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  • Apple's Game Of Inches [View article]

    Thank you for your comment. I appreciate your critical commentary and respect your point of view. Apple’s net income rose by 5.14% in the first nine months of the current fiscal year while deferred revenue with no associated cost of sales attached rose $1.394 billion to $11.454 billion.

    Absent profit growth the share repurchase program has diminished value. The four-quarter drop in profitability that commenced in the March quarter of FY2013 (preceded by marginal net income growth of $14 million in FQ1 2013) was due in part to unsustainable gross margin realized in the prior fiscal year and what appears to have been a cost-challenged original iPhone 5 which prompted extraordinary warranty cost set-asides.

    Impacting Apple’s aggregate revenue growth rate of 5.42% in the first nine months of the current fiscal year has been the nearly $2 billion drop in iPod revenue in the same nine-month period. By FQ1 2015, iPod line revenue decline will be essentially immaterial to results.

    Absent the delivery of new accessory lines such as the much-anticipated iWatch line or the introduction of new services revenue segments, I’d expect revenue growth next fiscal year in the mid-to-high single digits on stable year-over-year gross margin.

    As of June 28th, there’s about $39.9 billion in share repurchase authorization to be exhausted. However, I consider share repurchases without the prospect of profit growth to be a compromised approach to increasing shareholder value. While share repurchases will amplify the impact of profit growth on eps, I consider profit (net income) growth to be the primary driver of share price appreciation.
    Jul 29, 2014. 01:39 AM | 1 Like Like |Link to Comment
  • Apple's Game Of Inches [View article]

    if you adjust the trailing 12-month eps for June quarter results, the multiple falls to about 15.78.

    Do you believe there’s more upside to Apple over the next six months or downside for Apple over the next six months?

    If there’s more upside than downside in your view, why would try and time the stock as a buy and hold investor?
    Jul 27, 2014. 11:55 PM | 2 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]

    Let’s compare notes next year on the overall outcome for Samsung. In the meantime, please remember while Samsung was selling high-end smartphones which improved the company’s profitability, it was also filling demand at the low-end of the market which increased the company’s revenue.

    Since the addition of China Mobile and NTT DoCoMo as authorized iPhone carriers, the perception of Samsung’s success in the high-end market has changed and the company’s profit performance has declined.
    Jul 27, 2014. 11:10 PM | 1 Like Like |Link to Comment
  • Apple's Game Of Inches [View article]
    John Court:

    Without the introduction of new product or accessories lines in the fall, I would expect Apple to deliver high single-digit revenue growth next fiscal year. With the introduction of new product or accessories lines, such as the much-anticipated iWatch line, I expect revenue growth to move well above 10%.

    The announcements at last month’s WWDC suggest an broadening of the company’s eco-system to include initiatives in home automation. Continuity, as outline by Tim Cook, will boost what I call the Apple product mutual halo effect.

    In addition to home automation there are real opportunities in home entertainment and home gaming through an enhanced Apple TV product.

    I believe the iPhone can continue to deliver meaningful unit sales growth following the release of larger-screen handsets. There’s are large market that remain virtually untapped for the iPhone and iPad lines. The IBM initiative will boost demand for iOS-based products in enterprise.

    In my view, Apple can disrupt multiple markets simultaneously without the need for a blockbuster new product line. As the company broadens its customer base, continues to increase its content delivery infrastructure and, perhaps, moves into mobile payments, all of the initiatives outlined above will materially add to the company’s aggregate revenue goals and revenue growth rates.

    Moving out more than a year I tend to be overtly conservative in discussing growth rates. But high-angle digit revenue growth rates compounded over a two to three year period with commiserate net income growth rates over fewer shares outstanding will deliver an attractive outcome for a company with a FY2014 revenue base of $180 billion.

    Apple could make a major disruptive step with a blockbuster new product line. But I don’t think that’s needed to deliver attractive returns to shareholders over the next few years.
    Jul 27, 2014. 10:52 PM | 2 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]

    I agree. A higher dividend would reduce some of the remaining share price volatility and add to the risks of shorting the stock. As of June 28th, Apple had about $39.9 billion in repurchases remaining under the $90 billion program. Following the completion of the program, I wouldn’t mind an ongoing effort to repurchase sufficient shares on a quarterly basis to offset share creep from stock-based compensation, but I believe the benefits derived from a big repurchase plan will have been substantially achieved. In other words, more large-scale repurchases might have a diminishing benefit for shareholders.

    As you know, the more shares repurchased now the fewer shares upon which to pay dividends. I’m hopeful the massive repurchase plan and the number of shares removed from the market will provide for a higher dividend per remaining share.
    Jul 27, 2014. 10:01 PM | 4 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]

    Thank you for your comment. The line just came to me as I was searching for a closing contrast for the article.
    Jul 27, 2014. 09:52 PM | 1 Like Like |Link to Comment
  • Apple's Game Of Inches [View article]

    Isn't it time for you to starting writing articles in addition to your thoughtful comments on the work of other writers?
    Jul 27, 2014. 08:24 PM | 9 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]

    Although Apple achieved a new 52-week closing high on Friday and is approaching a new all-time high, it’s on a diminished market cap than when the current all-time highs were set in September of 2012.
    Jul 27, 2014. 08:21 PM | 2 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]

    Apple’s revenue growth rates began to slow in the latter half of FY2012 following the peak selling season for the iPhone 4S. Although revenue growth in the latter half of the fiscal year was slower than in the first half, for the six-month period the revenue growth rate was an impressive 28%. Also, in the first half of FY2012 iPad unit sales grew by well over 100%.

    Apple’s moderating revenue growth rates coincided with the maturing of the high-end smartphone market and Apple did not add either China Mobile, the world’s largest carrier, or Japan’s largest carrier, DoCoMo until last fall. Please remember it wasn’t until the first half of FY2012 that subscribers to Verizon’s network participated in the roll out of a new iPhone handset for the first time.

    Although increased competition did impact Apple’s growth rates over the past nine fiscal quarters, I don’t see a competitor on the planet that can match the new technologies and product innovations Apple will bring to market beginning this fall.
    Jul 27, 2014. 08:15 PM | 4 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]

    I did not see the news report. What I do know from the June 10-K filing is as of June 28th about 5.989 billion shares were outstanding and about $39.9 billion remained in the $90 billion share repurchase program. I do consider any and all shares purchased under the split-adjusted price of $100 to be a long-term bargain for the company’s shareholders.
    Jul 27, 2014. 07:45 PM | Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]
    John Court:

    I enjoyed reading your comment. I view Apple’s growth not so much in terms of the growth in units sales of the company’s current device lines but the expansion of the company’s economic footprint and the increasing number of eco-system participants now over 800 million.

    Please keep in mind there are several major markets that remain under served by Apple including but not limited to: Brazil, Indonesia & India. I view Apple less as a device maker and more as customer relationship continuum.

    The new partnership with IBM will provide for more opportunities in the large enterprise market and there are several industries ripe for disruption including the home entertainment and console gaming industries. Apple is among the world’s leaders in content distribution and management is investing billions of dollars in content delivery infrastructure for reasons that will become more clear in time.
    Jul 27, 2014. 05:06 PM | 2 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]

    Thank you for your comment. I’m not discounting the possibility or even probability of new products and services nor the impact of the company’s expanding economic footprint. However, forecasting the impact of unannounced new products and services is beyond the scope of this article.

    The point is Apple will deliver impressive rates of net income growth amplified by the ongoing share repurchase program to provide strong rates of earnings per share growth even on comparatively low rates of revenue growth. It’s my view long-term shareholders will continue to be rewarded with or without the introduction of new and disruptive products.
    Jul 27, 2014. 01:24 PM | 9 Likes Like |Link to Comment
  • Apple's Game Of Inches [View article]
    Harm Elderman:

    The term “game of inches” has been commonly applied to sports including horseshoes, baseball and football. It’s a reference to precision in execution and the importance of consistently grinding out even small plays successfully.

    As sports fans we like the long ball, the long pass and the big plays. As Apple shareholders we like the company’s big disruptive steps. But for long-term shareholders, there’s much to be gained from comparatively slower rates of revenue growth and consistently driving net income growth. This isn’t to say Apple isn’t going to take big disruptive steps in the future. But even now the company’s results are impressive and will lead to share price appreciation.
    Jul 27, 2014. 01:17 PM | 12 Likes Like |Link to Comment
  • Apple's Latent Rates Of Revenue Growth [View article]

    Thank you for your comment. At this time I don’t see the successful introduction of the iWatch factored into the share price nor the roughly $44 billion in additional share repurchase commitments to be made as of the end of the March quarter.
    Jun 29, 2014. 06:49 PM | 2 Likes Like |Link to Comment
  • Apple's Latent Rates Of Revenue Growth [View article]

    Thank you for your comment. As evidenced by the announcements at WWDC, Apple has a expansive platform of technologies that will serve as a foundation and platform for greater eco-system development and enhanced customer engagement as new devices and services emerge from the company this fall.
    Jun 29, 2014. 01:37 PM | 5 Likes Like |Link to Comment