AAPL - Apple Inc.

[John Hjorth]

Thank you for great input, comments, links etc. to you all active in this topic about Apple's presented new initiatives. It's a great help to get a better understanding of the whole thing.

[dwy000]

I'd love to know the economics for Apple and the suppliers in this arrangement.  Even if the whole $10 was going to WSJ, that is way less than WSJ is getting today.  And with hundreds of other publications in there I cant imagine how Apple is making money.  Copying Netfix model is great for customer engagement but horrible for cash flow.

[johnny]

The WSJ component is pretty intelligently limited--it's only rolling ~3 day access to articles. This is pretty good segmentation; the sort of people who were actually in the market for a $300/yr subscription to WSJ probably need archive access or at least think they do (what percentage of WSJ subs are paid, after-tax, by the actual end user, anyway?)

 

WSJ cut a decent deal here, they have the option to bail should this not work, so it's basically a free experiment. Again, even if this rolling 3-day access actually does convert/cannibalize full-paying subscribers, the WSJ product is not the sort of discretionary item where the customer's internal valuation of the product will irreversibly anchor on the hyper-discounted price. I think they're (rightly) confident that almost all of the original subs will be forced to snap back to regular pricing should Murdoch decide he doesn't like what he's seeing.

 

Not sure if this is just bad product integration or a deliberate UX choice, but WSJ within the News+ experience does not refrain from linking to "related" stories that end up smashing you into the regular-price paywall. I'm sure there's some crazy bull in the organization that thinks they're going to actually convert Apple dorks to full-freight WSJ customers--that seems unlikely.

[Liberty]

https://techcrunch.com/2019/03/28/how-apple-card-works/

[WayWardCloud]

I'm surprised their card offers dollar cashback instead of "Apple points" that go towards buying your next device  ???

I thought Apple was the company that does everything to keep you within their ecosystem...

[LongTermView]

Regarding News+, Command +/- still don't seem to work for Forbes but I can double click their articles for a larger font size. Command +/- does work for Bloomberg Businessweek.

 

Given the Cmd +/- and double click options, I now think it is worth the $10 per month.

[johnny]

News and News+ is such an incoherent jumbled mess of a product. It's so cheap that it's a no brainer for anybody with a mild curiosity about WSJ or bizarre niche magazines like 'Contemporary Yachting' and 'Gardens and Guns' or whatever, but the app is a total disaster from a UX perspective; it just adds more mass to the already pretty strongly established fact that Cook is driven less by a desire to create world-class services and just wants to be able to talk about slightly bigger services revenue each quarter.

 

These are in fact two different products, and two different applications, that Apple has lazily attempted to glue together, with nothing resembling an actual thought-out integration of functionality. I'm willing to bet Tim spent a lot more time hand-curating the selection of periodicals than contemplating what the fuck the app is supposed to be doing and how it's supposed to be communicating its structure to the user. This continues to be my big picture concern; I see a lot of evidence that more and more Apple execs fancy themselves cultural leaders and tastemakers and consider matters like UX coherence and product quality to be prosaic matters to be handled by the mid-tier engineers.

 

There's a rumor, briefly touched on by the ATP podcast, that the AirPower product was announced before Apple actually had a working production prototype--that it was based quite literally on a proof-of-concept demo by an as-yet-unacquired company. This is the sort of attention to detail on product announcements that you'd expect when management is --actually-- trying to figure out if they should have a coffee with Jennifer Anniston after their lunch with Spielberg, or have lunch with Jennifer Anniston and just do coffee with Spielberg.

 

But don't worry, there's plenty of cashflow left to be generated from the now 10+ year old product platform that was largely the brainchild of a dead guy and another guy that was ousted from the company 6 years ago. What multiple should we put on it? 25x?

 

(still long)

[Liberty]

There's a rumor, briefly touched on by the ATP podcast, that the AirPower product was announced before Apple actually had a working production prototype--that it was based quite literally on a proof-of-concept demo by an as-yet-unacquired company.

 

They had a working Airpower in the hands on area when it was annouced, pretty sure Gruber tried it.

 

I think what they probably couldn't get right with it is the safety aspect and the reliability. The physics of charging a bunch of devices at the same time that can be positioned anywhere on a mat aren't exactly straightforward. It's a good sign that they cancelled something the couldn't get right, rather than release a half-baked idea like most other companies would've done.

[johnny]

Doesn't sound like a production prototype. Having something you can plop your phone onto, with your phone saying "I'm charging now" is not exactly proof positive of any major engineering breakthrough (especially when you control the phone). Give me the ability to sign iOS updates and I can do the same thing, using a literal-brick instead of the airpower mat. This isn't the first time Apple has whiffed on thermal issues, so I don't think we can exactly call it an outlier issue either.

 

It is obviously a good thing they didn't release yet another product with thermal/reliability issues. But how much time should we allocate to celebrating the successful ditching of an aircraft and how much time should we spend wondering why our planes keep falling out of the sky?

 

As you mention, Gruber saw a design prototype. He also, IIRC, had credible contacts at Apple telling him a year ago that there was no way this product was ever going to be released. In other words, the product was understood unambiguously to be a pipe-dream by certain engineers in the company, yet somehow the executives could not be made to understand that fact. That's symptomatic of corporate dysfunction. It reminds me of the anecdote about how an engineer had to sit Steve Jobs and/or Jony Ive down and explain to them that the iPhone needed plastic/glass line breaks in the case because aluminum isn't radio transparent.

 

The difference, of course, is that they were able to sit Jobs and/or Ive down and have this conversation before the company announced the pure-metal phone. So what has changed? One reasonable hypothesis is that boring virgin loser engineer types are being relatively disempowered in the organization, while Tim Cook focuses on making sure film directors, handbag salespeople, and ex-white house officials have his phone number so that they can discuss big things of cultural importance like how many low-effort intersectionality boxes they can check for Woke Netflix®.

[Liberty]

Dude, hold your horses. They made a mistake, one way or another. Jobs made plenty of mistakes too. Show me a company that doesn't.

[johnny]

Dude, hold your horses. They made a mistake, one way or another. Jobs made plenty of mistakes too. Show me a company that doesn't.

 

Since the implicit question of this thread is whether or not one trillion dollars is a bargain price for this company, I think the correct disposition is the cynical excited horse one.

 

We can run from thread to thread on this board emphasizing that Pobody is Nerfect, but it doesn't strike me as a very useful valuation methodology.

 

I've tried to explain why I consider this story to be consistent with a half dozen other recent ones that I believe, in aggregate, demonstrate an increasingly dysfunctional organization. Two of their current pro product lines are plagued by, among other things, thermal constraints that should have blind-sided nobody. And yet, here we are, hearing the same story again about yet-another-product.

 

The point is that this is not where Apple's focus is. That's why they have a VP of Global Warming but no VP of Product Warming. One of these is actually an area that is critical for the success of Apple, and the other is an area that is critical for the inflation of managements' ego/s.

[John Hjorth]

johnny,

 

Please keep your posts about AAPL coming, thank you in advance.

[rkbabang]

The WSJ component is pretty intelligently limited--it's only rolling ~3 day access to articles. This is pretty good segmentation; the sort of people who were actually in the market for a $300/yr subscription to WSJ probably need archive access or at least think they do (what percentage of WSJ subs are paid, after-tax, by the actual end user, anyway?)

 

WSJ cut a decent deal here, they have the option to bail should this not work, so it's basically a free experiment. Again, even if this rolling 3-day access actually does convert/cannibalize full-paying subscribers, the WSJ product is not the sort of discretionary item where the customer's internal valuation of the product will irreversibly anchor on the hyper-discounted price. I think they're (rightly) confident that almost all of the original subs will be forced to snap back to regular pricing should Murdoch decide he doesn't like what he's seeing.

 

Not sure if this is just bad product integration or a deliberate UX choice, but WSJ within the News+ experience does not refrain from linking to "related" stories that end up smashing you into the regular-price paywall. I'm sure there's some crazy bull in the organization that thinks they're going to actually convert Apple dorks to full-freight WSJ customers--that seems unlikely.

 

Previously I've been able to use outline.com to read any WSJ article I wanted to.  I just noticed today that outline doesn't work on WSJ anymore.  So for people like me who used to rely on the google search trick and then the outline.com trick, news+ would be a not too expensive alternative.

 

[Patmo]

 

That's why they have a VP of Global Warming but no VP of Product Warming.

 

This is gold

[Guest ajc]

 

 

Since the implicit question of this thread is whether or not one trillion dollars is a bargain price for this company, I think the correct disposition is the cynical excited horse one.

 

We can run from thread to thread on this board emphasizing that Pobody is Nerfect, but it doesn't strike me as a very useful valuation methodology.

 

I've tried to explain why I consider this story to be consistent with a half dozen other recent ones that I believe, in aggregate, demonstrate an increasingly dysfunctional organization. Two of their current pro product lines are plagued by, among other things, thermal constraints that should have blind-sided nobody. And yet, here we are, hearing the same story again about yet-another-product.

 

The point is that this is not where Apple's focus is. That's why they have a VP of Global Warming but no VP of Product Warming. One of these is actually an area that is critical for the success of Apple, and the other is an area that is critical for the inflation of managements' ego/s.

 

 

 

Good posts.

 

Given the usual fluffer/fan-spam content the average COBF tech thread consists of, your informed and objective analysis is beyond necessary.

 

 

 

[Liberty]

 

 

Since the implicit question of this thread is whether or not one trillion dollars is a bargain price for this company, I think the correct disposition is the cynical excited horse one.

 

We can run from thread to thread on this board emphasizing that Pobody is Nerfect, but it doesn't strike me as a very useful valuation methodology.

 

I've tried to explain why I consider this story to be consistent with a half dozen other recent ones that I believe, in aggregate, demonstrate an increasingly dysfunctional organization. Two of their current pro product lines are plagued by, among other things, thermal constraints that should have blind-sided nobody. And yet, here we are, hearing the same story again about yet-another-product.

 

The point is that this is not where Apple's focus is. That's why they have a VP of Global Warming but no VP of Product Warming. One of these is actually an area that is critical for the success of Apple, and the other is an area that is critical for the inflation of managements' ego/s.

 

 

 

Good posts.

 

Given the usual fluffer/fan-spam content the average COBF tech thread consists of, your informed and objective analysis is beyond necessary.

 

What's good about the post, apart from it being negative, which I presume is aligned with your view? I don't see any substance, it's fluff, just a different kind.

 

The company earned 62bn of FCF TTM and hundreds of billions in cash on a shrinking number of shares, with high ROE and ROIC, it's increasingly monetizing its almost 1bn device installed base, and its dominance in premium (aka profitable) smartphones and computers is more established than it was a few years ago (when everybody thought Samsung or Google was going to take the lead any day now).

 

I don't own Apple, because I see better opportunities elsewhere, and they don't do everything right, and they aren't culturally set up to be the best in the world at everything (nobody is, business is about trade-offs), but to claim that they're somehow in disarray and that they don't know what they're doing is superficial BS.

 

They've had issues, especially with the Mac, in good part because Intel can't meet its own roadmap. I'm sure that when Apple switches to ARM CPUs things will run a lot smoother on that front. As for the rest, of course there are problems. There always were, even with Jobs (he's deified now, but back then Apple was an underdog that got a lot of criticism and had failures). It's just a much different company that is much more mature than it used to be, but they're in a good position to do pretty well for a while. Most of the businesses that got killed were specialized hardware businesses that got supplanted by general computing devices running software that subsumed their capabilities (RIM, Nokia, etc), and by companies that could design UX that could be adopted by the masses, not just early adopters or the enterprise. Apple is one of those general computing device makers, and one of those UX-focused companies. There's no level up once you get to a Turing machine, and I'm not seeing many other companies that have the capabilities required to severely attack Apple (table stakes are controlling your own OS and hardware, having an App store with millions of developers, being good at making consumer products (design, UX, brand, ecosystem, etc)), having worldwide distribution, etc.

 

They're not as exciting as they were when the categories were brand new and rapidly changing (everything matures after a while, Porsche keeps iterating on its cars, but they still look like Porsches.. iPhones are maturing too), but they've got a franchise that throws off a tremendous amount of cash. Companies mature (especially when they're so successful that they basically saturate their markets), grow slows, but that doesn't mean they can't be good investments. Lots of consumer product companies grow the top line at basically GDP+ and yet have quite satisfactory stock returns (usually through some buybacks, some leverage, some margin expansion, increasing dividends, etc).

 

Some appear disappointed at them because they don't come out with new iPhone-sized products every few years, but that's not a reasonable expectation. The iPhone is the most successful consumer product of all time bar none, and is unlikely to be ever equalled again. Many of their other franchises would be quite large companies near the top of the SP500 on their own (the Mac, the iPad. Even the Airpods are a pretty big hit and must have nice margins, and the Apple Watch has grown into one over time with iteration. The App Store and other services almost have revenues the size of Facebook...).

 

But yeah, they screwed up on the Airpower charging mat and miscalculated GPU use cases and Intel roadmaps with the low-volume Mac Pro, and they've made a big mistake with their butterfly keyboards, etc. Put that list of problems against the mistakes and errors of their competitors, and see how nobody's perfect.

[Guest ajc]

 

 

What's good about the post, apart from it being negative, which I presume is aligned with your view? I don't see any substance, it's fluff, just a different kind.

 

The company earned 62bn of FCF TTM and hundreds of billions in cash on a shrinking number of shares, with high ROE and ROIC, it's increasingly monetizing its almost 1bn device installed base, and its dominance in premium (aka profitable) smartphones and computers is more established than it was a few years ago (when everybody thought Samsung or Google was going to take the lead any day now).

 

I don't own Apple, because I see better opportunities elsewhere, and they don't do everything right, and they aren't culturally set up to be the best in the world at everything (nobody is, business is about trade-offs), but to claim that they're somehow in disarray and that they don't know what they're doing is superficial BS.

 

They've had issues, especially with the Mac, in good part because Intel can't meet its own roadmap. I'm sure that when Apple switches to ARM CPUs things will run a lot smoother on that front. As for the rest, of course there are problems. There always were, even with Jobs. It's just a much different company that is much more mature than it used to be, but they're in a good position to do pretty well for a while. Most of the businesses that got killed were specialized hardware businesses that got supplanted by general computing devices running software that subsumed their capabilities (RIM, Nokia, etc), and by companies that could design UX that could be adopted by the masses, not just early adopters or the enterprise. Apple is one of those general computing device makers, and one of those UX-focused companies. There's no level up once you get to a Turing machine, and I'm not seeing many other companies that have the capabilities required to severely attack Apple (table stakes are controlling your own OS and hardware, having an App store with millions of developers, being good at making consumer products (design, UX, brand, ecosystem, etc)), having worldwide distribution, etc.

 

They're not as exciting as they were when the categories were brand new and rapidly changing (everything matures after a while, Porsche keeps iterating on its cars, but they still look like Porsches.. iPhones are maturing too), but they've got a franchise that throws off a tremendous amount of cash. Companies mature (especially when they're so successful that they basically saturate their markets), grow slows, but that doesn't meant hey can't be good investments. Lots of consumer product companies grow the top line at basically GDP+ and yet have quite satisfactory stock returns.

 

Some appear disappointed at them because they don't come out with new iPhone-sized products every few years, but that's not a reasonable expectation. The iPhone is the most successful consumer product of all time bar none, and is unlikely to be ever equalled again. Many of their other franchises would be quite large companies near the top of the SP500 on their own (the Mac, the iPad. Even the Airpods are a pretty big hit and must have nice margins, and the Apple Watch has grown into one over time with iteration. The App Store and other services almost have revenues the size of Facebook...).

 

But yeah, they screwed up on the Airpower charging mat and miscalculated GPU use cases and Intel roadmaps with the low-volume Mac Pro, and they've made a big mistake with their butterfly keyboards, etc. Put that list of problems against the mistakes and errors of their competitors, and see how nobody's perfect.

 

 

 

Ma’am, this is an Arby’s.

 

 

 

[Liberty]

Ma’am, this is an Arby’s.

 

Back to fluff, eh?

[Liberty]

In today's episode of Gruber's podcast, he mention around 45 mins in that he spoke to some people who were working on Air Power (the Qi chargin mat that could have multiple devices in any location), and that they were working on it long before they acquired that company, and that he heard that most of the problems they had with it showed up when they tried to move to production (from pre-production prototypes).

 

Not that it matters that much in the grand scheme of things (I'd rather they cancel something that doesn't quite work out as planned like this than ship it to reviewers the way samsung sent it's terrible $2k folding phone that broke for most people in a day), but it's still interesting to have more of the backstory.

[Spekulatius]

In today's episode of Gruber's podcast, he mention around 45 mins in that he spoke to some people who were working on Air Power (the Qi chargin mat that could have multiple devices in any location), and that they were working on it long before they acquired that company, and that he heard that most of the problems they had with it showed up when they tried to move to production (from pre-production prototypes).

 

Not that it matters that much in the grand scheme of things (I'd rather they cancel something that doesn't quite work out as planned like this than ship it to reviewers the way samsung sent it's terrible $2k folding phone that broke for most people in a day), but it's still interesting to have more of the backstory.

 

I question Samsung’s engineering guidelines ever since a I had a LED TV that failed after 2 years. Turned out they had a 12V rated electrolyte capacitor in a circuit board running on 15V. Luckily there were lots of people that had the same issue and made YouTube videos on how to fix it. I replaced the capacitor with a higher rated one from RadioShack (that how old this thing is) and it still runs.

[mcmaaaaath]

 

 

What's good about the post, apart from it being negative, which I presume is aligned with your view? I don't see any substance, it's fluff, just a different kind.

 

The company earned 62bn of FCF TTM and hundreds of billions in cash on a shrinking number of shares, with high ROE and ROIC, it's increasingly monetizing its almost 1bn device installed base, and its dominance in premium (aka profitable) smartphones and computers is more established than it was a few years ago (when everybody thought Samsung or Google was going to take the lead any day now).

 

I don't own Apple, because I see better opportunities elsewhere, and they don't do everything right, and they aren't culturally set up to be the best in the world at everything (nobody is, business is about trade-offs), but to claim that they're somehow in disarray and that they don't know what they're doing is superficial BS.

 

They've had issues, especially with the Mac, in good part because Intel can't meet its own roadmap. I'm sure that when Apple switches to ARM CPUs things will run a lot smoother on that front. As for the rest, of course there are problems. There always were, even with Jobs. It's just a much different company that is much more mature than it used to be, but they're in a good position to do pretty well for a while. Most of the businesses that got killed were specialized hardware businesses that got supplanted by general computing devices running software that subsumed their capabilities (RIM, Nokia, etc), and by companies that could design UX that could be adopted by the masses, not just early adopters or the enterprise. Apple is one of those general computing device makers, and one of those UX-focused companies. There's no level up once you get to a Turing machine, and I'm not seeing many other companies that have the capabilities required to severely attack Apple (table stakes are controlling your own OS and hardware, having an App store with millions of developers, being good at making consumer products (design, UX, brand, ecosystem, etc)), having worldwide distribution, etc.

 

They're not as exciting as they were when the categories were brand new and rapidly changing (everything matures after a while, Porsche keeps iterating on its cars, but they still look like Porsches.. iPhones are maturing too), but they've got a franchise that throws off a tremendous amount of cash. Companies mature (especially when they're so successful that they basically saturate their markets), grow slows, but that doesn't meant hey can't be good investments. Lots of consumer product companies grow the top line at basically GDP+ and yet have quite satisfactory stock returns.

 

Some appear disappointed at them because they don't come out with new iPhone-sized products every few years, but that's not a reasonable expectation. The iPhone is the most successful consumer product of all time bar none, and is unlikely to be ever equalled again. Many of their other franchises would be quite large companies near the top of the SP500 on their own (the Mac, the iPad. Even the Airpods are a pretty big hit and must have nice margins, and the Apple Watch has grown into one over time with iteration. The App Store and other services almost have revenues the size of Facebook...).

 

But yeah, they screwed up on the Airpower charging mat and miscalculated GPU use cases and Intel roadmaps with the low-volume Mac Pro, and they've made a big mistake with their butterfly keyboards, etc. Put that list of problems against the mistakes and errors of their competitors, and see how nobody's perfect.

 

 

 

Ma’am, this is an Arby’s.

 

If I was in charge of this forum, a response like this would get a ban.

[gfp]

https://s22.q4cdn.com/396847794/files/doc_downloads/2019/04/Apple-Return-of-Capital-and-Net-Cash-Position-Q2'19.pdf

 

Apple resumed a more "normal" repurchase, buying $24 Billion worth of stock in the quarter.  Net Cash declined to $113 Billion.

 

$27.6 billion capital return in 3 months, plus a dividend raise, ought to satisfy uncle warren

[johnny]

Yeah I'm sure Warren is thrilled they finally resumed buybacks once shares got back up to $200. One word: courage.

[gfp]

cool.  not sure that is what happened in Q2 since the stock never traded 200, but I wasn't thrilled with the repurchases being curtailed over the holiday quarter either.  I think if you own over a quarter billion shares, you are generally pleased when the capital return increases

 

Yeah I'm sure Warren is thrilled they finally resumed buybacks once shares got back up to $200. One word: courage.

[Spekulatius]

https://s22.q4cdn.com/396847794/files/doc_downloads/2019/04/Apple-Return-of-Capital-and-Net-Cash-Position-Q2'19.pdf

 

Apple resumed a more "normal" repurchase, buying $24 Billion worth of stock in the quarter.  Net Cash declined to $113 Billion.

 

$27.6 billion capital return in 3 months, plus a dividend raise, ought to satisfy uncle warren

 

Interesting that they detail the expense (money spent on stock purchases), but not the effect (shares purchased and retired). Usually, when companies frame it like this (indifferent to cost), you know they are not out to really maximize shareholder returns. 90% of all the companies doing buybacks seem to be like that.