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Post by sponge on Nov 5, 2018 17:26:54 GMT -8
I did buy some calls. The downward move surprised me since I expected it on Wed. If we are lucky we should see 210 by end of the week.
In the next two month I still see us hitting 182-190. We had over 191 million shares in three days. This is not retail but rather big boys dumping. This damage will take months to recover from. And we are not done yet.
The iPhine concerns that WS is expressing has been mine since Sept release. Apple is getting greedy with the pricing and the sales of new iPhines will suffer.
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Post by carbonate24 on Nov 5, 2018 19:03:30 GMT -8
I did buy some calls. The downward move surprised me since I expected it on Wed. If we are lucky we should see 210 by end of the week. In the next two month I still see us hitting 182-190. We had over 191 million shares in three days. This is not retail but rather big boys dumping. This damage will take months to recover from. And we are not done yet. The iPhine concerns that WS is expressing has been mine since Sept release. Apple is getting greedy with the pricing and the sales of new iPhines will suffer. So, serious question...if Apple is being greedy, shouldn’t their profit margins be going up? Maybe all the new tech in the X series phones is much more costly than other versions.
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Post by sponge on Nov 5, 2018 19:10:50 GMT -8
I did buy some calls. The downward move surprised me since I expected it on Wed. If we are lucky we should see 210 by end of the week. In the next two month I still see us hitting 182-190. We had over 191 million shares in three days. This is not retail but rather big boys dumping. This damage will take months to recover from. And we are not done yet. The iPhine concerns that WS is expressing has been mine since Sept release. Apple is getting greedy with the pricing and the sales of new iPhines will suffer. So, serious question...if Apple is being greedy, shouldn’t their profit margins be going up? Maybe all the new tech in the X series phones is much more costly than other versions. Excellent question or concern. I need to look more into it. Last time margin went down the stock took a 40% drop.
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Post by sponge on Nov 5, 2018 19:27:18 GMT -8
Well in looking at the 10K the only two things that stood out to me is that cost of sales went up about 1.5% and R&D went up substantially this year compared to last year.
They seem to focus a great deal on cost of components or lack of. Some how that translates to higher costs in manufacturing. I also think that currency fluctuations are lowering profits that can't be offset by higher prices.
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Post by macoz on Nov 5, 2018 19:45:16 GMT -8
I don’t know why anyone would listen to Nikkei. They have been repeatedly wrong. I am, however, worried about how well the XR is really going to do. Apple is known for premium branding. By choosing one of those colors that differentiate them from the XS and Max you’re screaming “I bought the cheaper one.” Or “I don’t deserve the more expensive model.” I think our demographic will be turned off by that. I don't see why they (news site running rumors) have to be wrong about not firing up extra production lines. I'm sure Apple tries to hedge their bets, saving their space for extra production lines in case they need it, due to huge demand, or just as likely due to production lines at another company not doing what they need to. If there's a hiccup at one of the two plants making them, you want a backup. A deposit or whatnot to have space ready if needed is a good thing. Since this type of headline has come up repeatedly, while Apple has still had good numbers, I'd be apt to think that this is the sort of thing that's been going on. On the iPhone XR, I'm sure some that are overly worried of their image may only want the highest end model. For better or worse, that's not something that has affected me much. I try to use something up before getting rid of it, as the collection of (stylish?) WWDC 2004 shirts in my closet points to. I'm still using an old iPhone 5S, but do plan to upgrade even though I just put a replacement battery into it a week ago. But the way I see it, the XR is plenty of an upgrade, with the same chip as the other new models, and 4 times the memory of my current one. The screen is not the very best you could buy, but much better than my current daily driver, while also using less power than the OLED options. But frankly while I can afford the highest end model, I'm still astonished that I haven't broken one of my iPhones in the last 8-9 years. Its always with me, whether I'm mountain biking, hiking, or skiing, or things like splitting wood, cutting logs, moving rocks, or whatnot. Given the number of cracked screens I see, I'm sure mine will at some point, since while I might be more careful with mine, I also am often doing rougher things with higher potential for damage. Thus, I see the $250 or whatever saved now as a downpayment towards the next one, if iPhone tragedy should strike. OTOH as an investor, I've wondered about how the product mix has affected AAPL related numbers. One huge plus is that this "settling for the non-top model" still gets the consumer to pay more than last year's "nearly top model". But the other thing has been the consistency of gross margins over time. Over the last 11 quarters, Apple has had gross margins within half a percent of the current 38.3%. Adding in another 15 quarters before that, so 26 quarters, or 6.5 years, the GM has stayed in the 37.0-40.0% range. Given that, I think Apple has done a great job of maintaining individual product margins across a variety of products, and I expect that they are making roughly the same margins on XR's as the XS and XS Max, though I could see a larger percentage of buyers of the highest end models paying extra for more high-margin memory upgrades. But that's the thing that Apple is pushing these days. While product sales are important, the most important thing is growing the overall user base. This happens at all pricing levels, and also with used or remanufactured units. And with extended upgrade cycles, where a user or family continues using a unit for longer. These in turn make future sales, but as services matter more and more, the more overall users you have, the better. While older iPhones and iPads may continue working and doing a decent job, at some point they may become music players (sell a service), or just need more room for storing or backing up all the pictures (sell a service). It's the long game instead of the short game. And that's something that Apple, especially with a chunk of money in it's pocket, can and has focused on. Though keep in mind that they were certain to separate out cash ($237.1B) from net cash ($122.6B) this quarter, reminding people that another longer term goal is to become net cash neutral. The long game is going to have it's ups and downs. But I imagine Apple will sell plenty of all 3 of the current X series iPhones, and I still think it's likely that AAPL will be higher in 6 months than it is now, and even be setting some models ATH's. Time will tell... The irony of it all is that even if the Nikkei story is true, Apple should have known of the slow-down BEFORE they released the Earnings report and therefore would have factored it into their Q1 guidance. This shuttering of lines cannot be done on the spur of the moment and so Apple knew and decided to be conservative in their Q1 guidance.
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Post by sponge on Nov 5, 2018 20:03:17 GMT -8
I don't profess to have clear understanding of sales numbers, but my iPhone estimate last Q was off by 100 thousand. My estimate for Q1 was 74.7 million or a 3% drop from last year. That estimate gave me a $93.5 billion in revenue.
That 3% drop if I am close is what is freaking WS out. If they report under 93 then we could be looking at a bigger drop in sales. Last year we had 1% drop and WS punished the stock after earnings. It think they are punishing the stock before they report in January.
The part WS does not get is that market share is increasing despite a drop in sales because millions of phones are being sold in aftermarket.
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Post by hledgard on Nov 5, 2018 20:03:40 GMT -8
I still have no idea why one would not want to know unit sales of Apple products.
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Post by macoz on Nov 5, 2018 20:28:07 GMT -8
I still have no idea why one would not want to know unit sales of Apple products. Knowing unit sales is not meaningful and even dangerous if one does not know unit mix.
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Post by sponge on Nov 5, 2018 20:56:19 GMT -8
I still have no idea why one would not want to know unit sales of Apple products. When 60% of profits are linked to one product then units provides a more clear road map trends. If units were to drop 10% over a whole year, then quarterly numbers could indentfy the trend. I know Apple is a services oriented company and multiple products contribute to overall growth, but it will take quite a few years for other products and services to replace the iPhone if sales slow down. So I agree. If sales drop as ASAP increases then one can clearly see a cause and affect.
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Post by macoz on Nov 5, 2018 23:24:16 GMT -8
I still have no idea why one would not want to know unit sales of Apple products. When 60% of profits are linked to one product then units provides a more clear road map trends. If units were to drop 10% over a whole year, then quarterly numbers could indentfy the trend. I know Apple is a services oriented company and multiple products contribute to overall growth, but it will take quite a few years for other products and services to replace the iPhone if sales slow down. So I agree. If sales drop as ASAP increases then one can clearly see a cause and affect. In Q1 Apple is selling phones ranging from iPhon7 to iPhone XS Max. The price ranges from $449 to $1,449. Thus if you do not know the units sold in each price range knowing the total units sold is of limited value and could lead to false conclusions. So if units sold do not increase by much but ASP goes up, we should be glad for it means Apple is selling more high-end models. This is something Apple has been saying for years - they are concentrating on the high end. Units sold is not relevant.
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Post by hledgard on Nov 6, 2018 6:10:22 GMT -8
Thanks MacOZ and Sponge, I really appreciate your reply ! ! !
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