What Gene Munster learned from Cramer’s Q&A with Cook

Six takeaways in a note to Loup Ventures subscribers posted Wednesday:

  1. Expect “new services” this year. Healthcare, periodicals and a streaming video service (Munster expects Apple to spend $1.4 billion on original video content this year).
  2. The China trade war is moving towards resolution. Cook: “I think a deal is very possible. And I’ve heard some very encouraging words.”
  3. iPhone trade-in bonuses will likely continue. Munster: “In our view, Apple is doubling down on trade-ins as a demand generation tool.”
  4. Revenue from wearables is already over 50% more than iPod was at its peak. Munster: “It implies Apple Watch is about 5% of sales growing revenue at 45% y/y and AirPods is about 1% of sales growing revenue at 87% y/y.”
  5. India is now just under 1% of total sales. Munster: Growth in India will be supported by two initiatives: 1. producing iPhones in India; 2. opening new retail stores in the country.
  6. On the Qualcomm litigation: Cook suggests Qualcomm unlawfully discriminates against Apple by charging “exorbitant” prices. Apple refuses to pay these prices and believes they have the legal upper hand.

My take: Munster got more out of that interview than I did.

See also: Watch Jim Cramer toss softballs to Tim Cook (video)

4 Comments

  1. Robert Paul Leitao said:

    The 22-minute interview (which I recommend for viewing) was a reiteration of Tim Cook’s position the company invests for the long-term and doesn’t respond to the vagaries of shifting market sentiment.

    He also said in the end Apple will be known for its contributions to human health. That will take years and a steadfast commitment to investments in product and services development.

    My take: If you have confidence in Tim Cook’s long-term vision for the company, buy a ticket now. If one is looking for a quick ride to big gains, either find a different ride or get off at the next stop.

    1
    January 9, 2019
  2. Fred Stein said:

    Nailed it Robert.

    Gene did miss one point that Tim has made several times. Apple defines customers as the installed base, not as units shipped last Q, or rumors of next. The market will take a long time to understand this radical concept. (Of course we get it. haha.)

    1
    January 9, 2019
  3. John Konopka said:

    As noted above, Tim Cook said Apple looks to the long term, not the next quarter. This is very good to hear.

    Tim said there are about 500 million devices capable of using Siri. That is curious as there are about 1.4B active devices. I guess the balance are too old for Siri or are in countries that don’t have Siri support. First time I heard this number.

    Tim said we’d see new services this year. I guess we’ll find out about them in June.

    I was shocked to hear Tim say that from the future’s viewpoint Apple’s largest contribution to humanity will be in the area of health. Not the iPhone, iPad, DTP, AR, but health care. Of course, iPhones, iPads , etc. will be put to use in the support of health care. But since health care is currently a small part of Apple that implies a huge change in Apple’s business. Note that this was the CEO of Apple speaking, not just some random analyst. For a company that doesn’t talk much about future products this was a huge admission.

    0
    January 9, 2019
    • Aaron Belich said:

      No, Tim’s comment was the number of “devices using Siri”. He then walked it back a moment and said “Siri enabled.”

      My guess is that the customer satisfaction for Siri is low. This is a huge growth opportunity for Apple. Hence why they have the Google guy in-house now. Looking for massive changes over the next 12-18 months. Siri needs parity across Watch, iphone/ipad, TV, and HomePod.

      0
      January 9, 2019

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