Liberty Posted January 26, 2015 Share Posted January 26, 2015 Earnings tomorrow. Will be interesting to see if they sold more iPhones in China than in the US, and what the ASP will be (should be nicely up with the 6+, despite being supply constrained for the whole quarter). FX will be a headwind, but that won't stop what promises to be a monster quarter. Link to comment Share on other sites More sharing options...
Liberty Posted January 27, 2015 Share Posted January 27, 2015 I'd say this was a decent quarter ;) http://www.apple.com/pr/library/2015/01/27Apple-Reports-Record-First-Quarter-Results.html Link to comment Share on other sites More sharing options...
tengen Posted January 27, 2015 Share Posted January 27, 2015 I'd say this was a decent quarter ;) I think you need to add a couple of extra winky faces. Link to comment Share on other sites More sharing options...
gfp Posted January 27, 2015 Share Posted January 27, 2015 Better quarter than anyone was expecting - really impressive. ASP on iPhone really popped from the storage jump and 6+ mix. Sounds like 6+ is much more popular outside the US. For anyone interested, macrumors has a "live blog" - transcript - of the conference call going on: http://www.macrumors.com Link to comment Share on other sites More sharing options...
krazeenyc Posted January 27, 2015 Share Posted January 27, 2015 Earnings tomorrow. Will be interesting to see if they sold more iPhones in China than in the US, and what the ASP will be (should be nicely up with the 6+, despite being supply constrained for the whole quarter). FX will be a headwind, but that won't stop what promises to be a monster quarter. What I found interesting was the CFO said: "We have a comprehensive hedging program in place that mitigates the impact of foreign exchange." I didn't know that they had a currency hedging program in place. Link to comment Share on other sites More sharing options...
Liberty Posted January 28, 2015 Share Posted January 28, 2015 Finally listening to call. Did I hear that right? Revenue in greater China up 70%? Wow. CFO: “Revenue growth would have been 4% higher on a constant currency basis” Jason Snell did a transcript here: http://sixcolors.com/post/2015/01/tim-cook-transcript-what-apples-ceo-said-to-analysts/ Link to comment Share on other sites More sharing options...
innerscorecard Posted January 28, 2015 Share Posted January 28, 2015 Results not a surprise to me at all. Looks like it wasn't completely priced in, which was somewhat of a surprise to me. Some interesting tidbits: 1. Cook confirmed that Apple Pay was a new "category" (fulfilling the promise of multiple product categories in 2014?) as opposed to a complimentary service. No further promises of new categories - so looks like no integrated Apple TV this year. 2. Apple Watch in April - Seems that they are going for a little later rather than sooner - I think that's a good thing, as this is exactly the kind of product (relies on Bluetooth) where exact execution is very important (and where there have been issues recently with Connectivity on existing devices). Flawed technical execution, even if improved later, could, like on the Newton, be disastrous. 3. Oblique acknowledgment of Xiaomi as "local competition," which I haven't heard from Apple at all before. 4. Obliquely acknowledged possibility of Apple Pay as consumer-to-consumer payment service, which is interesting and I think does really help the Apple ecosystem. Everyday I see people use Alipay as a consumer-to-consumer payment service on their phone to pay back money borrowed for lunch or things like that in a way that is far beyond what I ever saw with PayPal. ApplePay would take even more friction out of that. Link to comment Share on other sites More sharing options...
loganc Posted January 28, 2015 Share Posted January 28, 2015 3. Oblique acknowledgment of Xiaomi as "local competition," which I haven't heard from Apple at all before. Doesn't it seem like the 1Q15 results in China indicate that Xiaomi hasn't ultimately impeded the AAPL opportunity. I think the AAPL results should be a pretty big blow to the Xiaomi investors. Further, I wish Xiaomi much luck in expanding their business beyond mainland China. Link to comment Share on other sites More sharing options...
Palantir Posted January 28, 2015 Share Posted January 28, 2015 I agree that these results were not too surprising, all that pent up demand for larger screens had to be released. That said, it was the low-hanging fruit. Link to comment Share on other sites More sharing options...
Liberty Posted January 28, 2015 Share Posted January 28, 2015 Results not a surprise to me at all. Looks like it wasn't completely priced in, which was somewhat of a surprise to me. What always surprises me is how the market doesn't understand Apple. They grow EPS 48%, they guide to over 20% next quarter, they have new incremental categories coming soon, they're buying back tons of stock and raising dividends quickly (which might accelerate after they are confident the Watch is established), they're doubling the number of stores in China where they grew revenue 70%, they have the best brand in the world and a very sticky ecosystem, ASPs are going up instead of down.. But hey, the stock is still trading at a super low FCF multiple ex-cash. Price is barely back to where it was in November before this was announced. Some interesting tidbits: 1. Cook confirmed that Apple Pay was a new "category" (fulfilling the promise of multiple product categories in 2014?) as opposed to a complimentary service. No further promises of new categories - so looks like no integrated Apple TV this year. This was not new. Cook had said at least once, probably many times, that Apple Pay was one of the "new categories" (along with the Watch) that he had said were coming. I also don't think this means anything about TV. Cook said he had multiple categories coming in 2014 because everybody was attacking Apple on that. Right now, he doesn't have to say anything. It'll come out when it comes out, no need to tease it (everybody expects it anyway). 2. Apple Watch in April - Seems that they are going for a little later rather than sooner - I think that's a good thing, as this is exactly the kind of product (relies on Bluetooth) where exact execution is very important (and where there have been issues recently with Connectivity on existing devices). Flawed technical execution, even if improved later, could, like on the Newton, be disastrous. I like later. More time to iron out bugs. But I don't believe that they ever meant to release it super early in the year, so they're not "late". Not that it would matter. It's not like there's likely a competitor just about the release an iPhone+Apple Watch (because these are a combo) killer and first mover's advantage will matter (anyone wants a Samsung Galaxy Gear?).. 3. Oblique acknowledgment of Xiaomi as "local competition," which I haven't heard from Apple at all before. I don't see this as very new either. The analyst asked about local competition, and Cook answered. Not long ago analysts all asked about Samsung and Google, so he talked about that. 4. Obliquely acknowledged possibility of Apple Pay as consumer-to-consumer payment service, which is interesting and I think does really help the Apple ecosystem. Everyday I see people use Alipay as a consumer-to-consumer payment service on their phone to pay back money borrowed for lunch or things like that in a way that is far beyond what I ever saw with PayPal. ApplePay would take even more friction out of that. The possibilities here are huge. Can't wait to see how big it becomes, and how much more sticky it makes the ecosystem, once the inventory of TouchID devices is much higher and it has launched in big markets like China, UK, etc. Link to comment Share on other sites More sharing options...
Liberty Posted January 28, 2015 Share Posted January 28, 2015 I like this way of visualizing large numbers: Sometimes just to wrap my head around really large numbers like this, I like to put things in units of aircraft carriers. The US Navy's last finished carrier cost $6.2 billion[1], meaning that $74.6 billion[2] is enough to buy Apple 12 nuclear carriers, a.k.a. a nuclear carrier fleet larger than that of the US Navy. Of course this is an inaccurate and very silly comparison, but at least for me it does give some sense of scale. That is a preposterous number of iPhones. [1]http://en.wikipedia.org/wiki/USS_George_H.W._Bush_(CVN-77) [2] Yes, I know that number is revenue and not profit. As long as I'm making a silly mental comparison though, why not have more fun by using the bigger number? Link to comment Share on other sites More sharing options...
rpadebet Posted January 28, 2015 Share Posted January 28, 2015 The ASP increase and huge pent up demand for large screen phones was not such a big surprise. It was predictable all along. The thing that caught my eye this quarter was the portion of iphone user base which has upgraded. Tim Cook put it as "mid teens to barely teens"....so that leaves room for a lot of iphones to be sold next couple of years. He also mentioned how ppl are switching over from Android now and that is very very interesting given Android's relative share and iphone becoming the aspirational smart phone. Plus there is the usual tailwind of new customers switching over to smartphones from feature phones. So these 3 drivers together can have a very powerful effect on the number of iphones being sold in the next few years. I think the 1 trillion market cap is a low bar here....and maybe carl icahns target of $200+ is also conservative. The only thing here I cant get my head around is what are they going to do with the cash which is piling up. $178 billion!!! Open a bank? Bail out the Euro and force everyone in eurozone to buy iphones forever? What can they possibly do with that kind of cash? Link to comment Share on other sites More sharing options...
Liberty Posted January 28, 2015 Share Posted January 28, 2015 The only thing here I cant get my head around is what are they going to do with the cash which is piling up. $178 billion!!! Open a bank? Bail out the Euro and force everyone in eurozone to buy iphones forever? What can they possibly do with that kind of cash? Opportunistically returning it to shareholders is fine with me. I'm kind of thinking that they're waiting to see if there's anything happening on tax reform/offshore cash rapatriation amnesty/etc. At some point when they have have 200-300bn in cash offshore, they become a poster child for pressuring politicians in figuring something out. The US is missing out on a lot of investment, and US shareholders are missing on a lot of money, by leaving this cash stranded. Apart from that, buybacks, tenders, rising dividends, it's all good. Link to comment Share on other sites More sharing options...
rpadebet Posted January 28, 2015 Share Posted January 28, 2015 The only thing here I cant get my head around is what are they going to do with the cash which is piling up. $178 billion!!! Open a bank? Bail out the Euro and force everyone in eurozone to buy iphones forever? What can they possibly do with that kind of cash? Opportunistically returning it to shareholders is fine with me. I'm kind of thinking that they're waiting to see if there's anything happening on tax reform/offshore cash rapatriation amnesty/etc. At some point when they have have 200-300bn in cash offshore, they become a poster child for pressuring politicians in figuring something out. The US is missing out on a lot of investment, and US shareholders are missing on a lot of money, by leaving this cash stranded. Apart from that, buybacks, tenders, rising dividends, it's all good. They say they have returned 103 billion out of the 130 billion in capital return authorized 1.5 years ago. The result is they end up with significantly more cash than they had then :). It's a high class problem for sure. Link to comment Share on other sites More sharing options...
jeffmori7 Posted January 28, 2015 Share Posted January 28, 2015 The only thing here I cant get my head around is what are they going to do with the cash which is piling up. $178 billion!!! Open a bank? Bail out the Euro and force everyone in eurozone to buy iphones forever? What can they possibly do with that kind of cash? Maybe they could hire Todd and Ted to invest a small portion of it :) Link to comment Share on other sites More sharing options...
innerscorecard Posted January 29, 2015 Share Posted January 29, 2015 I just had the idle thought that with Apple rising to majority share of smartphones in some countries, the risk of governments going after Apple, in any way they can, rises. Governments generally don't seem to like businesses that are very visible and both reliably high-margin and also dominant in share. I'm not talking about anti-trust law, but rather policy generally. Link to comment Share on other sites More sharing options...
rkbabang Posted January 29, 2015 Share Posted January 29, 2015 The only thing here I cant get my head around is what are they going to do with the cash which is piling up. $178 billion!!! Open a bank? Bail out the Euro and force everyone in eurozone to buy iphones forever? What can they possibly do with that kind of cash? Maybe they could build 15 or 20 aircraft carriers and, a few nuclear subs as well, then tell the U.S. "We will be returning as much cash to the U.S. as we please, whenever we please, and we will not be having any of it stolen from us F-you very much". OK I know I'm dreaming... Link to comment Share on other sites More sharing options...
rpadebet Posted January 29, 2015 Share Posted January 29, 2015 The only thing here I cant get my head around is what are they going to do with the cash which is piling up. $178 billion!!! Open a bank? Bail out the Euro and force everyone in eurozone to buy iphones forever? What can they possibly do with that kind of cash? Maybe they could build 15 or 20 aircraft carriers and, a few nuclear subs as well, then tell the U.S. "We will be returning as much cash to the U.S. as we please, whenever we please, and we will not be having any of it stolen from us F-you very much". OK I know I'm dreaming... Maybe the could build those and sell it to DoD at cost, book no profit and record revenues in US avoiding all the taxes altogether. Link to comment Share on other sites More sharing options...
Liberty Posted January 29, 2015 Share Posted January 29, 2015 Apple market cap: 681bn ex-out just 100bn in cash: 581bn TTM FCF = 59.7bn FCF multiple = 9.7x FCF growth rate NTM >20% Apple's ROIC during the last Q (using Greenblatt's method): 472.91% Per share will look even better over time because share count is going down... Horace Dediu: "Apple probably captured more than 90% of available profits in the mobile phone market during Q4." Link to comment Share on other sites More sharing options...
Jurgis Posted January 29, 2015 Share Posted January 29, 2015 Maybe they could build 15 or 20 aircraft carriers and, a few nuclear subs as well, then tell the U.S. "We will be returning as much cash to the U.S. as we please, whenever we please, and we will not be having any of it stolen from us F-you very much". OK I know I'm dreaming... This sounds more like Elon Musk than like Tim Cook. :) They could build a base on the Moon and tell the US: "iMoon U". Link to comment Share on other sites More sharing options...
Liberty Posted January 29, 2015 Share Posted January 29, 2015 Samsung's mobile profits plunge 64.2% after Apple's iPhone 6 devastates premium Galaxy sales http://appleinsider.com/articles/15/01/28/samsungs-mobile-profits-plunge-642-after-apples-iphone-6-devastates-premium-galaxy-sales Wow, Samsung has a 4.5% cash tax rate. And people complain about Apple's tax rate? Link to comment Share on other sites More sharing options...
rkbabang Posted January 29, 2015 Share Posted January 29, 2015 Maybe they could build 15 or 20 aircraft carriers and, a few nuclear subs as well, then tell the U.S. "We will be returning as much cash to the U.S. as we please, whenever we please, and we will not be having any of it stolen from us F-you very much". OK I know I'm dreaming... This sounds more like Elon Musk than like Tim Cook. :) They could build a base on the Moon and tell the US: "iMoon U". As RAH wrote about long ago, once you have a base on the moon you can threaten to throw big rocks down the well. Link to comment Share on other sites More sharing options...
Jurgis Posted January 29, 2015 Share Posted January 29, 2015 Maybe they could build 15 or 20 aircraft carriers and, a few nuclear subs as well, then tell the U.S. "We will be returning as much cash to the U.S. as we please, whenever we please, and we will not be having any of it stolen from us F-you very much". OK I know I'm dreaming... This sounds more like Elon Musk than like Tim Cook. :) They could build a base on the Moon and tell the US: "iMoon U". As RAH wrote about long ago, once you have a base on the moon you can threaten to throw big rocks down the well. Yes, that's the reference. :) You may know that Elon has Lady Vivamus: http://www.heinleinprize.com/2011/07/heinlein-prize-2011-awarded-to-elon-musk/ Link to comment Share on other sites More sharing options...
rkbabang Posted January 29, 2015 Share Posted January 29, 2015 Maybe they could build 15 or 20 aircraft carriers and, a few nuclear subs as well, then tell the U.S. "We will be returning as much cash to the U.S. as we please, whenever we please, and we will not be having any of it stolen from us F-you very much". OK I know I'm dreaming... This sounds more like Elon Musk than like Tim Cook. :) They could build a base on the Moon and tell the US: "iMoon U". As RAH wrote about long ago, once you have a base on the moon you can threaten to throw big rocks down the well. Yes, that's the reference. :) You may know that Elon has Lady Vivamus: http://www.heinleinprize.com/2011/07/heinlein-prize-2011-awarded-to-elon-musk/ I wasn't aware of that. Thanks for the links! Link to comment Share on other sites More sharing options...
Liberty Posted January 30, 2015 Share Posted January 30, 2015 Nice to see Jeff Williams get some public kudos, he deserves them: http://daringfireball.net/2015/01/jeff_williams_apple_executives Link to comment Share on other sites More sharing options...
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