Analyst: Trump's shot across China's bow will miss Apple

GBH's Daniel Ives sees "minimal financial impact" on Apple and the FANG.

From a note to clients that landed in my inbox Saturday:

In the near-term this launches a “worrywart” period for the Street around what the retaliation and actions from China will look like and ultimately how this could negatively impact US tech names in particular.

To this point, we strongly believe this ultimately will have minimal financial impact to Apple, FANG, and other tech names (Intel) despite retaliation worries in our opinion.

For Cook & Co given the tightly woven integration between Apple and Foxconn in China, we believe there is minimal risk to this relationship, cost increases, and backlash to Apple selling its iPhone devices within China (domestic competition remains a lingering worry), which is a key market opportunity for Apple over the coming years.

We continue to strongly believe that given the primarily services nature of traditional FANG names and very internationally distributed from a revenue perspective, that Facebook, Amazon, Netflix, and Google/Alphabet are “primarily insulated” from tariff worries and a potential retaliatory trade war with China.

My take: Color me a worrywart. (With kudos to Ives for spelling worrywart correctly. I had to look it up.)

8 Comments

  1. Tommo_UK said:
    FANG stocks are (or will be) in trouble for either data /privacy concerns, overvaluation, overstretch, or just over-owned.

    Apple is no longer part of Cramer’s original FANG acronym and I wish analysts would stop mentioning it in the same breath and context. AAPL stands apart, by valuation, earnings, margins, growth, stability, and visibility.

    It’s time the company received the credit it deserves after living in the shadow of a herd of glided unicorns preening themselves with Diamante-encrusted hooves and a slavish drooling bunch of hedge fund managers talking up their books.

    Anything with a PE of 300 earning almost no money and a dismal record at making a profit from of its activities despite hugely increasing revenues deserves to be taken out back and thrown into jail under anti-trust investigations. Gimme a break. Apple makes money on everything it does, with great margins, through producing great products and its “moat” against competition is its ability to sell people into its ecosystem because they love its products and pay for them, not because they’re led by the nose into “cheap free stuff and social networks.”

    FANG companies? They all run at a loss to discourage competitors (or drive them out of business by selling products for a loss), or sell your data to make money.

    Longer term the future is a no-brainer. Apple will win what’s turning into a struggle against invasion of privacy and oppression by big business and politics. That never starts easily and without a big fight back, but usually ends well as Martin Luther King proved. When you fight back and hold people to account for their actions on irrefutably principled and ethics; grounds, freedom win (in spite of Wilbur Ross ).

    I don’t think the world has quite cottoned on to quite how large the seismic shifts in attitudes on these issues is. Listen to the inspirational speeches of Steve Jobs and compare them to the loathsome business ethics of Bezos, Zuckerberg, and the google golems. They’re a million miles apart. To them, we’re all just data slaves to be harvested , no matter the colour of our skin.

    It’s time to end this abuse of the indidiuvdal.

    /rant over

    4
    March 24, 2018
    • “Listen to the inspirational speeches of Steve Jobs and compare them to the loathsome business ethics of Bezos, Zuckerberg, and the google golems. They’re a million miles apart. To them, we’re all just data slaves to be harvested , no matter the colour of our skin.”

      You go, Tommo!

      3
      March 24, 2018
      • From reader but not yet friend-of-the-pod Sharon G Lawton (quoted with permission):

        Tommo_UK: “”Listen to the inspirational speeches of Steve Jobs and compare them to the loathsome business ethics of Bezos, Zuckerberg, and the google golems. They’re a million miles apart. To them, we’re all just data slaves to be harvested , no matter the colour of our skin.””

        PED: “You go, Tommo!

        SHARON: That’s right because working for Foxconn and mining f o r cobalt is SO MUCH better than working for Amazon

        0
        March 25, 2018
        • Tommo_UK said:
          Dear Sharon,

          You go girl! Tell us how it really is in the real world!

          Let’s conflate cobalt miners who toil under horrific conditions and sell their “rare earths” to middle men who in turn supply wholesalers who in turn supply component manufacturers with the cobalt (amongst other material) to produce the bits which go into an iPhone, finally assembled by Foxconn, on behalf of Apple, because Apple’s responsible for their wellbeing right, even though they are so far down the supply chain they are hardly on Apple’s radar?

          Damn right they are, which is why Apple recently conducted an audit of its entire supply chain from miner to manufacturer, to try and encourage best practice and good working conditions.

          No other CE company has bothered to go to anywhere near the lengths Apple has gone to try and be both environmentally conscious (the new Apple campus generates all its own electricity via solar panels) as well as having a sense of corporate and social responsibility by reaching into the depths of the turgid world of rare earth metals mining you’re referring to. Not because they have to – nobody else gives a damn – but because it’s what Apple do. Again and again. It may never be enough, but that’s why they keep on going back, again and again, trying to improve conditions for everyone working in their entire supply chain whilst staying competitive, and within the limitations their influence extends outside of their immediate contractors.

          So anyway, you’re comparing cobalt miners with amazon warehouse employees because… oh, sorry, but the reason escapes me, given the above.

          My dear I do apologise but I’ve lost track of your point, if there was one. Happy ranting.

          2
          March 25, 2018
          • Jonathan Mackenzie said:
            And who assembled the Amazon Fire Phone? What was it made from? Did Amazon audit their suppliers? Huh, turns out there really is a difference.

            2
            March 25, 2018
        • Ken Cheng said:
          Amazon warehouse work is nothing to crow about. Given that Amazon has about 500k workers, they kind of do make an interesting comparison to Foxconn. Working at Foxconn in China, raises the bar for your average factory worker in China, while Amazon warehouse work does what for the average worker in the US? Soon to be replaced by robots.

          And since every electronic device with a lithium battery needs cobalt, and since Amazon sells e-readers, and the devices of just about every other mfr out there, Amazon certainly has no moral high ground when it comes to cobalt mining. What was their Greenpeace score again? Last? At least Apple is trying to improve the cobalt mining tragedy, by tracing their supply chain as they’ve done with tin and other metals. What has Amazon done?

          2
          March 25, 2018

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