AAPL - Apple Inc.

[Liberty]

http://i.imgur.com/DffHina.png

 

It might not mean much, but Apple didn't buy back any shares in December, and probably not in January either (pre-earnings blackout period).

 

They don't say why they didn't buy in December, but it sounds like it might have to do with some non-public material info. Maybe some bigger-than-usual M&A discussions..? Intriguing.

 

In any case, I expect that they're restarting the program now unless they still are prevented like in December...

[Liberty]

http://leancrew.com/all-this/2016/01/how-the-iphone-6-ruined-apple/

[johnny]

They don't say why they didn't buy in December, but it sounds like it might have to do with some non-public material info.

 

What are the standards or norms for this? Management is -always- in possession of such info, so are there any examples of where they were found to have crossed some line? Have there been any recent court cases or SEC actions on this sort of thing?

 

Maybe the material non-public info that they were refraining from acting on was that they knew they were going to have a flat quarter give ambiguously apocalyptic guidance? In that case, I'm happy they stopped buying and let the stock tank, assuming they are now active in the market.

[Liberty]

They don't say why they didn't buy in December, but it sounds like it might have to do with some non-public material info.

 

What are the standards or norms for this? Management is -always- in possession of such info, so are there any examples of where they were found to have crossed some line? Have there been any recent court cases or SEC actions on this sort of thing?

 

Maybe the material non-public info that they were refraining from acting on was that they knew they were going to have a flat quarter give ambiguously apocalyptic guidance? In that case, I'm happy they stopped buying and let the stock tank, assuming they are now active in the market.

 

I'd guess the standard is similar to the level of materiality that would require a company to issue a press release and file it with the SEC (if anyone knows the exact rules, please correct me if I'm wrong). So for example, buying a tiny company wouldn't be material - they do that all the time and we never hear about it - but buying something bigger might trigger their lawyers to make them stop. I doubt issuing weak guidance counts, that's what the pre-earning blackouts are for.

 

I guess in theory they could have decided to not buy a single share in December voluntarily, but that seems unlikely considering how much they've been buying back over the past year.

[DCG]

So it sounds like they're going to essentially start re-selling the iPhone 5 and call it something else?

[Liberty]

So it sounds like they're going to essentially start re-selling the iPhone 5 and call it something else?

 

No, the rumors are for basically an entirely upgraded phone, but the form factor would be similar to the 5.

[Guest neiljgsingh]

So it sounds like they're going to essentially start re-selling the iPhone 5 and call it something else?

 

No, the rumors are for basically an entirely upgraded phone, but the form factor would be similar to the 5.

 

And also at a lower cost. Should help appease the bears claiming the iPhone won't be able to grow in Asia like it has in the rest of the developed world. But one can only hope this is Cook/Ive being smart with long-term strategy and not pure capitulation to sell-side analysts and others claiming the iPhone in its current form is doomed.

[Liberty]

So it sounds like they're going to essentially start re-selling the iPhone 5 and call it something else?

 

No, the rumors are for basically an entirely upgraded phone, but the form factor would be similar to the 5.

 

And also at a lower cost. Should help appease the bears claiming the iPhone won't be able to grow in Asia like it has in the rest of the developed world. But one can only hope this is Cook/Ive being smart with long-term strategy and not pure capitulation to sell-side analysts and others claiming the iPhone in its current form is doomed.

 

I don't think they're doing this because of pressure from the outside, and these things have pretty long design/production cycles. This 4-inch iPhone would have been planned for at least a year, probably 2.

 

I think it just makes sense. There's never been one-size-fits-all with smartphones. Some people will always prefer bigger or smaller, so it makes sense to offer a few models, like they now have 3 sizes of iPads.

[Palantir]

This will also mean margin declines..

[Viking]

For iPhone it sounds to me like Apple is pursuing a similar strategy they pursued with iPod. As the smartphone market matures they are coming out with more line extensions.

 

6S Plus

6S

6 Plus

6

5 se (or whatever they are going to call it)

 

This will give them 3 different screen sizes of iPhone with current specs and lots of price tiers. Think back to 24 months ago when Apple has far fewer options available.

 

iPad has mini, air and pro - 3 screen sizes

Apple Watch

 

Apple has done a nice job the last 24-36 months of rounding out the number of devices they have in mobile and the screen sizes they offer.

[Liberty]

This will also mean margin declines..

 

Not necessarily by much. If the smaller phone has internals that are as fast or nearly as fast as the mainline, they probably won't be much cheaper.

 

The 6s Plus is 130$ more than the 6S. I wouldn't be surprised if the smaller phone was just $100 less (and also a bit less expensive to manufacture -- smaller battery, smaller screen, etc).

[innerscorecard]

I don't see why it isn't the same price as a 6. I'd say I prefer the 6 Mini concept to the 5SE concept. If people want a smaller phone first and foremost, they wouldn't mind paying up for one.

 

Of course, that way you add some complexity instead of reduce it by replacing the low tier. So I see why it makes some sense. I do wonder about the margin hit - whether it's even necessary.

[AzCactus]

For those of you who either own Apple products or know people who do, how strong if the loyalty ? So of ten users of Apple products how many would you say have complete loyalty?  Unless I'm missing something painfully obvious there's a large segment of the population that'll buy Apple products no matter what. 

[blainehodder]

The question of AAPL as a good investment  is more about renewal rates and market saturation than substitution of the high end phone market in my opinion. Much of the growth until now was getting smart phones into people's hands. Soon, the initial sales spike of a pent up market transtitions to renewing phones every 2-4 yrs, and therefore sales numbers can and likely will decline in the saturated markets even with 0 substituion. At the current price though, I don't think this transition from opening the market spillway to simple renewal patterns matters that much, but growth is certain to slow down or even shrink near term.

[DCG]

For those of you who either own Apple products or know people who do, how strong if the loyalty ? So of ten users of Apple products how many would you say have complete loyalty?  Unless I'm missing something painfully obvious there's a large segment of the population that'll buy Apple products no matter what.

 

 

We'll, I'm not exactly sure how to quantify it, but I own a mac, iphone, iPad, and Apple TV. My wife, as well as people I communicate with frequently (such as my parents, brother and sister) also have iPhones. Things like Facetime, iMessage, and sharing work well across different users.

 

 

My mac iOS devices work well together (not perfect, but much better than having an iPhone and a PC would).

 

 

I also do a lot of 'creative' projects, including with music recording/production and graphic design. Software/apps available on macs far exceed what's available on platforms such as Windows and Android devices. I can literally start recording a song on the Garageband App on my iPad or iPhone and resume it with Garageband on my mac.

 

 

I wouldn't say I buy Apple products no matter what though. I haven't bought an Apple Watch, and don't plan to.

 

 

There are things about Apple software that I dislike (mainly the Apple Music app and iTunes), but haven't had any big issues with any of their hardware.

 

 

I've owned 2 Android devices (and Android phone and a Nexus 7 tablet). Ended up selling both of them and replacing them with an iPhone & iPad and thinks iOS devices are still currently better devices overall).

 

 

If Google can make their products better (not just equivalent) to Apple I'd certainly switch back.

 

 

I buy Apple products for specific reasons - not just to have an Apple logo on my computer to feel cool when sitting in a coffee shop or whatever. At the same time, I will tell people who want a computer to just browse the internet and check facebook that they don't need to spend the money on a mac.

 

 

Not sure if this answers your question in any way.  :P

[boilermaker75]

For those of you who either own Apple products or know people who do, how strong if the loyalty ? So of ten users of Apple products how many would you say have complete loyalty?  Unless I'm missing something painfully obvious there's a large segment of the population that'll buy Apple products no matter what.

 

I'm pretty loyal, because I have never been disappointed with an Apple product. From my first SE/30 to my current MacBook Air I have probably had 10-12 Apple computers. So many I probably can't remember them all. At least 4 laptops.

 

I am on my second iPhone. I am on the 4 year replacement cycle.

 

I have an iPad. It has become indispensable for me for teaching, making instruction videos, etc. Only complaint is with using a stylus, although I have found the microfibre tipped stylus adequate.

 

I will probably get an iPad Professional soon. The larger screen will be an advantage for what I use an iPad for and I am hoping the pencil will eliminate my only issue currently with the iPad.

 

I have often had to work with window machines. For me, I'll take a Mac any day.

 

Edit: Forgot I also have an iPod. I still use it often.

[petec]

For those of you who either own Apple products or know people who do, how strong if the loyalty ? So of ten users of Apple products how many would you say have complete loyalty?  Unless I'm missing something painfully obvious there's a large segment of the population that'll buy Apple products no matter what.

 

I have a very bitty relationship with Apple.  Years ago got an iPod which led to a iTunes account and an Apple TV unit.

 

Separately, never had an iPhone until work bought me one.  Would have happily had a Windows Phone instead but for the lack of apps - I wonder if that changes with W10.  I've never owned a Mac or an iPad, but I got my mum an iPad because they seemed simple to operate.

 

I have a Surface and a desktop running W10 both of which are excellent for my uses, and the reliability of syncing everything I do through the cloud is good.  I'm fairly solidly locked into MSFT.  Why not Apple?  I just never saw the need. 

 

I've had one Android phone which I hated.

 

I think the key point is that if you like Apple's software you have to buy Apple.  And people do get locked into software by habit, as I am with Windows.  I'm seriously considering the stock on that basis.  My issue is that although the multiple is depressed, the earnings clearly aren't.  I like buying double-depressed! 

[LongTermView]

I think the key point is that if you like Apple's software you have to buy Apple.

Agreed.  Long AAPL.  Sometimes it seems like the market discounts Apple's software/ecosystem and mainly values them as a hardware company.

[DCG]

I think the key point is that if you like Apple's software you have to buy Apple.

Agreed.  Long AAPL.  Sometimes it seems like the market discounts Apple's software/ecosystem and mainly values them as a hardware company.

 

 

I think the market understands Apple at this point. The stock is discounted simply because their growth has stalled at the moment, so people/funds are moving money into stocks with stronger growth (as they chase short-term gains to hold onto impatient investors). I really don't think it's more complicated than that.

[Picasso]

To echo DCG's point, the software aspect of Apple shows up in their hardware sales. No need to pay a software multiple when you're already seeing the impact through more hardware sales.

[Junto]

I am thinking the point is that the ecosytem is not getting a fair valuation outside of the hardware sales. Hard to keep showing material growth when the company is getting this large.

 

Keep in mind that AAPL had larger Revenue and net income in Q4 2015 than GOOG had in all of 2015..yet briefly GOOG had a higher market capitalization.

[petec]

I agree entirely.  The market gets Apple.  It's just not sure about growth.  And for an innovative tech company if you can't grow then the market will worry about the risk that someone else makes a better mousetrap.  So, you get a low multiple unless you either grow explosively or become a cash cow.  That's what puts me off: I think you have to have significant faith in the "people will always love the software" thesis.  I do have significant faith in that, but even at 10x there is long term downside if I am wrong. 

 

 

[TheAiGuy]

I agree entirely.  The market gets Apple.  It's just not sure about growth.  And for an innovative tech company if you can't grow then the market will worry about the risk that someone else makes a better mousetrap.  So, you get a low multiple unless you either grow explosively or become a cash cow.  That's what puts me off: I think you have to have significant faith in the "people will always love the software" thesis.  I do have significant faith in that, but even at 10x there is long term downside if I am wrong. 

 

 

 

This is kind of foolish, though. I mean, I get the worry about another mousetrap but the growth concerns seem strange to me. If no one else builds something to take the place of the iPhone, then there is a healthy replacement cycle to the phones, slow growth opportunities as the rest of the world gets richer and further monetization of their existing customer base by selling watches, Apple music subscriptions, cases, larger phones, whatever. A lot of people buy whatever the default is, and for a lot of people, that's Apple.

[Liberty]

One thing I've been wondering about is the impact on iPad sales of not refreshing the iPad Air last fall. They had the iPad Pro come out, which helped, but it'll always be a more niche device than the 9.7 inch form factor. That can't have been good for sales. I wonder if we'll see some catch-up when the iPad Air 3 is released, especially if it has lots of cool stuff (3D Touch? Apple Pencil support? 4 speakers? Touch ID V2? the new accessory interconnect? Variable refresh rate screen?)

[dabuff]

Another thing to consider is that Apple in many ways is not just a tech company - it's also a fashion company.

There was a recent article discussing how to many of the young, up-and-coming Chinese, Apple is as much a status symbol as brands like Louis Vuitton. (so we have the white swan of the developing world to give this a little push).