I think Apple was supposed to make MacBooks in Texas but supposedly a special screw is predominately only available in China. I don’t remember exactly. I read it in one of the news articles on my iPad this past week.
News from Apple this week
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Suffice it to say that Apple is batting a relatively high average on welching on their Texas promises.
I decided to take profits yesterday and sold half my positions in Apple since my positions were all over 2 years old and a basis of $91. The remaining shares will remain for the next big doubling, the basis is at $126/share. Contrary to the nay saying experts on Apple the business growth is continuing. If the company continues to keep iphone to less than half the revenue generated, they will command a higher multiple that can re-evaluate the stock to that of a services business. It's multiple was at 17. The new earnings report puts the stock at $271/share and if it continues to hold at current profits, the stock could earn a higher multiple putting it on par with other companies with a similar spread of services to hardware. That puts the stock at $350-$375 next year.
Apple intends to maintain a high quality hardware product even if that lowers market share, but add to the coffers with more services such as the Apple credit card and Apple TV subscription services that will tie into the Apple infrastructure. Apple Pay had more transactions than Pay Pal this past quarter.
Trade wars haven't affected Apple's product flow yet in fact their China business is continuing to grow. Tim Cook answered the question that China does not supply all the components of their hardware. Most come from other countries including the US.
Cook said they will be announcing some new products in the Fall but did not go further than that.
Apple intends to maintain a high quality hardware product even if that lowers market share, but add to the coffers with more services such as the Apple credit card and Apple TV subscription services that will tie into the Apple infrastructure. Apple Pay had more transactions than Pay Pal this past quarter.
Trade wars haven't affected Apple's product flow yet in fact their China business is continuing to grow. Tim Cook answered the question that China does not supply all the components of their hardware. Most come from other countries including the US.
Cook said they will be announcing some new products in the Fall but did not go further than that.
That Apple Pay beating Pay Pal surprises me. I stopped using AP completely, since I don’t get points on my NFCU Visa. And I rarely use PP.
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I use PP for added firewall when ordering stuff from a foreign country or someone here I don't know, usually on ebay. Your Apple Pay to NFCU is an NFCU problem, not Apple. I get my cash back points with BJ's and Amazon CC. BJ's even has Apple Pay terminal I use when shopping there. I've only tested Amazon CC through the Apple Pay once at a store when the store told me they didn't accept Mastercard so the next card in my Apple Pay wallet is the Amazon card. Made no difference on the points. I have never tested my AMEX card, but I have since cancelled it as I just never use it anymore.
My recollection is that the reports from 2017 put the stock at $240 so they missed that by a pretty big margin. I don't see $250 happening unless they do another reverse split as they continue to cede market share in all of their markets (with the possible exception of tablets). The current guidance is for 9.7% per annum growth so that puts the stock at $229.25/share, not $357. You must be using an Apple calculator.
I submit that no other publicly traded company has a similar split of hardware and services in large part because no other company has bound its services so closely to its hardware.
Except for Microsoft and Google and many others. But there are exceptions to every case and no two are identical. It's a meaningless argument.
Your first paragraph doesn't make sense based on the way companies are valued by Wall Street analysts and stock traders. Apple does not control the multiple. I don't believe they even discuss it. While I would agree the concept of a "multiple" is fuzzy math, it is indeed how a company's stock is valued whether you like it or not. The multiple is the price of a stock to earning's ratio based on the growth of the current company in next year's earnings. Multiple's are categorized in sectors and a company that is pure service can have an extremely high multiple, like Netflix which is about 74 right now. Apple was 17 before the earning's call. As the company moves to more revenues in services and less % in hardware the multiple should and usually does increase unless the company has other issues such as no cash flow or extreme cash burn. That is not the case for Apple since it is the highest cash generator in the world for a tech company. In other words, if revenue remains constant and the ratio of hardware to services lowers on hardware the stock should increase since services companies get a higher multiple than pure hardware. Apple has had a 11-14 multiple for years since it's growth has been 85% hardware. the multiple is increasing now as the services end of Apple's business keeps generating an ever increasing % of the total. But Apple cannot drop it's line of hardware and go all in services because the hardware drives the service end and vice versa. The parts are mutually beneficial to each other. All Tim Cook needs to do is figure out the optimum ratio for growing the stock price in the best way.
Stock splits have nothing to do with this because it doesn't add or take away any value for the company or the stock holder. The main reason a company does a split is to bring more smaller investors into their ownership. That is a need when the volume of trading gets too low to remain on the exchanges. A reverse split is done when a company's stock gets too low it suffers becoming a penny stock with no respect and that hurts the company's reputation.
Actually the stock did get to $233.47 less than a year ago so that is a pretty close hit by my math. That prediction was in a "The Street" report when the current price was $144 and at the same multiple.
What do you think Tesla's multiple is? Why do companies like Beyond Meat have an extremely high multiple?
What Microsoft hardware is Microsoft binding their services to? Is the Xbox really that much of a cash cow? What services does Microsoft offer (maybe you're talking about software subscriptions???) I count Bing as a revenue source, not a service. What Google hardware is Google binding their services to? While cool software may debut on their Pixel phones, it often becomes available to all late-model Android phones (and sometimes even iOS) at some point.
A growth percentage appears in their earnings report so maybe we're not talking about the same thing.
While you're seeing the stock value going up 40% year over year, I'm not. 18 months ago you noted that "The Street" was looking for $224 and it ended up well short of that. Their long-term record has been closer to 23% (133% over five years). I think whatever you're basing your predictions on is not fundamentally sound. I get that Apple is almost impossible to pin down because so much of their value is tied up in "Joy-Joy" and "WWWBD" (what would Warren Buffett do).
As Apple's grip on many of their established markets continues to fade and some of those markets are seeing some big players enter in for the first time, I can't fathom how that suggests record growth in stock value. I freely admit that I haven't had a great track record with my own stock evaluation schemes but I don't see where Apple is going to blaze new trails as the old ones are taken over.
Ok you know the answer so I don't need to explain these hardware / software companies to you. Microsoft also tried and failed to do the first Surface in a goofy OS to compete with ipad but failed. Point is, Apple is extremely successful at giving the average public a computer system that works and they don't need to be a guy like you to use it to do basic modern tasks. You keep harping on them because their system is closed but that is the benefit most people like. Unless the user is like me who needs a custom power house to do high performance, then we design our own system and use an OS that the program tools want to run on.
That's most likely it. For a stock trader I go by the delta of the stock price but pay attention to the top and bottom line revenue too. However, I'm not the one needing to make payroll at Apple so those numbers to me are only important as how they compare to the guidance and the analyst's estimates because that is what affects the price of the stock. Not as important for the company to be number one in market share, but if there is a down year of poor sales due to some world trouble. can they survive on a nest egg of cash will determine if I bail or sit tight through the thin times.
I don't believe I ever said Apple goes up 40% YOY. But they have increased. I bought small amounts over the many years since 2008. I think I first paid around $25/share and it kept going up and then split when it got to $700, back down to $100 but the stock had several periods of losses too that I used to add to my position. The past 2.5 years I have been selling off because the amount of profit was getting too big to leave on the table. Each time I sold about 50% of my shares. The last time I bought was just before the 2016 election. The future estimate of the stock is not just an estimate but also a running number that changes constantly. So wherever you found back 18 months ago I stated that this week it would be $224, all I can say is that my high sell was a hundred shares for $222.20, but I also, sold some for $214.00 and several increments in between. Trade commissions are so low these days I never buy and sell all at once. The Market doesn't work like precise math so don't try to make a case like it is an engineering design calculation.
As to Warren Buffett- I don't do like he does. He claims he buys and holds for a long time. I'm a trader so I buy low and sell high. I might buy covered calls to generate income from a stock that doesn't pay a dividend when I am holding for a long time. I've never heard Buffett's team doing that. But maybe they do. I just don't follow him. His time horizon seems too long for fast growth, but who am I to contradict Buffett? In my opinion he was late to the table with Apple.
We see the Apple market quite differently. You see it as an phone market, a tablet market, and a desktop computer market. I see it as a communications company that makes an easy to use infrastructure for the consumer, family, household. Nobody in the world has a system like Apple that appeals to the non-geek buyer like Apple. Go to the Microsoft store in your Mall. You'll see 4-5 sales people bored to tears with maybe one customer. Go down the block and look in the Apple store. It is packed with hundreds of people any time of the day or night experiencing Apple products with 30-50 sales people showing them how to more effectively use Apple products. In the back are formal classes with an instructor. So as the market share does increase and the existing users expand with accessories like Apple watch, ipads, and iMacs, this adds to the sales revenue which impacts the stock positively. But the people coming into the Apple system is growing exponentially now too. Apple watch last reported 75% of all AW4 purchases went to new Apple customers. Meanwhile Fitbit is a dying company with their stock at new lows of $3 a share. In 2015 they were in the $40's.
I don't predict rapid growth forever. There are spurts followed by range bound numbers sometimes for months. I do see the company continuing to offer new innovation to existing products and once every 3-4 years introduce a revolutionary product that greatly improves on an existing one. Apple doesn't do original. They greatly improve on something others have made and it ties into the Apple system well which is what people like. .
You said in post #83 that based on "the delta" established by "The Street", the price would go up to a number that is around 75% higher next year than it is now.
He does differently than he says to be sure. He said that he's not going to buy Apple until the price drops. BRK sold quite a few shares ($3 million worth) recently but everyone is quick to point out that it wasn't Buffett's idea.
If you view texting emojis as a form of communications, yes. Otherwise, there's a reason that Apple has promised to put the interaction back in communications. Apple doesn't provide the network and they still have to suffer along with what the network providers offer in terms of voice mail and other tools. They did seize the text messaging portion of their traffic away from the carriers but that seems more like a Google move to me to capture data than it is a necessity to provide the service. Why steal conversation away from voice where there is less room for misinterpretation and autocorrect?
Apple has their own geeks. I call them Apple zealots as it outwardly appears to be more of a religious attraction than a practical one. Maybe it is comfort thing or maybe they just like being told how to do things.
We don't have Microsoft Stores or Apple Stores. Those are concentrated in the Socialist Republic of Portland where they have three Apple Stores within fifteen miles of each other. Apple knows their market and those outsite the major metropolitan areas must drive great distances to demonstrate their faith.
How does Apple define a "new Apple customer"? Is it a customer who sets up a new Apple ID? The watch is not where Apple is going -- it is a means to an end. Apple wants to sell videos and Apple Care and resell music and videos from other content creators.
Apple is perhaps still innovating in the wristwatch marketplace (something that, for most had long ago been replaced by their phone) but they're clearly falling behind on many of their other fronts.
More discounts coming from BJ's for Apple Pay users. through 8/14 you get $5 off of $50 purchase when you use Apple Pay.
Yes but that assumes a new multiple that puts it in the same sector as other companies with a similar mix of hardware and services. It's too soon yet for all 50 analysts valuing Apple to redo their projections based on Tuesday's numbers.
It is smart money management to sell on the basis of profits. That's why I sold half my positions in Apple and put limit orders on another half beginning at $250 to $350 range. That is also necessary to maintain a balance of 20% of my portfolio in Apple for future growth. Cramer has a special rule for Apple that you never sell any which would violate his other rules for diversity in the portfolio. I'm still confused as to why Cramer gives Apple it's own set of rules. Fact is, Apple does have periods of stock depression where you can use that opportunity to buy back the shares you sold at a higher price - lower. We had one of these in December-January and one in May. In December- January I actually bought back 300 shares that I sold in October and made money on the difference yet still had the same number of shares. I didn't do anything in May.
My specialty is video and TV production. Back in the early days of media production, The Apple Mac was the best platform to edit with high efficiency using the Avid Non Linear platform. We had one such system installed here in town at a bank. I worked with them to help in the TV engineering side but used that opportunity to witness how NLE was going to change the industry. It was almost 10 years later when the PC got a system built by Matrox that tried to compete with the AVID but failed. During that time several other video production houses were installing Avids running on the Apple Mac. My hands on experience with the Avid showed me the limitations and I decided then I was not going to spend the $100K on an Avid NLE studio and would wait for something better and lower cost. The a company in Germany released it's NLE calld Fast Video Machine. It could run rings around the AVID for speed and quality. They released a DVR board that added digital non linear editing to the broadcast VCR controller so that you could have 2 timelines of NLE plus 4 betacam SP sources and a betacam SP redit recorder. It also supported 3/4Umatic. Hi8, and DVCAM. Plus svhs for VHS controlled VCR's and betamax with it's Sony protocol control. There was nothing in video formats it couldn't edit. ( I was the sole facility in town that didn't participate in the format wars. That's what I installed. It ran on windows 95. The hard drives were expensive SCSI stripped units. I had a tower of 8 of them. It was working so well I was getting lots of contract editing and bought a second edit bay and hired a kid to handle the extra work load. So the point is most of the Apple geeks I knew really weren't tech people but rather video production people, kind of like the Amiga crowd. They were more into their use of Apple Mac than being in the cult. The cult people were totally not into anything special, they just spent all their time criticizing Microsoft and the PC. That all kind of changed when Apple began working with the intel chip. Apple geeks in that cult all began to die off and disappear. Today, more users are like my son-in-law who is literate on PC's for work and uses an iphone and Apple watch. He also has an ipad and Macbook that his PC based company supports.
I think when Cook talked about Apple watch sales his reference to new customers was not like me who moved from an android phone to iphone just to be able to have the Apple watch. He was talking about people who hadn't owned an Apple watch 3, 2 or original before. That the Apple watch 4 was their first Apple watch experience. They may or may not been an iphone user already.
I don't see that in the general population. Years ago, I would observe many in my travels wearing the Fitbit, but on my last cruises, the number of AW4's being worn by senior citizens and young millennials the AW4's outnumber the Fitbits at least 100 to 1 and that means they also use an iphone. I find it hilarious that some young people claim they would rather use their phone for the time. It's funny because my grandfather liked his pocket watch too. People born around 1900 and those around 2000 seem to have an affection for pocket watches, just today, they are also their texting machine they would rather type a letter than talk to someone with their voice. Is that a reverse social engineering? Turning back the clock to how my grandparents did things?
Update- Cramer surprised me in tonight's show. He said any stocks that have China exposure it's advisable to get out now if you have profits. So I took his advice and sold all but 400 shares of Apple. He said it is time to move the cash into US companies now that will not be impacted by the Trade war. I may be down to 200 shares by tomorrow. He doesn't believe China will buckle until after the election so we better be ready for the long game here. I feel good right now but need to view companies with a different perspective. Microsoft and Google and Netflix- China exposure? I did sell all my Google but still have Microsoft and Netflix. Apparently the trade talks didn't go well. Time to buy more Gold. I stioll love my Apple watch 4 
I'm still not buying your "similar mix" argument. Apple is nothing like Microsoft or Google. Maybe a little like Roku but few companies make the kind of profits that Apple does on a rather unique bias of hardware and services. The Xbox and the Surface are not representative of where Microsoft dwells. Apple gives away their office suite and for those who want interoperability, they miss that opportunity in favor of Microsoft (because it is often quite miserable trying to convert things from Apple formats -- not that it is cake trying to be interoperable with Microsoft Office).
A market they have substantially ceded by making few changes (many of them undesirable) to Final Cut Pro.
This suggests that Watch owners aren't rushing to upgrade and that's always been of keen interest when Apple was dependent on zealots for ridiculous profits. Losing the zealots (as you noted, they've already jettisoned most of the hardcore Mac weenies) is a big hit to profit. Since they give away a good chunk of their software, the only revenue to be had there is from education (something Apple used to claim that you're not supposed to need).
I question whether you really understand the general population with your repeated references to what you see on cruise ships and "in your travels". The general population cruises once every few years if they're lucky so what you see on a cruise ship or in a major tourist destination is surely far from representative. First Class passengers can only guess what goes on back in coach.
Fine! we certainly are not clones. It's not important to me that we agree 100%
Yes, FCP, Apple's answer not to Avid or the PC but to adobe Premiere Pro. Today APP is still better than FCP yet many stay with FCP. I once had a customer for an edit project who insisted I do his video on FCP,
All Apple watch owners I know have upgraded to AW3, and some waited to AW4. The reason is features and battery life. What I posted is not what you wish were true it is what happens when a product finally is realized to be superior and so many more get on board with it. Apple stores have always promoted education. I never heard that Apple claimed education was not necessary. Where do you come up with all this nonsense? Apple even has special deals for elementary schools to teach kids how to use the Apple formats in the lower grades. My grandson's get classes in both the PC and Apple at there schools. How do I know that? My daughter taught the classes. She's been on leave for a few years as she started her family but she just told me she has been called back to run the kid's computer classes again. The kids still learn both.
Wow! Your opinions are so back woods limited. Do you ever get out? In the last 6 months, how many strangers have you spent quality time with, had dinner with, discussed many topics of life? How many countries have you been to in the past year, How many states? I hope you don't form your opinions of others by what you see on your local news as most of that is not accurate. But, next time start observing the watch people on the news are wearing. I don't know this factually, but by the number of times I see AW being worn by those on TV is way more than other brands of electronic watches. I just know the AW has caught on and the number one Fitbit is no longer number one. Even in Cartegena when I was there in April I saw locals wearing AW. How difficult do you think it is getting an AW in Colombia? Even they figured it out. While many people love their Samsung phones, very few have also added the Gear. Reason? It's huge, poorly designed circular, which is great for analog mechanical time piece but not for data display.
So much of your anecdotal evidence comes from travel excursions and your immediate family, I wonder how you can assert that it is representative of the median, mean or average Joe.
What kind of apps are likely to establish smart watches as something that everyone needs?
Can the ATV make headway in a world that is so dominated by Rokus and Fire TVs?
What is it that Apple is selling and what are the chances that someone (there are companies other than Microsoft and Google out there) else isn't going to eat their lunch?
Health monitoring. They’re nearly at the point where I’ll get one. Haven’t worn a watch in 15-20 years. They destroyed Fitbit. I doubt Google worries them.
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Do you really think that people who won't regularly visit a doctor are going to care about their heart rhythm?
Yet FitBit is still around and gaining some market share. The same used to be said for the iPod.
I guess that depends one what you view as Apple's markets. YouTube and YTTV are clearly after iTunes' midday meal and Android is chowing down on mobile devices.
Stock value is no indicator of the goodness of a companies products or services. It is uniquely an indicator of investor perceptions of how a company is doing financially.
Profiting on sales isn't the only way to make money on stocks. Some companies offer substantial dividends (dividends are something Apple started doing relatively recently).
Health appeals to fitness buffs and athletes. And more and more to the general public as they age. I can see insurance companies offering discounts to targeted groups for wearing and reporting.
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Fixed it for you. Plus, it can also be a FOMO or FUD that the stock is moving up or down and traders will buy or sell accordingly, regardless of the fundamentals of the company.
Fitbit continues to slide from once traded in the mid 40's. Today it is $3.20. It has been losing money since 2015. When Apple announced the first Apple watch in Fall of 2014 FitBit sales began to drop fast. By May 2015 it lost 80% of it's sales when the Apple watch was released. By the latter part of 2015 Fitbit was no longer profitable. Most believe Fitbit will go the way of the Nokia phone, the Blackberry and VHS vcr's. The company will be out of business. Another company that is set to bite the dust if GoPro. They have not innovated to keep up with what's happening in small action cameras.
