sacto joe

entropys said:

I guess this could be spun as Apple wanting to emphasise the growing importance of services as a revenue stream, making hardware less important as revenue.  The thing is though, much, much more than any other company providing services, ultimately Apple will have to rely on sales of that hardware to grow services revenue.

As a general rule, all Apple services require an Apple device. If you don’t own an Apple device you are unlikely to use Apple services. Apple Music on android is about the only one I can think of off hand, and I bet that isn’t that popular.

Moving hardware prices up into the Burberry market, and the limits that places on hardware growth, ultimately threatens services revenue growth. You can only extract additional revenue from existing hardware owners to a point. Ultimately in Apple’s business model, hardware purchases have to expand to also grow services revenue.

"...more than any other company providing services, ultimately Apple will have to rely on sales of that hardware to grow services revenue."

It's true, but with an important caveat. In his article "Lasts Longer" http://www.asymco.com/2018/09/13/lasts-longer/ , Horace Diedu points out the error of thinking about Apple in terms of "market share" rather than "installed base". Robert Paul Leitao put it this way recently on ped30.com:

"The violent sell-off in Apple illustrates a clear and pervasive misunderstanding of Apple’s emerging revenue model and a knee-jerk unwillingness to forego conventional approaches to the valuation of the company.
Apple has entered a “post-iPhone era” in which revenue and profit growth will be driven less by reported device unit sales and more by an expanding global base of device owners leveraging the most advanced eco-system of devices and services on the planet.
The robust global market for pre-owned iPhones through both formal and informal channels is not reflected in Apple’s quarterly unit sales. It is, however, reflected in the fast growth of Services revenue.
Nothing about Apple’s fundamentals has changed. The company reported record September quarter revenue, net income and earnings per share. Despite very heavy forex pressures, management is guiding to the highest quarterly revenue in the company history in the December quarter which will deliver record quarterly revenue, net income and earnings per share (again)."

So it's NOT true that "Moving hardware prices up into the Burberry market, and the limits that places on hardware growth, ultimately threatens services revenue growth." At least not for Apple.

512ke said:

Devil’s advocate. We are at peak iPhone sales and peak iPhone price. The #1 selling product for Apple can’t grow revenue much more.  

Goinf forward, Appleflix, Apple’s services and the watch etc must drive growth.
Can they?

Wall Street likes a profitable well run company but loves only exponential growth.

Can a giant keep growing?

I think yes but I understand why these kinds of question continually get asked. 

We’ve reached peak smartphone, but probably not peak iPhone, although the explosive growth is past. And yes, short term traders are still interested in the quick buck, which they can find if they bet on the right rabbit.

That isn’t to say that Apple’s potential for good growth is over, or even it’s potential for surprising growth. Lest we forget, Apple is one of the premier, if not the premier, computer companies in the world. And the potential for growth for computers remains enormous.

Meanwhile, on the smartphone front, Apple is now entering the endgame towards which it has been working for the last decade. And the endgame isn’t nearly as much about smartphone sales growth as it is about growing the installed base. All this time, Apple has been building an installed base much larger than it’s so-called market share. And every indication is that it’s still growing at a double-digit pace, unlike the installed base of it’s competition, which is shrinking.

There are very good reasons for fhis, and top notch Apple analysts like Horace Deidu have spoken clearly about those reasons. Suffice it to say that Steve Jobs was a huge believer in W. Edwards Deming,  and inculcated his profound theories deep into Apple’s culture.

The bottom line is that Apple remains a long term play of immense potential, even though it is, as you say, a giant among companies. Just like in the present political arena, however, fake news abounds. But lies can’t mask reality forever. Eventually, truth will out.

elfig2012 said:

say what you want, stock prices will go down until a new event is scheduled, I guess March 2019

You seem pretty sure of that. What’s your basis? Or did you just pull it out of your glass?

retrogusto said:

sacto joe said:

(From one of my posts on ped30.com)

Okay, some numbers to play with this weekend:

• Apple appears to have bought back about 81 M shares last quarter. I’m assuming a flat 4.8 B shares outstanding.
• Net income was $14.125 B for the quarter, and $59.531 B for the fiscal year.
• EPS thus equals (59.531/4.8=) $12.40/share.
• At the present price of $205.65, that’s a “real” (backwards looking) P/E of (205.65/12.40=) 16.6.

I don’t think we need any clearer indication of how utterly stupid this selloff of AAPL is, but I couldn’t be more delighted, because Apple is in the market, buying back 20% of the stock that’s up for sale each and every day at fire sale prices, and consequently handing Wall Street it’s head on a platter.

What utter and complete vindication for Apple’s long term business plan.

Yeah, for a long-term shareholder, it’s kind of a win-win situation—no problem if the share price drops for no good reason, because we’re essentially buyers through the buyback program, and low prices enable Apple to buy back more shares for the same money. Now is a critical time, because they will be buying back shares at an accelerated rate until they get to a “cash-neutral” position. 

Exactly. Apple is approaching 30% of it’s shares bought back since 2013. If you’d bought and held since then, if you’d owned 1% of Apple (don’t I wish!), at a 30% reduction in stock “float”, you’d own (1/70=) 1.43% of Apple today.

Sinking Apple’s valuation is like throwing Br’er Rabbit into the briar patch. Good luck with that.

(From one of my posts on ped30.com)

Okay, some numbers to play with this weekend:

• Apple appears to have bought back about 81 M shares last quarter. I’m assuming a flat 4.8 B shares outstanding.
• Net income was $14.125 B for the quarter, and $59.531 B for the fiscal year.
• EPS thus equals (59.531/4.8=) $12.40/share.
• At the present price of $205.65, that’s a “real” (backwards looking) P/E of (205.65/12.40=) 16.6.

I don’t think we need any clearer indication of how utterly stupid this selloff of AAPL is, but I couldn’t be more delighted, because Apple is in the market, buying back 20% of the stock that’s up for sale each and every day at fire sale prices, and consequently handing Wall Street it’s head on a platter.

What utter and complete vindication for Apple’s long term business plan.