AAPL - Apple Inc.

[Arden]

"-trades at a low multiple because historically investing in high multiple hardware cos ends up bad

-Apple creates recurring revenue streams by getting customers to adopt platform. iPod > iPhone > iPad > iTV (you start with one and typically buy the others)

-Once a customer, very likely to renew

-Every 2 years people buy a new device, so like an annuity

-Reality: apple is a high growth company at low multiple

"

 

Like an annuity? yeah right. I don't see Apple automatically sending their new device to my home every year, I have to go to the store and buy it. If the new device hasn't advanced much since the last version- I won't bother. Apple has a huge competitor in itself. it is always competing with the future apple and the past apple. if they make a great and extremely innovative phone, the year afterwards they will have to compete with that phone to make people buy a new on .Apple must always innovate to stay in place.

 

About the loyalty and the likeliness to renew, I'm really not sure that's true.. Many people who used RIM for years and invested tons of time on getting used to the small ass keyboard changed brands without hesitation.

 

I think that phone operating systems aren't like PC OS, and if someone explains to you how to get to the menu screen and download apps on an android you can know everything there is to know about using a phone OS in 5 minutes.

 

BTW, is it true that you can't play most computre games on a mac?

[ExpectedValue]

I think there's always going to be certain tech-savvy/extremely price sensitive/budget-oriented consumers that will not buy Apple products. Computer gaming is pretty irrelevant because I would argue that PC gaming as a percentage of video game profits is probably a lot smaller than it was 10 years ago and is on the decline. PC gaming I think will settle on a really niche audience while the masses consume games through consoles.

 

That being said, I think Apple's strategy works pretty well to get you to adopt their platform. I work in an environment with a lot of older people and they have adopted the iPad, iPhone, and will probably be purchasing a mac PC for personal use soon. Some have even went with the current Apple TV.

 

It seems like if they can get you to adopt their hardware platform, and eventually really incorporate iCloud to make you tie all your information and data onto the platform, they can create a good amount of stickiness as long as they keep coming out with quality products.

 

I think RIMM is a terrible example to bring up, because it's just not the same thing. They just had a phone. That's it. It's different when you're having a bunch of devices, tied to some sort of cloud, and apps that sync across those devices. We haven't seen anything like this before but I think it's where things are heading in tech, and Google seems to be trying to follow the same lead (android phones, chrome PCs, tablets, now even a home media center).

[Arden]

Tariq- Android has a market share greater than apple's in the US in smartphones, and most PCs and laptops sold aren't apple's. You think that's because the majority of population is price sensitive and tech savvy?

 

About computer games- I'm not sure there's less computer gamers now than there were a few years ago. Just think about games like World of warcraft, starcraft, starwars the old republic- all of them have millions of players and can be played only on PCs. more importantly- gamers are the ones that buy the most expensive computers, so you want them to be your customers. anyway, Im pretty sure there is a way to get around the problem and play most games on a mac.. I do however think Apple's threat in the PC OS market is credible enough for me not ot invest in MSFT..

 

Even if there would be some kind of cloud- what makes you think that it would be apple's? google is the dominant player online, has very strong Phone OS market share. and almost everybody have a Windows PC where most of their information is stored. Why is Apple a better candidate than any of them to create a cloud system? (there's something called a google tv, and you can watch netflix movies using Xbox..)

 

Even if I have an Iphone, why would I get a mac? learning to use a PC is hard (my parents are still learning to use a computer, both of them have iphones), learning a phone OS is easy- so if anything I would deduce that people would now buy a Windows phone, I think we both agree that's unlikely..

 

About the iTV- it does look interesting. I wonder if it'll work for them.help me understand - if say you buy a movie on the iTV (you can only buy movies? some are for free?), you can watch it on your iphone or ipad later for free? and if you have an android you can't?

I wonder how they dealt with the copyright issues..

[Guest Hester]

David Einhorn on Apple at the CIMA conference

 

-trades at a low multiple because historically investing in high multiple hardware cos ends up bad

-Apple creates recurring revenue streams by getting customers to adopt platform. iPod > iPhone > iPad > iTV (you start with one and typically buy the others)

-Once a customer, very likely to renew

-Every 2 years people buy a new device, so like an annuity

-Reality: apple is a high growth company at low multiple

 

I'd like to ask Einhorn "why" on all those points. Why does Apple create recurring revenue streams and new devices people want to constantly buy? Has that reason, perhaps, passed away.

[tengen]

The London Evening Standard has an interview with Jonathan Ive, the creative genius behind Apple's iProducts:

 

http://www.thisislondon.co.uk/lifestyle/london-life/sir-jonathan-ive-the-iman-cometh-7562170.html

 

There's some interesting insight into Apple's design culture.

[Liberty]

Dividend coming?

 

http://www.bloomberg.com/news/2012-03-18/apple-to-discuss-outcome-of-discussions-over-handling-its-cash.html

[DCG]

That's my assumption. Don't see them announcing any share buybacks or major acquisitions.

[Guest valueInv]

Apple's products continue to be unimpressive post-Jobs:

 

http://www.informationweek.com/news/mobility/smart_phones/232800138

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/04/02/bloomberg_articlesM1UNR41A74E901-M1VDN.DTL

 

;) ;)

[Guest Hester]

Apple's products continue to be unimpressive post-Jobs:

 

http://www.informationweek.com/news/mobility/smart_phones/232800138

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/04/02/bloomberg_articlesM1UNR41A74E901-M1VDN.DTL

 

;) ;)

 

I wouldn't expect the popularity of Apple's existing products to crash just because Jobs died. But, just wait until the technology advances and they have to actually create some new products without Jobs.

[brker_guy]

http://allthingsd.com/20120402/iphone-outselling-all-other-smartphones-combined-at-sprint-and-att/?reflink=ATD_yahoo_ticker

 

"iPhone Outselling All Other Smartphones Combined at Sprint and AT&T"

 

“In fact, we believe iPhones are outselling all other smartphones combined at Sprint and AT&T and selling at roughly equal volume to all Android smartphones at Verizon.”

 

 

[JAllen]

Apple's products continue to be unimpressive post-Jobs:

 

http://www.informationweek.com/news/mobility/smart_phones/232800138

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/04/02/bloomberg_articlesM1UNR41A74E901-M1VDN.DTL

 

;) ;)

 

I know!  What horrible products!: http://www.washingtonpost.com/business/economy/consumer-reports-recalibrates-excellent-rating-for-new-ipad/2012/04/02/gIQAU0AprS_story.html?tid=pm_business_pop

[Guest valueInv]

If you segment the US market by price and operator, the iPhone covers about 2/3rds of it.

Over the next few years, we can expect Apple to cover close to 100% of it. What would the marketshare

look like then?

 

	$0	$99	$199+
ATT	Y	Y	Y
Verizon	N	Y	Y
Sprint	N	N	Y
T-Mobile	N	N	N
Metro, Cricket & Others	N	N	N

[Guest valueInv]

In my view, this is one of Apple's biggest problems:

 

http://www.businessweek.com/articles/2012-04-12/apple-and-the-revenge-of-the-phone-carriers

 

If I were Tim Cook, I would make fixing the subsidy issue the number one priority. The operators are  the reason why Android took off on smartphone market but is nowhere in the tablet market.

[Guest valueInv]

Great article on Apple and the law of large numbers:

 

http://www.networkworld.com/community/blog/apple-and-myth-law-large-numbers

 

Couldn't agree more.

[Guest valueInv]

Real-time IOS Vs Android usage stats:

 

http://labs.chitika.com/mobiledominance/

 

Their sampling is probably not very good but others have reported similar stats.

This also correlates stats from Flurry showing that developers make 4 times the amount of

money on IOS compared to Android.

[Guest valueInv]

The law of large numbers seems to be slowing Apple down:

 

http://online.wsj.com/article/SB10001424052702303459004577364293267650950.html

 

;)

[Parsad]

Just crazy what Jobs created!  A monster business and generating profits that no other corporation comes close to.  Numbers are just nuts.  Cheers!

[jeffmori7]

Yep..the largest market cap in the world..and still growing near a 100% YoY..crazy!

 

Substracting cash, still valued at 10 times profit.

[orion]

Up 10% in pre-market trading. This increase in market cap alone equals about 1.5x DELL´s total market cap. Amazing.

[Guest valueInv]

And there is more to come.

[DCG]

99% of analysts and talking heads out there are complete morons.

 

I had CNBC on for a few minutes yesterday and it was one analyst after another talking about how Apple is dead and how 'the price action of the stock indicates the company is in shambles'. Guy Adami and the rest of the Fast Money idiots were just as moronic. How do any of the idiots on CNBC all day make any money?

 

 

[BargainValueHunter]

I think the question is not "what is the next development in mobile technology that will change the game as much as the iPhone's touch screen a few years ago?" but "will it come from Apple?"

 

 

[txlaw]

The iPhone unit sequential change is the most astounding part of the numbers.  The drop was really small for being out of the holiday season. 

 

I wonder how much of that is due to the Sprint commitment?  Presumably, international sales also comprised a disproportionate percentage of those unit sales.  Any anecdotal evidence from Sprint users and people abroad could be informative. 

 

For you guys in Asia, for example, are you seeing the iPhone become a hot commodity?  Which version -- the 3Gs?

[txlaw]

Never mind, just skimmed CC transcript.  Looks like the 4S is probably the hot seller in Asia.

 

One thing I noticed when I read the CC is that the analysts who cover AAPL are not actually dumb.  They ask very good questions.  It's just dumb that they have to put price targets on the stock, try to predict earnings, and ignore the fundamental concepts of business investing when making recommendations.

[DCG]

Never mind, just skimmed CC transcript.  Looks like the 4S is probably the hot seller in Asia.

 

One thing I noticed when I read the CC is that the analysts who cover AAPL are not actually dumb.  They ask very good questions.  It's just dumb that they have to put price targets on the stock, try to predict earnings, and ignore the fundamental concepts of business investing when making recommendations.

 

The problem is that most analysts make predictions and recommendations based on what individual stocks are doing at any moment, not what the actual companies are doing. Analysts rush to raise their price targets when stocks go up, and quickly cut their price targets when stocks go down. I hate listening to these people, but look to take advantage of good buying opportunities created by stupid comments from analysts and pundits (such as them harping on iPhone sales being down in this last quarter compared to Q4 of 2011, which was a holiday shopping period and included the release of the iPhone 4S).