Seeking Alpha

Posts At Eventide

View as an RSS Feed
View Posts At Eventide's Comments BY TICKER:
Latest comments  |  Highest rated
  • Apple: It's A Matter Of What, Where And Why [View article]
    Dan Manners:

    Thank you for your comment. As a matter of practice, I don’t include unannounced new products in forecasts or forward-looking estimates. Based on Apple’s current slate of products and services I do see improved margin over FY2013 and a stabilization of ASPs.

    While there is a possibility of at least one new product line in FY2014 and a possibility of some expansion of the iPhone and iPad product lines, I will address the impact of those occurrences following an announcement by Apple.

    In all, I view Apple as a customer relationship continuum and the company’s continuing build out of content delivery infrastructure suggests an expansion of products and services in the coming months and years.
    Dec 29 10:42 AM | 17 Likes Like |Link to Comment
  • Apple: Where From Here? [View article]

    I consider current marketshare analysis of the smartphone market almost meaningless. I can purchase an Android 2.3 handset at my local supermarket for $59 without a contract commitment. Yet this inexpensive, low-margin handset for statistical purposes carries the same weight in unit sales and marketshare analysis as an iPhone or high-end handset from Samsung HTC or Sony.

    As feature phones disappear from the market and are replaced by cheap "smartphone" handsets, marketshare numbers will be skewed. Currently the white-box manufacturers selling inexpensive handsets are collectively gaining marketshare.

    Apple's focus on yield per customer and long-term customer acquisition must be viewed using a different series of metrics. Among the company's challenges that's revealed in the June quarter numbers is sustaining strong Apple Retail traffic in the six months prior to the expected fall product line refreshes.

    Apple customers tend to begin sitting on their hands in the spring in anticipation of the next product refresh cycle.
    Jul 28 02:13 PM | 12 Likes Like |Link to Comment
  • Where In The World Is Apple's Growth? [View article]

    One of my often mentioned axioms about Apple is:

    Apple doesn’t sell products. Apple creates customer relationships and these customer relationships sell Apple products.

    If one views Apple primarily as a purveyor of separate and independent digital device lines, any effort to boost unit sales would be the expectation.

    If one views Apple as an eco-system, expectations move beyond how many iPhones, iPads or Macs Apple might sell in any particular quarter.

    Apple has more than one-half billion iTunes customers with accounts backed by credit cards and the rate of revenue flow to developers is quickening by the month and is rising at a consistent rate.

    Yield per customer and expanding the addressable market for developers is as important as increasing the number of units sold of any one particular product in any particular period.

    Releasing a lower-cost iPhone for emerging markets or the global market as the smartphone market rapidly matures and releasing new products for the high concentration of Apple customers in the US and Europe are not mutually exclusive outcomes. But releasing a lower-cost iPhone will not deliver net income growth commensurate with the rise in unit sales.

    At this time, the US and Europe remain Apple’s best markets for increasing revenue yield per customer and expanding the addressable market for developers through the release of new products.

    At my website I publish a variety of charts and data tables chronicling Apple product unit sales and Apple’s financial results with associated performance metrics. This article provides a current overview of my continuing work tracking Apple’s revenue and operating income performance by region.
    May 27 11:22 AM | 10 Likes Like |Link to Comment
  • Why Apple Will Beat The Street [View article]

    The so-called "Law of Large Numbers" does not apply. In the current fiscal year, 80% of Apple's revenue will be derived from products that did not exist in the market as recently as six years ago. Chances are six years from today more than 50% of Apple's revenue will be derived from products that are only now in early stages of development.

    There are large and essentially untapped regional markets for Apple's products and the company is the only maker of iOS-based devices. Apple will maintain high margin and the leadership in digital device revenue share even as more competitors enter the digital device markets.

    Android is an amalgamation of device makers competing more with one another than any one Android device maker successfully compete with Apple. Apple's gross margin is pressured in the current quarter due to manufacturing changeovers that do not impact the marginal cost of each additional unit sold. Carriers are willing to pay over $400 in subsidies to provide the iPhone 4 at $0 to customers in the States and the iPhone 5 continues to deliver high average selling prices for Apple.

    Competition among Android handset makers will continue to increase. But that doesn't necessarily mean more competition for Apple. Revenue share is more important to Apple than nominal market share numbers and management has stated the company will manage its operations for margin, not market share.
    Dec 2 02:59 PM | 10 Likes Like |Link to Comment
  • Apple: Where From Here? [View article]
    Constable Odo:

    Comparing enterprises in different industries using the same metrics is an exercise in frustration. Look no further than the fact Apple considers Apple to be the company's best cash investment. The fact that management has chosen to aggressively front load the $60 billion, multi-year share repurchase program indicates management's confidence in the company's performance over the next several quarters.
    Jul 28 02:29 PM | 9 Likes Like |Link to Comment
  • Apple: Net Income Growth Is The Name Of The Game [View article]

    Exactly which facts have been “twisted”? Apple is working through a multi-quarter cycle of negative net income growth and declining gross margin. Those are facts.

    The rates of growth in high-end smartphone unit sales on a global basis have diminished. The Apple iPad will not see anywhere near the rates of unit sales growth that occurred in the first two years following introduction of the product line.

    Contributing to the multi-quarter cycle of negative net income growth are the company’s very strong results in FY2012, the extraordinary $1.551 billion warranty set-aside realized in the March quarter one year ago and an overall change in the unit sales mix following the introduction of the iPad mini and a higher percentage of iPhone unit sales for lower-cost handsets. The iPhone unit sales mix has been influenced by efforts to gain traction in India and other emerging markets.

    Due to high import tariffs, sales in Brazil are challenged. In the December quarter, revenue in the Americas actually fell 1%. The company’s performance in the Americas was also challenged by changes in US carrier upgrade policies that have extended the time period between subsidized smartphone upgrades.

    China Telecom and China Unicom participated in the initial rollout of the iPhone 5s and iPhone 5c. This moved revenue from sales through those carriers to the recent December quarter from the March quarter. China Mobile became an authorized iPhone carrier this quarter but sales in the first year of the agreement will be influenced by the rollout of 4G/LTE on the mainland. This agreement will reveal its value long-term.

    Through the company’s March quarter guidance, Apple’s management has signaled the possibility of negative revenue growth in the current quarter. That’s not conjecture and it’s not a twisting of the facts.

    As I stated in the article, I expect a return to positive net income growth in the June quarter and improved gross margin through at least the March quarter of FY2015.

    Although I do not make stock recommendations, I consider Apple a strong investment choice for value, conservative and even growth investors moving forward. But this does not change the company’s current performance realities.

    Apple’s capital allocation plan (the return of over $100 billion in capital over four years through dividends and share repurchases) will buoy the share price. But until net income growth returns, the impact of the share repurchases on the share price will be compromised.

    Patient investors may be well rewarded over the next two years. But ignoring the company’s recent and current performance realities benefits no one.

    Again, exactly which facts have been “twisted”?
    Feb 23 12:36 PM | 8 Likes Like |Link to Comment
  • Why Apple Will Beat The Street [View article]

    Apple's gross margin will move above 40% as early as the March quarter and remain above that threshold for the next four consecutive quarters. Among the reasons Apple's gross margin remains the envy of the industry is because of manufacturing and supply chain management. Also, Apple develops its own OS, designs its own chips and sells a high percentage of the company's products through its own distribution channels. Each of these factors contribute to high gross margin.
    Dec 2 03:12 PM | 8 Likes Like |Link to Comment
  • Apple Is Walking Up The Down Staircase [View article]

    Even with the current four-year $100 billion cash distribution program, Apple is continuing to add to the company’s cash and marketable securities balances. This is in the midst of a slow-growth revenue cycle.
    Mar 30 01:04 PM | 7 Likes Like |Link to Comment
  • Apple Is Walking Up The Down Staircase [View article]

    Thank you for your comment. The numbers suggest a much different outcome.
    Mar 30 12:55 PM | 7 Likes Like |Link to Comment
  • Apple: It's A Matter Of What, Where And Why [View article]
    Ted Bear:

    Unlike Microsoft, Apple has continued to reinvent itself over the years. But not everything is new and the company’s product lines have proven to be long-lasting.

    The Macintosh, Apple’s oldest and most enduring product line introduced in 1984, delivered about $21.50 billion in revenue last fiscal year. That’s a higher revenue total than was achieved by 367 enterprises on the 2013 Fortune 500 list.

    Apple’s iTunes franchise will deliver in total billings - inclusive of the revenue pass through to developers and content providers Apple doesn’t recognize as revenue - $20 billion this fiscal year and within four years the company will have more than 1 billion people as iTunes content customers.

    Even with the company’s documented success there are large regions of the globe that remain under served by the company. These regions include Brazil and much of South and Central America, India, Russia and most of the African continent. The world’s largest cellular services provider will begin selling iPhones to customers next month and Japan’s largest carrier, DoCoMo, began selling iPhones with the release of the iPhone 5s and 5c.

    If you don’t think Tim Cook is competent and skilled to lead Apple into its next era of growth, by all means short the stock. It’s your money.

    But one quick question: If you expect the shares to fall from Friday’s closing price of $560, why in the world would you repurchase the shares between $310 and $380?
    Would there not be better prospects for your investment dollars than a company you view as similar in growth potential to Microsoft?
    Dec 29 09:05 PM | 7 Likes Like |Link to Comment
  • Apple's Think Different Approach To Quarterly Math [View article]

    This is the biggest revenue, net income and eps quarter in the company’s history. I’m looking for single-digit unit sales growth from the Mac line and impressive results from both the iPhone and iPad lines. Apple entered the quarter below the target range on iPhone channel supply and the recent iPad line refresh will boost sales. The questions now are how many of the new iPad minis and iPhone 5s handsets can Apple produce before the end of the quarter?
    Oct 29 05:14 AM | 7 Likes Like |Link to Comment
  • Apple Price Target: $950 Per Share [View article]
    Thank you for your kind words. I put a great deal of time into developing my share price forecasts and 12-month price targets.
    Aug 12 03:58 PM | 7 Likes Like |Link to Comment
  • Apple Is Walking Up The Down Staircase [View article]

    Apple’s return to a cycle of net income growth is news. Just count the headlines over the next few months.
    Mar 30 01:26 PM | 6 Likes Like |Link to Comment
  • Apple: Net Income Growth Is The Name Of The Game [View article]

    That’s correct. Apple maintains comparatively high gross margin on Mac unit sales and takes in a much higher percentage of the global industry’s profits than underlying market share statistics suggest.

    Apple will not play the low-margin game. There’s absolutely no reason to participate in a race to bottom of the PC, smartphone or tablet markets.
    Feb 23 01:35 PM | 6 Likes Like |Link to Comment
  • Where In The World Is Apple's Growth? [View article]

    Registrations for this year’s developer conference sold out in less than two minutes for good reason. While releasing a lower-cost iPhone would increase unit sales particularly in emerging markets, the US and Europe remain Apple’s best markets for increasing revenue flow to developers. This will occur through the release of new products over the next 12 months, not the release of a lower-cost iPhone handset.
    May 27 11:30 AM | 6 Likes Like |Link to Comment