Toni Sacconaghi: Apple ripens in the summer (video)

“So 14 of the last 15 years the stock has outperformed the market [between June and September] by an average of 14 percentage points.”

From “Bernstein’s Toni Sacconaghi gives the bull and bear case for Apple” which aired Thursday on CNBC:

My take: In summary, Sacconaghi likes Apple in the short term, prefers IBM for the long.

6 Comments

  1. Robert Paul Leitao said:
    No doubt about it. IBM’s dividend yield, currently north of 4.75%, is gorgeous. However, the share price has been range bound for years. It’s been a slow turnaround. On the plus side, Big Blue will benefit from an uptick in mainframe sales as it enters a new multi-year product cycle. In my view, it’s an attractive buy for investors looking for a high dividend yield, low beta enterprise with an option on hybrid cloud success with Red Hat and associated services solutions. But… It doesn’t have anywhere near Apple’s growth trajectory at this time.

    2
    June 23, 2022
  2. Robert Paul Leitao said:
    In my view, Mr. Sacconaghi has a misread on Apple. I see Apple as a customer relationship continuum. The company’s incredibly strong customer relationships are an exceptional source of recurring revenue. As Mr. Daryanani at Evercore recently noted (covered by Apple 3.0 two days ago), Average Revenue Per User (ARPU) is on the rise and at this time the company can’t meet demand for Apple silicon-based Macs. Apple will soon be entering the third year of the massive 5G upgrade cycle and services revenue continues to rise at double-digit rates. In my view, the expanding global customer count and rising ARPU is a much better way to view Apple than to try and bifurcate Apple’s revenue growth between devices and services. The company’s customers tend to purchase both devices and services. It’s not a “bad thing” to have the world’s best digital products and associated services. As long as the global costumer count keeps rising on a global basis and ARPU is rising as well, the breakout between device sales and services is less important, in my view, especially when device sales and customer upgrade patterns are taking on the dynamic of a recurring revenue model.

    4
    June 23, 2022
    • Fred Stein said:
      Yes indeed, Toni misreads Apple. His commentary, though is useful, both to understand his biases and to see the potential strength in the next few months.

      Toni’s misread comes from seeing things financially. That is OK, but limited. In his limited view, Apple’s 15% growth in developers in China (earlier post by PED) means nothing. In my view, Apple’s relentless share growth in every category and every geography counts for more than recurring revenue from customers that are pretty much locked in, as for example, with IBM. That may explain why IBM, while attractive, does not excite investors.

      0
      June 23, 2022
  3. David Drinkwater said:
    Anybody who knows anything knows that an apple in the wild is seasonally a Fall Fruit.

    That Apple, the company, can drag this out into December in the US shows that Apple can extend the “expiration date”.

    1
    June 23, 2022
  4. David Emery said:
    I’d take that bet. IBM is a company in some highly competitive businesses (e.g. cloud). Apple has a commanding lead in each hardware business, and is highly competitive in Services. And between the two companies, I would much rather work for Apple. (Wife had a consulting contract with IBM and we still have friends from that job. NONE of them work for IBM any more.)

    1
    June 24, 2022
    • David Emery said:
      p.s. one of those friends now works for Apple. In between he worked for Amazon. He’s definitely very happy at Apple, he was not at IBM or Amazon.

      0
      June 24, 2022

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