Collin Gillis, the haiku guy, still plays the skunk at Apple’s party

The former BGC Apple analyst wants to break up the company and sell off the pieces.

From a note to Chatham Partners that landed on my desktop Tuesday:

Will it be China?
Or just slow iPhone demand
That shows up today.

Current management is better suited to operations and methodic execution than producing visionary new product and opening new categories, in our opinion. The company’s massive capital return of $336.3 billion (including $247.3 billion in stock repurchase) since FY2012 is both a wonderful testimony to the power of its smartphone franchise, and symptomatic of a leadership team that has been unable to deploy the bounty into building new franchises to sustain the firm in the future. New service offerings designed to offset the slowdown in iPhone sales—such as a streaming TV product—seem derivative, and late to market…

Apple could benefit from input driven by new leadership. Apple’s new video service is not going to be a Netflix killer, and not going to materially impact the investing outlook for the company. We view that Apple Music with its estimated 56 million subscribers is still only 10-15% of services revenue, about 1-2% of total revenue. Video streaming is not going to save shares of AAPL if the iPhone market declines. Apple remains the iPhone company. Apple lacks polished offerings in cloud services, home automation, voice search, and AI. The company is limited in its ability to grow an advertising revenue stream as it promotes consumer privacy. Current management does not create software and service products that inspire customers like earlier hardware products.

While we understand the power of Apple’s integrated software and hardware model, perhaps value can best be unleashed by spinning out Apple’s platform offerings including the App Store, Apple Pay, Apple Music, iCloud and other similar products that could benefit from fresh leadership, aggressive innovation, and open access to the broad market.

My take: Gillis is a long-time Apple skeptic. In August 2016, with shares trading at $114, he gave the stock a 12-month Street-low $85 price target and advised BGC’s clients to sell. Two years later, any shares they sold were worth more than $200. Gillis is no longer at BGC.

See also: Moving targets.

8 Comments

  1. Ross Richardson said:
    You know what’s weird? Collin is probably worth more broken into pieces, too.

    0
    April 30, 2019
    • Ross Richardson said:
      Alas, poor Yorick. Died while stuck in “awaiting moderation” purgatory.

      0
      May 2, 2019
  2. Aaron Belich said:
    *points and laughs*
    In the 90’s and Aughts the PC computer took off. It was the digital hub. You could connect everything to it. But it lacked native security.

    iPhone supplanted it and integrated or eliminated most of what connected to a PC. There will always be fringe use cases for a niche product or commodity. But Apple brought the security. It’s locked down pretty tight without requiring a third party babysitter.

    And it’s now the hub that things will connect to, until something else replaces it.

    At this foreseeable time, nothing can replace it.

    0
    April 30, 2019
  3. David Emery said:
    How to get more clicks:
    Show ideas that don’t make sense,
    Just count some syllables.

    0
    April 30, 2019
    • David Emery said:
      delete “some” from the last line. Sorry, I lost count 🙂 🙂

      0
      April 30, 2019

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