a big pullback in iPhone revenue in 2019. But that's CLEARLY an outlier, caused by the huge impact of the Trump Trade War on Apple sales in China (a negative $8 Billion in fy '19 comparative revenue). Disregarding that blip, the trajectory of iPhone revenue is up, not flat, and certainly not down!
It is, however, flattening, which is to be expected as we hit peak smartphone.
As you say, Apple publishes iPhone revenue figures and that was what I was referring to. I'm not sure how you can call the last data point in the line a blip and disregard it. Besides, even if we assume you are right and iPhone revenue is flattening off, my point still stands. Can Apple's other categories grow fast enough to offset iPhones in the company's next phase?
Does the iPhone need to be offset? Isn't it OK that the rocket ran out of fuel and we're back to travelling at a speed that is still quite fast?
There seems to be an assumption that growth rates will, can and must continue indefinitely for a company to remain "successful." That assumption doesn't seem sound, to me.
If you're a shareholder then yes, it does need to be offset. I agree that there is room in the market for different companies, those that are growing, shrinking, profitable, not, but if you have X dollars to invest then they either need to replace the revenue stream or find one that is smaller but more profitable or their share price will decline.
You missed FilemakerFeller’s point, although he could have made it clearer. Think of the rocket as in orbit, and the fuel as a way to raise the orbit. The smartphone rocket will inevitably reach some orbit, and unless displaced by a new paradigm shift (like smartphones replacing cell phones), will stay in that approximate orbit, even after the “fuel” is gone. Although really, for the iPhone, there is a way to keep climbing to a higher orbit, by essentially displacing Androids. And, of course, vice versa. Several years ago, I referred to this as the “endgame phase”, and I believe we are now entering that phase.
So if I’m right, your vision of an iPhone market that begins decreasing from now won’t happen, and this year’s pullback, like others in Apple’s past, is an anomaly. In fact the iPhone market will continue to grow, but more and more slowly. One can look at the Mac and see that same kind of slowly increasing growth.
In the meantime, any growth in other areas gets added to the total, which can amount to a net quite decent amount of growth.
But there’s more to it. Where the rubber really hits the road is in net income. Apple’s net income growth has also been slowing, and also has taken a bit of a hit this fiscal year. But it’s still absolutely fabulous, and if growth restarts, will be even more so. The thing about a high net income is, it’s got two places to go: It can go to acquire other companies, or it can get returned as dividends to stockholders. The neat thing about Apple is that they’ve realized that the very best company they can invest in is themselves, and particularly so when the market seriously undervalues them. So they are using huge gobs of that net income to massively reduce their float, essentially buying themselves back from the market.
But looky here! When they massively reduced their float, they massively increased the percentage ownership of Apple for the shares remaining! Thus, when they’ve bought back half the stock (about five years from now, I figure), they will have doubled the percentage ownership of Apple for each remaining share!
And that’s all made possible by the massive amount of net income Apple is generating. Now, they could also choose to give back more cash in the form of dividends, but dividends get taxed. And frankly, if the market ever woke up and realized that they were selling AAPL to Apple for a song, and raised the P/E ratio up where it should be, then that’s probably what Apple would do; raise dividends significantly.
Bottom line: Apple has a LOT of potential for seeing it’s valuation go up significantly as time goes by. So long term investors like myself are going to do quite well, thank you very much.
DAalseth said: Some people claim they can do well in the stock market. Some people claim they can win at blackjack. I don’t believe either of them.
Huh? Put your money in an index fund and let it ride - over 10 years it WILL go up because the whole market has - and continues to - go up. There are easy strategies to get pretty much guaranteed gains. When people do crap like day trading and routinely buying high and selling low that's when things go sideways. When the markets go down that's when you buy MORE, not sell
Comments
Some people claim they can do well in the stock market. Some people claim they can win at blackjack. I don’t believe either of them.
So if I’m right, your vision of an iPhone market that begins decreasing from now won’t happen, and this year’s pullback, like others in Apple’s past, is an anomaly. In fact the iPhone market will continue to grow, but more and more slowly. One can look at the Mac and see that same kind of slowly increasing growth.
In the meantime, any growth in other areas gets added to the total, which can amount to a net quite decent amount of growth.
But there’s more to it. Where the rubber really hits the road is in net income. Apple’s net income growth has also been slowing, and also has taken a bit of a hit this fiscal year. But it’s still absolutely fabulous, and if growth restarts, will be even more so. The thing about a high net income is, it’s got two places to go: It can go to acquire other companies, or it can get returned as dividends to stockholders. The neat thing about Apple is that they’ve realized that the very best company they can invest in is themselves, and particularly so when the market seriously undervalues them. So they are using huge gobs of that net income to massively reduce their float, essentially buying themselves back from the market.
But looky here! When they massively reduced their float, they massively increased the percentage ownership of Apple for the shares remaining! Thus, when they’ve bought back half the stock (about five years from now, I figure), they will have doubled the percentage ownership of Apple for each remaining share!
And that’s all made possible by the massive amount of net income Apple is generating. Now, they could also choose to give back more cash in the form of dividends, but dividends get taxed. And frankly, if the market ever woke up and realized that they were selling AAPL to Apple for a song, and raised the P/E ratio up where it should be, then that’s probably what Apple would do; raise dividends significantly.
Bottom line: Apple has a LOT of potential for seeing it’s valuation go up significantly as time goes by. So long term investors like myself are going to do quite well, thank you very much.