sacto joe

Apple once again leads the way. Some will say it’s easier for Apple, and it is, but with the failure of our leadership to protect its citizens, it’s up to those of us who can best afford it to step up to the plate.

That’s the lesson Apple is teaching.

Taking into account the earlier AppleInsider story “iPhone build numbers still greater than 2019, despite coronavirus”, The Great 2020 Apple Supply Versus Demand Collision has officially started.

BTW, a lot of bad information in this thread today, along with a spattering of good information. DED’s article has the basics right on buybacks: Just like every other investor, Apple automatically gets more bang per buck when the share price drops.

Regarding buybacks, I made this comment on ped30.com a few days ago:

Below are some interesting numbers that I just calculated out of my master spreadsheet. They may seen unconnected, but I see a very deep and meaningful connection:

0.65 B
0.34 B
0.28 B
0.25 B
0.38 B
0.38 B

[These are] the approximate numbers of shares Apple has bought per fiscal year since they started their buybacks. Note that the first fiscal year, fy ‘14, was by far the biggest buyback. Also, note the major jump commencing in fy ‘18. The reason for that jump, simply put, was the repatriation of foreign-generated cash.

I submit that, with the pullback in stock prices, Apple’s buyback power is going to be supercharged. And the further the pullback, the more supercharged it’s going to be.

I’d further submit that few if any other companies in the world will be able to match Apple’s supercharger capacity and will to supercharge. Consequently, I view ANY economic slowdown short of a major world war as beneficial to long-term Apple shareholders.

Edit: For those who don’t understand the profound positive impact this has for long term stockholders, consider that buybacks in fact increase the percentage ownership of Apple for each remaining share. Thus, if you hold shares from before buybacks began, then when Apple buys back half it’s float, each share you still own will be worth twice the percentage ownership of Apple the company. Note that Apple has grown since buybacks started, so you effectively will own twice the shares in a larger, more profitable company. And furthermore, you didn’t have to pay any additional taxes to “acquire” those shares!

For my wife and I, being retired and elderly, Apple is essentially investing for us when our investing days are over. Pretty sweet!

What’s amazing to me is how few shares (relative to the massive float) it took to pull stocks down 20%. Indeed, yesterday’s relatively hefty 100+ M share volume spike was mainly impressive because, in spite of the volume, the stock had barely dropped in price by the market’s close. On a percent of float basis, ~100 M shares of AAPL is decidedly small potatoes compared to, say, what happened during the Great Recession.

BTW, It looks for all the world like someone had jerked a chain to create a pullback and then rushed in yesterday to collect the jackpot. I’m just sayin’....

Folks that sold at the lows yesterday are going to look pretty sheepish if the stock now starts to reverse direction.

That is not to discount the COVID-19 issue. But other than a production hit that fortuitously happened just when Apple had shut down manufacturing for the Chinese New Year, and just before the annual low sales quarter to boot, I frankly don’t expect a material impact on Apple’s business - certainly not enough to justify a 20% pullback in valuation.

Yes, there are some who will declare that Apple was overvalued in the first place. I don’t share that opinion. For that matter, I haven’t shared that opinion for over a decade.

As in the past, the future will show who was right.

Abalos65 said:

corrections said:

Abalos65 said:

And you were wrong about Apple's supply chain being prepared for the coronavirus, not more so than other companies. Are you willing to admit that?

There was never any claim that Apple wouldn't be affected at all. 

Instead, I noted that Apple is well positioned to get through a temporary problem, and contrasted that with the situation for Huawei and other Android makers who are seeing not only sales disruptions, but are desperately dependent on year-round volume sales, trade shows, retail discounting, and Chinese sales to a far greater degree than Apple.  

It is impossible to argue that Apple is not prepared for crisis after turning around sales in China last year and surviving previous supply chain disasters such as the devastation in Japan. 

On the other hand, the wild media narratives of doom described in the article have been wrong, wrong, wrong over the last year. Point your waging finger where it belongs.

C'mon. The title was "Why Apple's supply chain is prepared for China's coronavirus". Not how Apple can weather sales disruptions/reductions. The supply chain. Purely the manufacturing and supplying of products.

In the editorial:

"But all that mysterious complexity serves a critically important function. It makes Apple resilient to crisis."  Again, about the supply chain, not sales. Also note the absolute of resilient.

"If there's any need to be concerned about who will be affected by any global event—including the most recent coronavirus in China—it's certainly not Apple that anyone needs to voice concerns about." This is below a large portion of text praising Apple's supply chain as magical (Japan, smelters, previous virus, the whole nine yards), clearly implying the supply chain will be unaffected, not sales.

How hard is it to admit you were wrong?

How hard is it for you to read without applying your personal bias to what you read? There was clearly NO such "implication". You simply cherry-picked what you wanted to hear.

Look. Apple is absolutely in better shape to withstand any slowdown due to the '19 novel coronavirus, simply because of its massive cash flow. But what is the source of that cash flow? It stems from its "magical" JIT manufacturing setup of stupendous dimensions and highest quality. Sure, it takes time to set the JIT wheels in motion when they've come to a halt. But guess what: They ALWAYS come to a halt during Chinese New Year! All that's happened is that they've stayed halted a while longer.

Indeed, if Apple wanted to, they could have spun up the machine sooner. But instead, they've chosen to keep those gathering places closed, at no small expense to the company, helping to save lives. Because, you see, that matters to the leadership of Apple more than mere profit.

When Apple feels that it's safe enough, it'll turn the key and open its factories and its stores. And all that pent up demand will eventually be satisfied, since people who buy into the Apple ecosystem are extremely loyal. Once things recover in a month or two, Apple will actually begin to see an increase in sales over and above what would have been expected.

You said: "And you were wrong about Apple's supply chain being prepared for the coronavirus, not more so than other companies." Nope. The supply chain IS prepared for the '19 novel coronavirus. Once the green light is given, Apple will turn the key and be back in business.

But, as DED said, those competitors that are living close to their vest with very little profit are going to have a much harder time overcoming the disruption. 

Next time, try getting your objective glasses on and actually reading what it is that DED wrote.

Now, it does have to be said that, in countries like China where industries are heavily supported by the state, they don't necessarily have to make a profit to "stay in business". (They also don't have to concern themselves with how many people die over their screwups.) But they have other problems, not the least of which is that subsidizing businesses is a good way to weaken them. And it isn't possible to create creativity and ingenuity by fiat. IOW, before China can truly step up to match Apple, it's going to have to give it's people substantially more freedom.

Good luck with that.