'All eyes on Apple' (video)

From CNBC's "If Apple shares break down, that could create a 'waterfall effect,'" says Katie Stockton" which aired Friday before the opening bell:

Katie Stockton, founder and managing partner at Fairlead Strategies, joins CNBC's 'Squawk Box' to explain why investors should keep their eye on shares of Apple as stocks slide ahead of the open.

Cue the YouTube (the Apple bit starts at 1:25):

My take: Way to pour cold water on the day's trading.

24 Comments

  1. Daniel Epstein said:
    One of the more annoying things I heard on CNBC this morning. No one really cares about fundamental reasons for a stock to track its companies success in this environment. Instead they think it should trade down since the market is down. May be right for the short term. We will see if the consumer spends enough money while they still are employed which will then make corporations think they should invest in opportunities to try and make more money. Regardless of interest rates in the mid single digits.

    5
    September 23, 2022
  2. Neal Guttenberg said:
    I tend not to pay attention to CNBC. Most of the people who go on, as well as the hosts, seem to have an agenda of some type. If there is truth there, it is usually just stating the obvious.

    Fundamentally, especially with the potential for a recession driven by the higher interest rates among other things, stocks got ahead of themselves. Apple included IMO. So it is not a surprise to me that market averages are heading lower, as well as the stocks used to calculate those market averages. But I am not smart enough to time the market so I will stay invested, especially in Apple, unless there are reasons to get out of any individual stock that is in my portfolio. The reports on the newly introduced iPhones make me feel that Apple will weather the storm fundamentally as well as any other company, maybe better. The stock may do better or worse than the averages in the short term. Again, I am not smart enough to accurately predict short term movements. So I am staying invested for the long term right now.

    4
    September 23, 2022
  3. Michael Goldfeder said:
    Apple is selling their new iPhone 14 at a robust pace. Moreover, more people are purchasing the more expensive Pro and Pro Max models. That doesn’t get factored into these “chartists” who operate in another dimension compared to the revenues and EPS generated by Apple.

    However, now they’re treating Apple like the pack mule for the entire market who might be overpriced by comparison. Apple and Buffett are taking advantage of this buying opportunity.

    3
    September 23, 2022
  4. Hap Allen said:
    “Fibonacci retracements.”

    But of course…

    Signore Fibonacci modeled the Nautilus shell pretty well, an organism the appearance of which is pretty consistent. But stock prices?

    2
    September 23, 2022
  5. Aaron Belich said:
    Blah blah blah…

    What a bunch of nonsense.

    1
    September 23, 2022
  6. Bart Yee said:
    Where is Phil this morning?

    I sent this to him:
    Making sure Apple users knows Apple‘s best support is available. For a price which represents an ecosystem value. As our blog has mentioned many times:
    ‘“You shouldn’t expect to get the Apple experience if you don’t pay for it.”

    What Android says with competing mostly on price and Android being free is “Since you’re not paying much, you shouldn’t expect much.”

    Apple reminds customers about unlimited AppleCare+ repairs for accidental damage

    Earlier this month, Apple quietly introduced some changes to the AppleCare+ plan, which extends the warranty on Apple products and also adds coverage for accidental damage. While previously AppleCare+ offered service for two accidental damages per year, Apple now says that repairs are “unlimited.”
    Read in 9to5Mac:

    https:// (remove) apple.news/ARvq8-1ufQMGEedJ4UKqmDw

    2
    September 24, 2022
    • Gregg Thurman said:
      When I started my electronics repair company (Mitel PBX components) the industry warranted their work for 30 days.

      My attitude was if it worked for 30 days the percent that would work for a year would be little changed. When I announced one year warranty on everything the industry howled. But I gained a ton of their customers and prospered.

      Unlimited accidental damage repairs will very rarely result in more than one in a 3 year period. But if the policy increases net sales of AppleCare Apple wins. Smart.

      2
      September 24, 2022
      • Bart Yee said:
        @Gregg Thanks for that. The usual MTBF estimates assume normal proscribed use and designed out manufacturing and assembly defects. In a PBX or stationary install environment, that is fairly easy to determine assuming no shipping or installation damage, normal user behaviors and regular maintenance.

        For Apple’s users and mobile devices subject to practically any kind of physical mishap, it’s pretty likely Apple has significant warranty and repair claims offset by most users’ case use and care knowing they have a very valuable device to protect, let alone the downside of being without their device if repairs are needed.

        That’s the reason why AppleCare+ is valuable for both Apple and its users – it’s priced to cover the warranty costs and then some, while for users, it’s protecting their investment and piece of mind for reliability, access to factory parts and service, and prolonging in-service life.

        In some respects, its streets better than Android’s idea that if your low or mid priced smartphone gets damaged badly or craps out, you just spend another $150-300 to replace it with a new but still low-mid priced device, with still minimal support and rapidly degrading resale value (if it has any) out the door.

        0
        September 24, 2022
      • David Emery said:
        The statistics on hard drives are interesting (I think it’s Rackspace that publishes an annual analysis). There’s (a relatively) high initial failure rate, within the first couple of months, then a long period (3 years?) with few failures, eventually turning into an ‘aging out curve’ where probability of failure starts to go up over time.

        1
        September 24, 2022
    • “Where is Phil this morning?”

      Phil was on a long bike ride. Today he’s on another one — a “biking for food” fundraiser.

      1
      September 25, 2022
  7. Bart Yee said:
    Here’s a look at Apple Warranty costs as reported in Note 8, page 15 of 28 of Q3, 2022 10Q. Best viewed in landscape.

    “Note 8 – Commitments and Contingencies Accrued Warranty
    The following table shows changes in the Company’s accrued warranties and related costs for the three- and nine-month periods ended June 25, 2022 and June 26, 2021 (in millions):

    3 Months Ended ——— 9 Months Ended
    June 2022 June 2021 — June 2022 June 2021
    Beginning accrued warranty and related costs
    $ 3,206 vs $ 3,784 /—-/ $ 3,364 vs $ 3,354
    Cost of warranty claims
    $ (534) vs $ (636) /—-/ $(1,787) vs $(2,008)
    Accruals for product warranty
    $ 177 vs $ 384 /—-/ $1,272 vs $2,186
    Ending accrued warranty and related costs
    $ 2,849 vs $ 3,532 /—-/ $ 2,849 vs $ 3,532

    So AppleCare+ and standard warranties accrue a net positive $2.85B YTD 2022 vs $3.53B YTD 2021, 2021 having a huge jump in hardware sales and AppleCare+ subscriptions. Q1 is likely the largest contributor and allows for continued accrual of funds vs the likely increase in warranty use and expenditures as devices age and accumulate damage enough to seek repair.

    It would be instructive to see see how warranty accruals vs expenditures change over a hardware product cycle or FY, findable per each 10Q and 10K. Suffice it to say, Apple ensures through Services and AppleCare+ extended warranty pricing, thoughtful design and “repairability” that those costs are much less than the revenue generated.

    1
    September 24, 2022

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