NYT: ‘Even Apple’ gets a COVID-19 bump

Apple is an afterthought in a story about how, despite more than $1 trillion in lost market value, the FAANG will benefit from the pandemic.

From “Big Tech Could Emerge From Coronavirus Crisis Stronger Than Ever”  in Tuesday’s Business Times:

Even Apple, which once appeared to be among the American companies most at risk from the coronavirus because of its dependence on Chinese factories and consumers, appears to be on good footing. Many of Apple’s factories are nearly back to normal, people are spending more time and money on its digital services, and on Wednesday it even released new gadgets.

“The largest tech companies could emerge on the other side of this much stronger,” said Daniel Ives, managing director of equity research at Wedbush Securities…

Even Apple, a company with hundreds of closed stores around the world (except now in China), is increasingly looking as if it will emerge from the pandemic in good shape.

Terry Guo, the head of Foxconn, which assembles most of the world’s iPhones for Apple, told reporters on March 12 that Foxconn’s Chinese factories were resuming production ahead of schedule and were back to normal — well ahead of expectations that would happen by the end of March.

Apple has tried to move away from its heavy reliance on device sales and toward so-called services revenue, which includes app sales and subscriptions to its music and TV services.

For that business, having much of the public in the United States and Europe stay inside is almost certainly good news. Early data shows that people are spending more time watching TV. Apple has spent billions of dollars on original programming for its Apple TV Plus service, hoping to hook people enough to pay $5 a month for it.

More time and money spent on phones is also good news for Apple and Google because they take a cut of most app sales…

“After the financial crisis in 2008, Apple emerged even stronger,” said Mr. Ives from Wedbush. “There is no reason it and the other giants can’t do the same again.”

My take: A well-reported piece with snappy soundbites from Wall Street’s most quotable Apple analyst.

3 Comments

  1. Jerry Doyle said:

    Many of us on this forum have been predicting that Apple’s 2Q and 3Q numbers would not be as depressed as analysts believe and that the markets’ valuation of Apple shares show.

    Folk quarantined in their homes are turning to streaming media content, purchasing apps, playing video games and upgrading hardware for home schooling or for home work telecommuting. Apple is benefitting from all this activity through Apple TV, Apple News+, Apple Arcade, Apple’s App Store, Apple Music, in the form of new Apple service subscriptions along with purchases of new Apple hardware.

    Apple supply chain meanwhile is coming back online.

    It is myopic for analysts and us, to believe Apple forthcoming numbers in the next two quarters are going to be severely depressed. Apple has been busy selling new services and hardware folk. Yes, Apple stores are shut down outside mainland China, but who among us and among other consumers today allow store closures to affect our online purchases from the comfort of our homes?

    This news article validates what many of us long have been saying for weeks.

    2
    March 24, 2020
    • George Ewonus said:

      Be interesting to know the volume of the Apple on-line stores. In my family some of us have needed it to supply minor replacement items and others have been fortunate to be able to purchase the new releases. (Looking forward to your review of the new MacBook Air, Philip)

      2
      March 24, 2020
  2. Gregg Thurman said:

    Looking forward to your review of the new MacBook Air, Philip)

    I am too. Specifically I’ll be looking to see how this MacBook Air impacts unit market share estimates. If there isn’t a surge in market share (current unit sales not installed base) then all the angst about the butterfly keyboard was overblown.

    My guess is that we’ll see incremental sales growth just because the new MacBook Air is a significantly better value than previous models. For those that were impacted by the butterfly keyboard the improvement will be even greater.

    The thing is, Apple could have introduced a more traditional KB long ago, it the KB was the problem the media claims. Apple didn’t do that. Is Apple that stubborn/pigheaded with regards to customer complaints? NO.

    The tale of the tape will be in analyst estimates of unit volume/share come July.

    0
    March 24, 2020

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