Recent Comments

  • David Emery on Jason Snell: Four scenarios that could spell Apple's doom - 'THIS is spot-on. Either due to the unexpected loss of Cook or to a bad choice later on, Apple could well be ruined by a bad CEO choice.'
  • Fred Stein on Neil Cybart: The three phases of Apple's gross margins - 'Neil force-fits his bias. Apple’s Pro models sell well because they are worth it. This is due to Apple’s long-term investments: 1) More robust iPhone last longer. The $200 uplift only costs $4/month over 4 years. Higher resale value also reduces the uplift. 2) Investments in silicon mean Apple increases value faster than inflation, while reducing BOM costs. Nearly every product category increases margin with up-sell. This applies to cars, plane tickets, restaurants, etc. Apple excels at this.'
  • Jerry Doyle on Jason Snell: Four scenarios that could spell Apple's doom - 'It surprises me that Jason Snell failed to mention the one chief cause for a company’s demise or irrelevance: lack of sustained viable leadership. Company after company that declined did so with the failure to fill the CEO position with outstanding leadership and vision. I worry over Tim Cook’s replacement more than I fear over the other four factors Jason Snell enumerated.'
  • Bart Yee on Neil Cybart: The three phases of Apple's gross margins - 'Jerry, I think Neil is mostly correct. This year’s iPhone 14 and 14 plus did not offer the improvements normally seen by newest models, namely across the board use of newest A16 chips (production delays and possibly Apple “withholding” chips and features for margin and differentiation purposes. If Apple had actually dropped prices by $50-100 AND discounted the older iPhone 13 by a bit more, sales may have been spurred but margins may have suffered. Plus in pursuing that route, a lower Apple base model price becomes a new norm and expectation, undermining its own pricing power. Given the margin erosion already in the wind from foreign exchange headwinds, Apple took their chances with maintaining prices in the US, Canada and China while raising in the rest of the world to maintain margins elsewhere. Q1 results gives us pause as to how well that price elasticity will work out long run but if gross margins improve, overall revenues may remain flat to slightly down if unit sales drop within 2-4% YoY.'
  • Lalit Jagtap on Jason Snell: Four scenarios that could spell Apple's doom - 'Scenario #1 Does Android is best competition To Apple iPhone? Any other comparable product where privacy of data is on everyone mind. Scenario #2 Democratic govt in USA and Europe have many high priority issues Scenario #3 What if India China war due to some invasion in northeast similar to Russia inversion of Ukraine. Scenario #4 Something big is cooking at Apple due to almost $7bn spent on R&D in 2022.'
  • Bart Yee on Neil Cybart: The three phases of Apple's gross margins - 'As discussed yesterday, with Apple Silicon helping to extend performance while helping in some respects to control costs, DRAM & NAND flash memory prices dropping over 2H2022 and projected to continue dropping through 1H2023, and efficient plus minimum parts designs, especially Mac, Mac Mini, iMac, and Mac Studio all play a role in driving up hardware margins and incrementally overall margins. That Apple continues to also expand the install base and that base expands high margined services revenues, well you can see clearly why Cook told us long ago to quit counting widgets and look to the revenues generated by each segment and particularly Services growth. Once this economic trough is pulled out of by end of 2023 into 2024-2025, Services and gross margins may continue to climb. It’s quite possible there will be excess production capacity in the commodity memory semiconductor market as well.'
  • Jerry Doyle on Neil Cybart: The three phases of Apple's gross margins - '“…. Apple is experiencing a rather intriguing scenario where higher pricing found with the iPhone Pro models is leading to more robust demand.” I question Neil Cybart’s thesis. It is not higher pricing per se leading to more robust demand, but lack of sufficient pricing differentiation in product offering driving increased sales of the iPhone 14Pro models. For an almost unassuming $200 extra, one gets a pretentious amount more premium product offering. For this reason, while the 14Pro models are selling robustly, the 14 models are showing a lack of demand. It is not that complex, Neil.'
  • David Emery on Jason Snell: Four scenarios that could spell Apple's doom - 'Fortunately, the story itself didn’t live up to the bogus headline. Those 4 scenarios would have significant impact, and I generally agree with his assessment of each. The one point Snell didn’t discuss is the timeframe for each. #2- Government interference, could happen much more rapidly than the others. And Apple acting like this can’t happen with a strong defense I’m hoping hides thinking inside Apple for how to adjust if people like Vestager get their way. It’s been interesting reading the reaction to Microsoft’s AI enabled Bing as a threat to Google. That could well be a significant tech pivot for how internet search works. (But I, for one, am not rushing out to switch from Google to Bing, because I don’t use Google. I’ll put up with potentially less complete results from DuckDuckGo in exchange for privacy.)'
  • Bart Yee on Neil Cybart: The three phases of Apple's gross margins - 'Agree, if your products remain top in performance (CPU, battery life, software execution, user perceived value), then sales, pricing power and demand keep gross margin higher. If sales falter like what happens with Samsung premium products after the initial first adopter rush, then promotional marketing & discounting sets in to boost sales but erodes margins rather quickly.'
  • Alan Trerise on Which is it, Apple? AR or AI? - 'Apple always knew AI was table stakes. The neural engine Apple added to the A11 Bionic in 2017 has been underutilized by developers to date. The machine learning behind several features is subtle. I expect more focus on it this coming WWDC.'
  • Roger Schutte on Mizuho: PayPal is haunted by the Apple Pay bugaboo - 'Adam, I was super surprised when I wasn’t able to use Apple Cash as an alternate payment method for tap-to-pay purchases. Giving it a 16 digit number and having it be used like a debit card in Apple Pay can’t be that hard. Apple needs to fix this ASAP.'
  • Bart Yee on Evercore: Top five takeaways from Apple's 10-Q - 'Fred, upvoted and exactly right. The fall in Android sales, coupled with declining demand for PC’s and other consumer products put a big dent into major chipmakers sales and revenues, especially memory chip makers. With Apple’s 6-8M unit shortfall and Android’s drop of over 150M units, the entire smartphone market fell by 11%. Samsung, Micron, SK Hynix, and Kioxia all saw chip demand fall by smartphone and PC makers who then ended up with unused chip inventory. As a result, chip makers cut prices for regular LPDDR DRAM memory, NAND flash memory chips and SSD assemblies. The WSJ noted both memory prices dropped over 25% in 2H2022 and DRAM continue to drop double digits 20% in Q1 and at least another 10% into Q2 2023, NAND flash May drop up to another 13%. SSD prices dropped between 25-50%, especially for larger SSD’s. Apple’s gross margins for iPhones, iPads, Macs, Watches and Apple TV would benefit from lower memory chip prices and memory upgrades would be even more profitable. We can certainly see where a gross margin boost of up to 1-1.5% could be easily achievable with chip prices continuing to fall practically into the iPhone 15 introduction, and the recent Mac M2 introductions.'
  • Bart Yee on Megatechs pitch in with Turkey-Syria earthquake aid - 'Apple, Alphabet and Amazon have all pledged money, resources or logistics to assist Turkey and Syria. Meanwhile ExxonMobil, Shell, and Chevron have reported a combined record $132B profits in 2022, plus BP also reported record $27.8B in 2022, pretty much all on the backs of the Russian-Ukrainian war and supply demand imbalances raising oil prices, yet crickets so far when it comes to earthquake relief. I will note Shell will not pay ANY UK taxes this last year.'
  • Adam Foster on Evercore: Top five takeaways from Apple's 10-Q - '“Could easily double the dividend if they wanted to.” That would make me very happy!'
  • Adam Foster on Mizuho: PayPal is haunted by the Apple Pay bugaboo - 'I have used PayPal for everything happily since its inception. I now use Apple Wallet for everything I can! I decided to try Apple Cash for the first time. I had about $900 in Apple Cash from accrued purchases. I was able to send ~800$ to someone instantly, but it took several tries being warned from Apple that it looked fraudulent. It finally went thru. Voila!, it was there for the person to use in minutes… and they needed it. I found trying to use Apple Cash is hard as it requires a bank debit card that I have but I I never use debit cards, ever. So, in experimenting to pay contractors on a condo I have in FT. Meyers, Florida (9feet of water) I found that in order to pay a big bill I had to add $$$ to Apple Cash from my debit card. So I tried two thousand dollar transfer… declined. So I tried one thousand dollar transfer… declined. So I tried 500 dollar transfer… accepted. So I did that two more times.. accepted. Fourth time, declined. I called Apple – they said one can transfer and pay up to $10,000 a day. It was the bank. I called my bank and they said it was for my protection and there was a limit per day of transactions and amounts. I truly believe that this is a pushback from the card transaction money suckers in the guise of protecting us. Has anyone else tried to put a large amount of money into Apple Cash in order to pay a large invoice through Apple Cash? Love to hear anybody else’s experience. I have a lot of needy people I take care of and Apple Cash is magical/instant when it works!'
  • Greg Lippert on Mizuho: PayPal is haunted by the Apple Pay bugaboo - 'I do work for a charity and was able to add ApplePay easy peasy. However, it only works on iOS and Apple browsers.'
  • Daniel Epstein on Evercore: Top five takeaways from Apple's 10-Q - 'One thing this implies about the buyback. While it is huge it is not big enough to stem the tide of selling that was going on in November and December. And Apple was not in a rush to use it for that purpose either. Maybe they will surprise us with this quarters purchases. This has happened before where they don’t buy back as much stock in the quarter when the share price is being pushed down for various reasons. Still the ratio of buyback spent to dividend spend was about 4.5 to 1. As the approach cash neutral and political noise about buybacks increase they may want to adjust that ratio. Could easily double the dividend if they wanted to.'
  • Fred Stein on Evercore: Top five takeaways from Apple's 10-Q - 'Re 2. GM levers: Weakness in clone Windows and Android drives component prices down. Manufacturing process improvements in efficiency and yield further reduces BOM costs. All that adds to cash flow. No worries.'
  • Bart Yee on Lawsuits: Rather than defend privacy, Apple invades it - 'Everyone has the option of downloading or copying all their iCloud data, files, photos, mail, notes , etc. to their iPhone, iPad or PC/Mac computers and external storage. Apple provides instructions to do so. Another way of backing up your own data if you need to for yourself or your family or business. “Archive or make copies of the information you store in iCloud Learn how to make copies of the information that you use with iCloud. You might want to make a copy of the information you keep in iCloud. If you accidentally delete an important contact, email, or document, you can restore it from iCloud or from another copy that you have.” support dot apple dot com/en-us/HT204055'
  • Fred Stein on Evercore: Top five takeaways from Apple's 10-Q - 'My notes listening to Luca: They spent $19B and bought 133M share, which comes to $142.86. Disclaimer – hearing impaired, dyslexia, 76 years old. My guess: They kept a bit extra dry powder once they saw problems in iPhone city. More simple math $154/$143 = 107.6% or 7.6% gain for a 3 month hold time or 30% annualized.'
  • Steven Philips on Lawsuits: Rather than defend privacy, Apple invades it - 'Siri: Are you looking for “How to make your big break in Hollywood?”'
  • David Emery on Steve Jobs' revenge - '“When other foundries start to understand the need to proactively invest in R&D to replace their current bloated power hungry chipsets and start to optimise them…” The problem is that no foundry also controls the operating system or the rest of the system components. Thus no foundry has insight into what to optimize, let alone the ability to move functionality around between hardware and software. THIS is Apple’s core advantage, that can’t be met by any current competitor. A forthcoming example will be how Apple brings home-grown radios to phones, pads and computers. I would expect an integrated Apple radio in a future iPhone will look very different than the current Qualcomm/Broadcom chips. (At some point in the future, a new -systems house- might well emerge, but for now no other company can compete.)'
  • Troy Thoman on Evercore: Top five takeaways from Apple's 10-Q - 'Anyone find the average price of their share repurchases this quarter?'
  • Gregg Thurman on Evercore: Top five takeaways from Apple's 10-Q - 'FX has inched higher since the beginning of the year. I’m inclined to think this upward move will reverse itself late in the quarter. Be that as it may I think the dollar is going to hold an approximate 100 relative value through the end of the year., down ~15% from its 2022 highs.'
  • Michael Goldfeder on Evercore: Top five takeaways from Apple's 10-Q - 'There are four (4) US Mints located in: Philadelphia; West Point; Denver; and San Francisco. Yet Apple probably prints more money evidenced by point # 3: “Apple’s net cash balance increased from $49B to $54B, which is somewhat unusual as the balance has been working lower towards Apple’s net cash neutral goal.” Hard to achieve “cash neutral” when FCF is around $100 Billion per year and apparently still growing! A great problem to have!!'
  • Michael Goldfeder on Megatechs pitch in with Turkey-Syria earthquake aid - 'I don’t see Vestager stepping up.'
  • Rodney Avilla on Megatechs pitch in with Turkey-Syria earthquake aid - 'If not the megatechs, then who? People?'
  • Daniel Epstein on Mizuho: PayPal is haunted by the Apple Pay bugaboo - 'I was trying to figure out what “definition” of Bugaboo PayPal was being haunted by in this article. Share loss to Apple Pay is where I see the term “haunted”. I found a couple of definitions of Bugaboo “1 an imaginary object of fear. 2 something that causes fear or distress out of proportion to its importance” Seemingly neither applies correctly to a description of Paypal’s concerns as Apple Pay is not imaginary nor is it seemingly causing fear out of proportion to its importance. Other definitions might apply as some people think a lack of function is a “Bugaboo”. As Apple Pay could be considered a direct competitor to at least part of Paypal’s business I understand why they might be concerned and even fear that another payment system will limit their growth. The threshold for using one over the other is pretty small with convenience likely winning. Seemingly a very good concern for Paypal to have. Basically the article uses a relatively childish term for what may be a very serious problem for Paypal.'
  • John Butt on Megatechs pitch in with Turkey-Syria earthquake aid - 'Even Art Deco standards of the 1930s would have helped. No reinforcing in bare concrete is not going to stand a much smaller earthquake.'
  • John Butt on Mizuho: PayPal is haunted by the Apple Pay bugaboo - 'I decided PayPal was giving away my details of purchases so disconnected. That turned out to be hard.'