AAPL after hours!

[MichaelB]

I saw that just 2 months ago, Tim Cook had high hopes for the year-end season. He expected revenues to grow 5% relative to the same period in 2017. Turned out it was 5% down, year-over-year.

I don't think China sales was an excuse. The weakness there is real, and cannot be hidden. Looks like what caught Apple by surprise was the sales decline. I wonder if it was because of China's consumer sentiment. The Chinese are nationalistic, and the trade war may have cause them to buy more domestic products, particularly with the recent Huawei fiasco.

Many US companies were expecting growth to come from sales in China. They may be disappointed in the months ahead.

I acknowledged sales in China are an issue but am wondering aloud if Apple has made a pricing misjudgment with the latest iPhones. From Tim Cook’s letter iPhone sales are missing their targets. When facing declining demand most companies look to reduce price. Apple introduced models that were more expensive. Either they expect this soft demand to be temporary, or they have a unique pricing strategy that isn’t clear - at least to me.

Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year.
While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.
https://www.apple.com/newsroom/2019/01/letter-from-tim-cook-to-apple-investors/

 

[mpeirce]

I don't think China sales was an excuse. The weakness there is real, and cannot be hidden.

Apparently a number of luxury product companies are getting killed in the China market. And Apple is a high end brand in China.

 

[audreyh1]

Ouch! I felt the writing was on the wall, but sat for a while before pulling the trigger out of it.

Maybe Apple will pull a rabbit out of their hat once the smoke clears, but I'm not holding my breath on it. If we ever slide into a recession, even a small one, those $1000 phones will sit in stores. Plus, the China thing scares me.

Their P/E is still low. DH has owned it for almost 20 years, so however long it takes.....

 

[Sittinginthesun]

I spent $8,000 on apple devices for Christmas presents this year. Just doing my part to help shareholders! Love the XS Max, great screen, battery life, face recognition works flawlessly for me, camera is outstanding.

 

[NW-Bound]

I acknowledged sales in China are an issue but am wondering aloud if Apple has made a pricing misjudgment with the latest iPhones. From Tim Cook’s letter iPhone sales are missing their targets. When facing declining demand most companies look to reduce price. Apple introduced models that were more expensive. Either they expect this soft demand to be temporary, or they have a unique pricing strategy that isn’t clear - at least to me.

Yes, Apple got used to being able to raise the price with each new model release, and its customers would faithfully upgrade. Perhaps I missed it, but recently do not recall reading about people camping outside stores to be the first to get the new phones like they did a few years back.

People either cannot afford the higher price, or are OK with what they already have. In either case, they are not buying. Apple can continue to cater to the few people who do not mind paying top dollars for the latest phones, but the market there is of course smaller.

I think there are new toys now that are a lot cheaper for people to play with. My daughter said she had a dozen Google Home Mini throughout the house. My niece also had a few. My son has an Alexa Echo Show. These new toys will cut into smartphone sales, the same way HDTVs cut into sales of HiFi stereo equipment.

 

[Disappointed]

I was at the mall on the day Apple released the new phone and saw no one standing in line for the new phone. The store was not crowded, I figured the excitement for the new phone was gone since there isn’t enough new features. I still use iPhone 6 and no plan for an upgrade. I used to get a new one yearly. However, I did not sell the stock as I thought if was good enough for Buffet it was good enough for me. I was wrong (in addition to WFC and IBM).
Need to believe in myself a little bit more.

 

[Montecfo]

It seems implausible that this miss is all China. If you focus on the interview that Cook did with Alan Lipton on CNBC, it seemed to be a number of factors including subsidies, pricing Etc.

Cook has done a remarkable.job.

My basis is $20 a share so I think I'm staying in. But I do not own the products.

 

[NW-Bound]

Apparently a number of luxury product companies are getting killed in the China market. And Apple is a high end brand in China.

An article on Bloomberg notes that the iPhone XS Max sells for 9,599 yuan ($1,400) in China. The average white-collar monthly salary is only 7,850 yuan. Flagship domestic phones are 4000-5000 yuan.

The article also mentions that Apple's China Web site now advertises the XR for 4,399 yuan with the trade in of an iPhone 7 Plus.

PS. The Bloomberg article has a chart showing Apple was the #1 seller in Q4 2017 at 77.3M phones. In Q4 2018, it has fallen to #3 with 46.9M phones.

PPS. That Q4 2017 was an exceptional quarter for Apple. Quarterly sales of Apple ran from 41M to 50.8M phones. Apple expected a repeat of last year year-end sales, but that did not happen. Sales of Samsung, the #1 seller in China has been steadily going down from around 80M/quarter in 2017 to 72.2M in the last quarter. Sales of China domestic phones from Huawei, Xiaomi, Oppo, and Vivo has been steadily increasing.

 

[kcowan]

Cook has done a remarkable.job.

My basis is $20 a share so I think I'm staying in. But I do not own the products.

Yes we are at $10 so in for the distance. We sold them all at $72 and bought back half at $52 (that was 5:1 splits ago).

 

[Montecfo]

Yes we are at $10 so in for the distance. We sold them all at $72 and bought back half at $52 (that was 5:1 splits ago).

Sweet.

I am reminded of the first time I looked at buying AAPL. Was around 2000. The stock was at 16 (so $1.15 post the 2 for 1 and 7 for 1 splits). While I was studying it the stock rose to $24 ($1.70 or so post-splits). I figured it had "gotten away from me" and abandoned the idea.

Then much later I returned to it at 12X the price and it has worked out anyway.

 

[ERD50]

Uh-oh. Some false behavioral economics being displayed here.

Other than taxes, your cost basis should have no effect on your buy/hold/sell decision. What is done is done. The only thing that matters is do you expect xyz investment to outperform its alternatives going forward.

-ERD50

 

[Montecfo]

Uh-oh. Some false behavioral economics being displayed here.

Other than taxes, your cost basis should have no effect on your buy/hold/sell decision. What is done is done. The only thing that matters is do you expect xyz investment to outperform its alternatives going forward.

-ERD50

Former DC Mayor for Life Marion Barry once said, "Crime in DC isn't that bad, other than the murders".

 

[ERD50]

Former DC Mayor for Life Marion Barry once said, "Crime in DC isn't that bad, other than the murders".

Some people are trading in IRAs, so it really does not matter.

-ERD50

 

[trixs]

Sales of China domestic phones from Huawei, Xiaomi, Oppo, and Vivo has been steadily increasing.

I have an unlocked Huawei personal phone which I purchased from Amazon at $199. I also always have my work phone on me which is an iPhone Xr. Completely my opinion but I find that I actually use the Huawei more often. It does the same exact things as the iphone but the battery seems to last longer.

 

[kcowan]

Some people are trading in IRAs, so it really does not matter.

-ERD50

Yea mine is in the trading account so it will be the legacy to children and charities. Hopefully they will make out OK.

 

[copyright1997reloaded]

The world is coming to an end.

First the top-line: Revenues expected around $84B vs the previous guidance of between $89B to $93B. At the prior mid-point (which was given when the stock was $232), this would be a $7B miss, or 7.7% miss on the revenue line. Gross margins are pretty close to what the original guidance was (38% vs 38.5 or so %). In the letter:
"Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance. "

What is clear is that China is decelerating rapidly (and not just for Apple). In terms of Apple, "Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. "

What hasn't been discussed here:
1. Install base of active devices at a new high, and grew 100 million in the TTM.
2. Revenue's for non-iPhone are growing nicely, +19% YoY.
3. $10.8B (billion with a B) in services revenue in the quarter
4. Wearables (e.g. Apple Watch and Air Pods) up 50% YoY in latest quarter
5. iPad revenues growing double digits due to new Ipad Pro (YoY)
and
6. Apple will be announcing record earnings per share
and
7. they have net $120 Billion in cash (estimated as of end of quarter).

So, using TTM earnings (which Apple just said they would beat) and 4.77B shares outstanding (also in the letter) puts them at $146/11.87 = 12.3 PE (TTM) and a market cap of $696 Billion. Taking away the $120B NET cash puts us at $576 Billion and a $120 per share (net of cash), or a 10.1 PE ratio (net of cash).

I dunno, I think I'd rather have Apple at 10X vs. a bunch of other companies out there who will also be impacted by any continued China downturn.

If I didn't own so much of this, I would be hoping for a big blow-off and downdraft on this one, hoping to see if I could pick up a bunch of it in the mid 130's (under 9.5X).

Just revisiting this old post. Apple has gone from $146 and now is at new all time highs (broke $240 this morning).

 

[Montecfo]

Great! I am in at $20!

 

[audreyh1]

Forgot when they are announcing results. This week or next week?

 

[kgtest]

Good ole AAPL! So many people still on that Iphone SE. What are you all waiting for, go upgrade and get the nicest airpods you can while you are at it.

*I am an AAPL shareholder

 

[mpeirce]

Forgot when they are announcing results. This week or next week?

October 30

 

[audreyh1]

Good ole AAPL! So many people still on that Iphone SE. What are you all waiting for, go upgrade and get the nicest airpods you can while you are at it.

*I am an AAPL shareholder

Next March. But may be the iPhone 8 architecture. I’m out of memory and my battery is old.....

 

[audreyh1]

October 30

Thanks!

 

[YoungSaver]

Good ole AAPL! So many people still on that Iphone SE. What are you all waiting for, go upgrade and get the nicest airpods you can while you are at it.

*I am an AAPL shareholder

Is that a serious question?
You're aware of the new one coming out in a few months, right? We're all waiting for that new 8/SE. That thing is going to sell like hotcakes.

 

[audreyh1]

AAPL has been on a tear since the last posts in this thread. New all-time highs almost daily! And certainly a massive run up since the start if this thread - up over 68% YTD. DH bought a bit more in late 2018 and early 2019.

DH has finally started to seriously unwind his position, much of it held for ~20 years

Looked at some records. Earliest shares are from 2016 ~ 70 cents split adjusted.

 

[NW-Bound]

AAPL has been on a tear since the last posts in this thread. New all-time highs almost daily! And certainly a massive run up since the start if this thread - up over 68% YTD. DH bought a bit more in late 2018 and early 2019.

DH has finally started to seriously unwind his position, much of it held for ~20 years

Looked at some records. Earliest shares are from 2016 ~ 70 cents split adjusted.

You meant 1996? Apple shares have not split since 2014.