Seeking Alpha

ChuckJones

 
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  • Analysis Of Apple's Gross Margin Through The Past 4 iPhone Product Cycles [View article]
    I agree with you that gross margins are not the only way to try and tell if there are pricing pressures but it can be helpful.

    Devices ASP can give one indication but product mix can affect that. One situation could be declining ASPs due to lower priced products with rising margins. That may an instance that competition is not increasing but due to geographies lower priced units are being sold. Or it could be pricing pressure.

    Another thought is how investors react to changing margins. As can be seen when Apple's margins declined the stock took a big hit. When they stabilized the stock has run.
    Aug 21 11:18 AM | Likes Like |Link to Comment
  • Analysis Of Apple's Gross Margin Through The Past 4 iPhone Product Cycles [View article]
    I agree that net profit and margins are important but so are gross margins. It is one of the best ways to tell if the company is experiencing pricing pressure and with the swing factor it provides to the bottom line can make a large difference to profitability.
    Aug 19 06:20 PM | 1 Like Like |Link to Comment
  • Analysis Of Apple's Gross Margin Through The Past 4 iPhone Product Cycles [View article]
    I have the actual dollars spent in my model (they are provided in the 10Qs and 10Ks) but have not looked at them in detail. They fluctuate as you would expect and tend to be around the same levels as the accruals but since they don't directly affect the income statement (but should impact cash flows) I haven't spent time analyzing them.
    Aug 19 06:16 PM | Likes Like |Link to Comment
  • Analysis Of Apple's Gross Margin Through The Past 4 iPhone Product Cycles [View article]
    Check out Apple's latest 10-Q, page 21.
    They title it "Accruals for product warranty"

    I believe it is how much they estimate warranty costs will be for the products they have sold in the quarter. As you will see from the table it is different than the actual amount that is spent in a quarter "Cost of warranty claims".

    Thanks for asking as I received another question about the definition.
    Aug 19 02:48 PM | 1 Like Like |Link to Comment
  • Deep Dive Into Apple's Gross Margins And What It Means Going Forward [View article]
    You are correct that the FQ1 and FQ2 2012 margins were not sustainable.

    Great question about FX but hard to factor what it would be without company input. If Japan is the biggest factor (it is only 7% to 8% of total revenue) but has seen its operating margin move down about 200-300 basis points the past few quarters then it may not be a huge factor.

    If gross margin does come in at the mid-point of 37.5% it will probably be due to multiple factors, some of which you point out. We don't know what type of promotions the company may implement, especially overseas, and what will happen with component prices to name a couple of other reasons.
    Apr 29 12:13 PM | Likes Like |Link to Comment
  • Deep Dive Into Apple's Gross Margins And What It Means Going Forward [View article]
    Unfortunately I did sell my shares before earnings (thankfully they were bought at much lower prices). From my analysis (which was way off) I was concerned that guidance would disappoint and take the stock down a leg short-term. Was off on the number of iPhones and gross margin. I wasn't surprised by the share buyback or increased dividend (but did only expect about a 5% increase) but did not see the stock split coming.
    Apr 29 12:06 PM | 1 Like Like |Link to Comment
  • Deep Dive Into Apple's Gross Margins And What It Means Going Forward [View article]
    I agree with your assessment on Apple buyers and sellers.
    Apr 29 11:24 AM | 3 Likes Like |Link to Comment
  • Apple's June Quarter Guidance Could Cause A Downdraft In The Shares [View article]
    Actually I've had six comments in replies to comments since Apple reported earnings owning up to underestimating gross margins (were help by lower warranty accruals by $0.33 but Apple still had a significant beat even with that adjustment) and international iPhone sales doing much better than I expected (and not impacting margins). I'll repeat one a portion of one of my earlier comments: There is a saying I learned a long time ago that "he who lives by the crystal ball winds up eating glass sometimes". And this time I did so best to learn from it and move forward.
    Apr 26 12:45 PM | Likes Like |Link to Comment
  • Apple's June Quarter Guidance Could Cause A Downdraft In The Shares [View article]
    While warranty accruals were down 86 basis points sequentially the only helped EPS by $0.33, but were some of the upside.

    I agree that Cook seems to be a really good CEO (it does take 5 to 10 years to judge) and could also turn out to be a great one. It would not surprise me to see Ive and his design team turn out great products (but probably won't move the financial needle as much as the iPhone) and one of Cook's main roles is to not get in the way of Ive.

    Cook will also shine if he is able to pull off a move into an area such as payments which is a huge market and if Apple can get 20 to 30 basis points of a transaction would be a huge incremental financial benefit.
    Apr 26 12:39 PM | 1 Like Like |Link to Comment
  • Apple Is Running Out Of Cash To Raise Its Dividend [View article]
    I guess you didn't read almost any of my other articles where I was bullish (or at least seemed to be per readers comments).

    This article also didn't talk about products but about Apple's ability to raise its dividend (at least over a multi-year timeframe). Which of course Apple has said they plan to do but it will be interesting to see by how much due to limitations on using overseas cash. Maybe they can get around it by borrowing on the overseas cash or will keep on taking on more debt until there is a tax holiday.
    Apr 24 03:24 PM | Likes Like |Link to Comment
  • Apple's June Quarter Guidance Could Cause A Downdraft In The Shares [View article]
    Thanks for the comment. You are correct that it is hard to get a handle on the overseas markets.
    Apr 24 12:37 AM | Likes Like |Link to Comment
  • Apple's June Quarter Guidance Could Cause A Downdraft In The Shares [View article]
    Always try and learn. It appears the biggest item I was off on was the iPhone strength which was probably driven by overseas demand (which unfortunately is harder to get a handle on). It will be interesting to see if there are some nuggets, especially on gross margins, in the 10-Q.
    Apr 24 12:36 AM | Likes Like |Link to Comment
  • Apple's June Quarter Guidance Could Cause A Downdraft In The Shares [View article]
    You are correct that I was certainly wrong this time vs. other times that I have been correct (had the exact EPS number for the June 2013 and September 2013 quarters). There is a saying I learned a long time ago that "he who lives by the crystal ball winds up eating glass sometimes". I'll work to do better next time.
    Apr 24 12:33 AM | 2 Likes Like |Link to Comment
  • Apple Is Running Out Of Cash To Raise Its Dividend [View article]
    When one gets new information it is always prudent to think or rethink what you should do. Given the multiple positive items from Apple's results especially the strength of the iPhone business and gross margins (but it will be interesting to see if warranty charges or the absence of them played into the strength) buying the shares is on the radar screen.
    Apr 23 07:51 PM | Likes Like |Link to Comment
  • Apple's June Quarter Guidance Could Cause A Downdraft In The Shares [View article]
    Thanks for the comment.
    Apr 23 06:09 PM | Likes Like |Link to Comment
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