Apple: Sacconaghi interruptus (video)

Bernstein's Toni Sacconaghi makes two of his three points about why Apple right now is among the hottest stocks in big tech.

From "Investors feel Apple may be immune to economic weakness," which aired Friday on CNBC:

Toni Sacconaghi, Bernstein senior research analyst, joins CNBC's 'Squawk Box' to break down shares of Apple, one of the best names among big tech companies.

My take: Well, that was awkward.

8 Comments

  1. Michael Goldfeder said:
    If paying for a phone bill on time ahead of a mortgage or anything else doesn’t scream “consumer staple”, then I don’t know what else is going to make that bold claim?

    1
    August 12, 2022
  2. David Emery said:
    Toni STILL ignores Apple services as a major revenue source. That service revenue is driven by the customers “captured” by the iPhone, and that is supported by (payments to) telco bills (no internet/cell access, no access to the growing services Apple provides.) Someone might well defer a new iPhone for a year, while still racking up Services revenue for subscriptions.

    6
    August 12, 2022
  3. Fred Stein said:
    Still counting iPhones.

    @David, yes he still ignores services. He also ignores the amazing success of iPad and Macs considering the weakness among their competitors. And he ignores the phenomenal high growth in India.

    In sharp contrast to Toni, I think more investors see Apple has diversified their income streams. Text book valuation methods say that lowers the risk premium, which in turns increases the present value of future income streams.

    4
    August 12, 2022
  4. Gregg Thurman said:
    As much as I hate to say it – Toni is correct.

    A smartphone without a carrier is a music playing iPod, IOW, a brick.

    Paying your Verizon, ATT, T-Mobile account is not the same thing as buying a new smartphone.

    This is a great example of a talking head not understanding what he/she is reading on their monitor, even as this talking head notes, he’s had 2-3 days to digest the data point.

    3
    August 12, 2022
  5. Hap Allen said:
    I wonder if the payoff to his firm comes from his being a bear on Apple, thus an outlier who makes for ‘contrary’ appearances on TV. This may also appeal to news producers.

    An appearance of a pundit on television advertises the company he/she works for. Whether or not the analyst is any good, to their bosses this promotion is perhaps the point.

    Like the market, the financial news (entertainment) business thrives on difference of opinion (drama).

    2
    August 12, 2022
    • David Emery said:
      Without any tracking/accountability for the collective poor performance of ANALysts, this trend of “heads talking trash on Apple” will continue.

      1
      August 12, 2022
  6. Rodney Avilla said:
    I am not sure that Tony is ignoring services, but that he is saying iPhone sales is a driver of services, as opposed to the services being a driver of the iPhone sales. And I would agree with that. If Apple started coming out with crummy iPhones, I would assume that services income with suffer.
    I do think that Tony does underestimate the value of services, and that it could be possible in the future that services, the wall garden, becomes the primary driver of Apple‘s revenues. But I don’t think that it has happened yet.
    I do admit, though, for me, even if Apple made an inferior phone to Samsung, I would continue with the iPhone because of its Garden of products and services.

    4
    August 12, 2022
  7. Bart Yee said:
    Segments as a % of total Revenue, 2022 FYTD, YOY 2021 FYTD

    iPhone 53.5% — 54.2%
    Mac 9.4% — 9.2%
    iPad 7.3% — 8.36% (supply constrained)
    Wearables, et.al. 10.37% — 10.47%
    Services 19.37% — 17.75%

    We can easily see that Services continues to grow as a % of total revenue plus increases gross margin. Non-iPhone hardware revenue together makes up 27.1% vs 28.0% last year, and all three were supply constrained to some extent in FY2022. If supply constraints improves as Tim and Luca suggest this quarter and into FY2023, NiP hardware will come up a bit more, possibly with a nice improvement. iPhones still make up a slight majority of revenue but nowhere near the 60+% in quarters or years past. In fact, last Q1 2022, iPhone was only 57.7% of gross revenue.

    It’s high time that Apple revenue diversification is recognized by so called professional analysts, not just PED FOBs.

    4
    August 12, 2022

Leave a Reply