chinacat
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AAPL Long since 2006
Posts: 4,426
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Post by chinacat on Feb 2, 2019 8:32:31 GMT -8
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Post by sponge on Feb 2, 2019 10:00:32 GMT -8
The upgrades article is very important. www.fool.com/investing/2019/01/31/apple-just-inadvertently-confirmed-that-most-iphon.aspxI was hoping someone would do the math after Apple gave us the 900 million number. I knew something was not right when Apple stopped bragging about switchers and market share opportunities given the single digits smartphone share. So people are not upgrading. That is concerning only short term since, they will eventually. The bigger issue is how can they expand the base with new iPhones and not second hand phones. Someone buys a $700 brand new iPhone will be more affluent and loyal then a person who buy a $250 iPhone that is 3 years old. I agree that they can increase market share simply because of the quality of products and eco system advantages. But we have hit a wall. Price is a big factor. But the bigger factor is lack of new big features. Right now the number #1 reason people upgrade is that their batteries are dying. Well now people are getting smart and simply invest $80 to give their iPhones 2 more years. A longer lasting battery is a big feature. Right now both Android and iOS are almost equal. My Android friends have phones that last longer then the iPhone. A few years ago people mentioned that Apple made a bigger screen simply to accommodate a bigger battery to keep up with the faster processor. The 5G network will be a big feature. However I am not sure the battery will improve a great deal. If I wwere TC I would drop the prices and increase market share. Yes margin will take a hit, but it won’t matter since they brag about 60% gross margin on services. Those entering the ecosystem will buy other products. I did not upgrade my iPHone for the first time in 7 years, but I did buy 2 Apple Watches, AirPods, and new iPad Pro. So other products will make up the difference from a lack of big upgrades the next 2 years. If they can lower the prices on those products a little, then they do even better. Especially when 50% of iPad owners are new to the platform. TC is touted as the manufacturing genius. But if the story is correct that despite an increase of $300 in the X margins did not go up and that HomePod is sold at a small loss, then his negotiating ability is not that great. The AirPods are still in short supply almost two years later.
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Post by appledoc on Feb 2, 2019 12:30:40 GMT -8
So then I'll ask again, if TC knew in early December what was coming, why was the public not made aware? What amount of time is allowed between knowing that guidance would need to be reduced and publicly releasing the information?
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Post by sponge on Feb 2, 2019 12:48:15 GMT -8
I think they knew but could not believe their own data. The fact that they announced the ending of unit disclosure was a big hint.
Market knew something was not right. The stock went from 222 to 146 before the letter.
They waited as long as possible hoping to limit further damage to stock. For a company that was reporting within 3% of guidance for many years, I find it hard to believe they did not see data indicating a major slow down in China.
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Post by archibaldtuttle on Feb 3, 2019 17:33:59 GMT -8
I think they knew but could not believe their own data. The fact that they announced the ending of unit disclosure was a big hint. Market knew something was not right. The stock went from 222 to 146 before the letter. They waited as long as possible hoping to limit further damage to stock. For a company that was reporting within 3% of guidance for many years, I find it hard to believe they did not see data indicating a major slow down in China. I wonder how widely word spreads among the Big Boy market participants without it being made "public." Goldman Sachs runs Apple's bond sale and buyback program. Apple must have told Goldman at the start of December to pause the stock buybacks. It feels probable that word spread behind the scenes in Wall Street, which accelerated the December selloff...
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Deleted
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Post by Deleted on Feb 3, 2019 18:49:40 GMT -8
I think they knew but could not believe their own data. The fact that they announced the ending of unit disclosure was a big hint. Market knew something was not right. The stock went from 222 to 146 before the letter. They waited as long as possible hoping to limit further damage to stock. For a company that was reporting within 3% of guidance for many years, I find it hard to believe they did not see data indicating a major slow down in China. I don't want to be glib here, since I know people are at different places in their lifecycles, and everyone feels a downdraft in one way or another, but I see no reason whatever not to give Cook the benefit of the doubt. I get alarmed when he seems to pay too much attention to the stock. The stock got to where it is by not paying much attention to it. More of that please. I'm highly skeptical that not announcing unit disclosure is a big hint of anything other than what is perfectly obvious or should be. The reality is that it was never a good idea, but when you're the challenger the rules are different than when you're the hegemon. And statements that "market knew something was not right" amounts to a faith in efficient markets that isn't realistic. About the ever-present end-of-year supplier warnings I always said "probably nonsense, but someday they'll be right" and this time was that day. "They waited as long as possible hoping to limit further damage to stock"? Okay, sure. If you must find a grand narrative in Apple's behavior, it'll have to be a conspiratorial one. But I doubt there is a grand narrative in their behavior. Maybe finding it hard to believe they didn't see a slowdown in Chia less attributable to a conspiracy than that people can't imagine multiple factors simultaneously. An economic slowdown in China, Chinese crackdowns on personal credit (I've never seen this reported), a rare marketing miss by Apple with the Xr, and possibly other things. If folks need simple narratives, then I can't fault them for finding what makes them sleep better. The problem with all this is that to see things this way is to see things the same way as "the street" does. Namely, that the only thing that really counts is regularity. Buffet no doubt it amused by all this. He's say "Why do you want the stock to go up unless you're preparing to sell?" Being entirely selfish (and gasp! individualistic), if I could have one wish it would be that AAPL stay low for another year until I can do some rollovers.
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Post by sponge on Feb 3, 2019 18:58:06 GMT -8
We have only three events to rely on for our analysis.
No more number reporting on the iPhone after 10 years of bragging.
A rare miss on guidance and no buy back rush after 35% drop.
A big reversal in revenue from China. 50% reversal from last year.
The bigger data will be in July guidance and March guidance a year from now. Those two data points will confirm the concerns regarding the other three data points.
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