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  • 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'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 01:17 PM | 12 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'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 08:24 PM | 9 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 01:24 PM | 9 Likes Like |Link to Comment
  • Apple's Global Picture In 1,500 Words [View article]

    The value of the China Mobile agreement will unfold over time. The carrier will participate in the roll out of the next flagship iPhone handset and the implementation of the carrier’s 4G network is underway. Please don’t forget the importance of NTT DoCoMo, Japan’s largest carrier. As Apple’s management has stated, the change in US carrier upgrade policies has skewed the pace of domestic iPhone upgrade activity.

    While there might not be another China Mobile to add as an iPhone carrier, establishing markets in India, Brazil and other emerging economies will benefit revenue growth over the next few years. Europe’s economic recovery will also boost Apple’s revenue growth performance. At this time, Europe remains Apple’s second largest regional revenue segment.
    May 25 12:01 PM | 9 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's Global Picture In 1,500 Words [View article]

    Thank you for your comment.

    NTT DoCoMo has yet to complete its first year as an authorized iPhone carrier and China Mobile is continuing its 4G roll out and will participate in the initial roll out of a new flagship iPhone handset for the first time this fall.

    The change in US carrier upgrade policies has, according to Apple management, pushed some upgrade activity into the June quarter. Additionally, Apple adjusted iPad channel supply in the March quarter versus channel supply adjustments in the June quarter last year. I’m expecting a strong June quarter outcome relative to the unimpressive June quarter results one-year ago. This quarter has the softest prior-year comparison for measuring revenue growth of any quarter this fiscal year.

    I don’t expect the Surface 3 to pose much competition for the iPad in the consumer tablet market and most of the new products for the Android platform being brought to market are for competition in the mid-line to low-cost product tiers.

    This is not to dismiss Apple’s growth challenges. The domestic high-end smartphone market is rapidly maturing and it will take years of investment and effort to develop a strong market presence in emerging economies such as India, Brazil and Indonesia.

    I consider Lenovo a much bigger threat to Samsung than the company poses competition for Apple. The stiffening competition among Android device makers that compete almost exclusively with one another is a story that receives comparatively little coverage compared to interest as to how any of the device makers you mentioned might create competition for Apple.
    May 25 02:45 PM | 8 Likes Like |Link to Comment
  • Apple's Global Picture In 1,500 Words [View article]

    Please remember with the $90 billion share repurchase program underway, the share price is rising faster than the rise in market cap. Additionally, management has signaled the quarterly dividend will continue to rise and dividend increases will be announced annually.

    Apple has recently exited a multi-quarter cycle of negative net income growth and rising net income over the next several quarters will support further advances in the share price.
    May 25 12:18 PM | 8 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's Latent Rates Of Revenue Growth [View article]
    Fear the cow:

    The expiration of support for Windows XP and the costs of migration to Windows 7 are providing Apple with an opportunity for greater reach into the enterprise market at this time. Continuity, introduced at WWDC, also raises the value proposition offered by the product line.
    Jun 29 11:21 AM | 7 Likes Like |Link to Comment
  • Apple's Newfound Glory [View article]

    Thank you for your comment.

    What “new fact” about Apple are you seeking to read in any article about the company?

    The purpose of using information made available by Apple is to base the analysis on facts for the benefit of the reader.
    Apr 27 11:52 AM | 7 Likes Like |Link to Comment