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Cook: Carrier policies hurt N.A. sales; Apple "intrigued" by payments

  • Peter Oppenheimer states channel inventory shifts are partly responsible for Apple's (AAPL) FQ2 sales guidance. Whereas inventories rose in FQ2 a year ago due to iPhone 5/iPad Mini shortages in FQ1, Apple exited this year's FQ1 with iPhone/iPad supply and demand nearly in balance. Of course, that also means inventory shifts gave a lift to Apple's Y/Y performance in FQ1.
  • Oppenheimer also notes the impact of revenue deferrals - Apple's deferred revenue balance rose 13% Q/Q to $11.4B, as a portion of hardware sales get deferred due to software/services bundling.
  • Tim Cook says changes in carrier policies (a hard requirement for 24 months between subsidized upgrades) hurt North American iPhone sales; U.S. carriers have been trying hard to lower subsidy expenses. On the other hand, Cook declares last week (China Mobile's launch week) was Apple's best yet for Chinese iPhone activations.
  • Cook on mobile payments: "The mobile payments area in general is one that we’ve been intrigued with and that was one of the thoughts behind the Touch ID. But we’re not limiting ourselves just to that." The comments come in the wake of the WSJ's report about an Apple payments service.
  • Also: 1) 78% of Apple's $159B cash/investment balance is offshore. 2) Japanese iPhone sales, boosted by DoCoMo's launch, rose 40% Y/Y. But a weak yen resulted in Apple's total Japanese revenue rising only 11%. Chinese iPhone sales rose 20%. 3) Cook doesn't say much about buybacks in the face of Carl Icahn's ongoing campaign, other than to reiterate Apple has "been a big believer" in them.
  • AAPL -7.7% AH. More on Apple's earnings.
Comments (33)
  • vismadeb
    , contributor
    Comments (59) | Send Message
     
    its a buy <$500 guys - load up!
    27 Jan, 07:08 PM Reply Like
  • chopchop0
    , contributor
    Comments (3226) | Send Message
     
    According to all of the AAPL bulls who armchair invest on SA, AAPL has been a buy since it went <$600 LOL
    27 Jan, 08:08 PM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (373) | Send Message
     
    "According to all of the AAPL bulls who armchair invest on SA, AAPL has been a buy since it went <$600 LOL"

     

    Funny, I've seen a lot of Bulls here that aren't shy about saying they're long AAPL.

     

    You, on the other hand, seem to do nothing but chirp and spread FUD. Presumably, you've used your vast wisdom to short AAPL and reap untold riches?
    27 Jan, 08:12 PM Reply Like
  • milehr
    , contributor
    Comments (476) | Send Message
     
    It is a buy anywhere below $700.
    27 Jan, 08:31 PM Reply Like
  • rsykes73
    , contributor
    Comments (24) | Send Message
     
    I have a 110 for sale, I'll give them to you at a discount of $650
    27 Jan, 08:39 PM Reply Like
  • chopchop0
    , contributor
    Comments (3226) | Send Message
     
    "You, on the other hand, seem to do nothing but chirp and spread FUD. Presumably, you've used your vast wisdom to short AAPL and reap untold riches?"

     

    I don't short stocks that have a cult following. I do however stick to stocks with well-defined "moats", something AAPL is lacking. That's become quite obvious lately. The IPad Mini and the soon to be released larger IPhone are "reactionary" products to the competition not revolutionary products that would help me sleep at night as an AAPL investor.
    27 Jan, 09:13 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1191) | Send Message
     
    Cattle rustling...all the bulls are missing...
    27 Jan, 07:14 PM Reply Like
  • doublepen
    , contributor
    Comments (4) | Send Message
     
    Wtf lost over 16k today tim crook!
    27 Jan, 07:37 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (611) | Send Message
     
    Icahn should save you. Lord knows I won't.
    28 Jan, 09:14 PM Reply Like
  • UnStopaBull!
    , contributor
    Comments (171) | Send Message
     
    How is he a crook? They guided higher best EPS and Rev. So they didn't sell as many phones as the street predicted, still the most they have ever sold I believe. They also guided two billion light of Q2 expectations. Maybe you should aim you anger elsewhere or sell.
    27 Jan, 07:46 PM Reply Like
  • Momintn
    , contributor
    Comments (3855) | Send Message
     
    Apple Inc. (AAPL) Signs 3-Year Deal With Russian Carrier
    http://bit.ly/1d5j5Uo
    27 Jan, 07:46 PM Reply Like
  • boisterousbob
    , contributor
    Comments (263) | Send Message
     
    Zero growth. Why do you care where in the world they achieve it?
    28 Jan, 12:11 AM Reply Like
  • UnStopaBull!
    , contributor
    Comments (171) | Send Message
     
    Thx Momintn, think that was out before earnings. Hope that helps q2 #s
    27 Jan, 07:54 PM Reply Like
  • calikym
    , contributor
    Comments (226) | Send Message
     
    @Momintn - thanks for that info about Russia. Very exciting indeed.
    27 Jan, 07:55 PM Reply Like
  • Yokyok
    , contributor
    Comments (325) | Send Message
     
    "The (idiot) 4 inch Phone Comany"
    27 Jan, 08:11 PM Reply Like
  • jakexb
    , contributor
    Comments (60) | Send Message
     
    This might be the final capitulation.

     

    I mean really, Apple hit the high end of their own estimates in everything. The only thing they "missed" were analyst expectations which exceeded Apple estimates that Oppenheimer went out of his way to say were honest and not overly conservative.

     

    Eventually the p/e is going to become so ridiculously compressed that we're going to see another spring-loaded expansion in price.
    27 Jan, 08:20 PM Reply Like
  • GRJ
    , contributor
    Comments (228) | Send Message
     
    Stop with the "spring load" and "rubber band". AAPL's problem is not its business, its perception. WS has raised the hurdle so high that it will almost certainly always fail to meet expectations. WS has successfully painted the stock price into a corner where they either buy-back much more stock a la Icahn or jaw-drop innovate through a new hereto-unthought-of product category. All the $b in cash on the BS have successfully been tarred as a drag on the company and multiple and until WS's ransom terms are met, every crack of daylight is going to be dismissed as insufficient.
    27 Jan, 08:39 PM Reply Like
  • jakexb
    , contributor
    Comments (60) | Send Message
     
    I think I actually agree with you. I'm just saying that there is a point at which the p/e will become so compressed that WS will see a bigger opportunity in riding the price back up again than keeping it depressed.
    27 Jan, 08:48 PM Reply Like
  • Dukester
    , contributor
    Comments (72) | Send Message
     
    Yeah, and that point would be?
    27 Jan, 08:58 PM Reply Like
  • Pearljamten
    , contributor
    Comments (4) | Send Message
     
    So let me get this str8 They beat on Revs and EPS.
    They must have had better margins on the phones they did sell?
    Guess that is worthy of a negative 8%
    27 Jan, 09:38 PM Reply Like
  • Doyle3000
    , contributor
    Comments (1284) | Send Message
     
    It's a traders' stock. If you have a 5+ year timetable (which you should if you are in stocks), then you'll end up just fine. At some point, this stock will trade at the market P/E and then you'll have a fair valuation for your ownership of a great company.

     

    Or you could keep buying high flyers who grow top line revenue and guess well as to when to jump ship.

     

    I sleep fine at night with my AAPL. Annoyed at the disrespect, but I know I have something good.
    27 Jan, 09:43 PM Reply Like
  • BlueVelvet
    , contributor
    Comments (41) | Send Message
     
    Average market P/E requires Average market rate of growth. Companies with flat earnings, as Apple!, will have lower P/E.
    27 Jan, 11:31 PM Reply Like
  • ctownzoo
    , contributor
    Comments (54) | Send Message
     
    I look at this as another great buying opportunity and am happy to be long with apple. In 3-5 years they will be in the $900-$1000 range. Seriously what other company makes $57.6 billion in 3 months and drops 5% after hours. WS has lost its mind. $159 Billion in cash, all kinds of positive rumors (larger phones, sapphire screens, new Apple TV, possible physical tv, wearable health monitoring, watch, payment alternatives). I remember when Google was "dead" and stuck in the $400-$500 range. Then in ran up to $1100 with basically phones and ads, plus a bunch of non revenue producing robots. Apple will be back. Don't panic.
    27 Jan, 11:45 PM Reply Like
  • Atkins
    , contributor
    Comments (1037) | Send Message
     
    You're absolutely correct about Google's doldrums, ctown. However, even when it was in its latent phase, Google was much more well-liked by the street than Apple is today. That fact matters -- a lot.
    Apple is my largest holding (by far), and I'm an Apple bull, but I don't see this stock anywhere near $1,000 unless there is a massive influx of wildly popular new products. By the time Apple hits $1,000, Amazon will probably be well above that figure, and I suspect Google will be at $2,000.
    I will continue to hold Apple with a horizon of 5 years. However, I wouldn't put any additional money into Apple at this point. There are far too many other good short-term and long-term opportunities in this market. With a five-year horizon, gold is probably a better bet than Apple for new money.
    28 Jan, 12:00 AM Reply Like
  • Hope128
    , contributor
    Comments (107) | Send Message
     
    I don't know what kind of gross margin WS expected when they came up with 56M iPhone sales & $14.07 EPS, which AAPL beats handily. The bears have been attacking AAPL's compressed GM for over a year, now once ASP & GM are increasing for all major products, suddenly they decided to overlook them?

     

    IPhones, iPads, Macs all grow YOY, CM deals & recently-signed Russian carrier deals will create more long term distribution channels. IWatch will be a hit in medical/biometric market, and coming mobile payment service. Don't sell your AAPL shares in panic! AAPL is a fundamentally-sound company with $159b cash &many catalysts, it is a safe bet in a down market. Hold the stocks & sell covered calls to help reduce your cost, & collect dividends too.

     

    One of my friends only buys high flyers on their way up, this does work sometimes, but he has to watch closely & get out at first down sign, he bought tesla last week & nflx on ER date, he took loss on tesla today & has unrealized loss on NFLX. Some of high flyers can drop 50% or even more within very short times, you put your cash at more risk to trade them.
    27 Jan, 11:47 PM Reply Like
  • dboy53
    , contributor
    Comments (6) | Send Message
     
    As an Apple investor, here's what I wrote to its IR Dept:

     

    I doubt that Apple reads emails from its shareholders but as a shareholder and 30 year Apple user, I am increasingly disappointed in Apple as an investment, and as things stand, I will be voting for Icahn's proposal, if only to shake up an organization that has lost its direction and panache. 1) The decision not to release a larger iPhone, when many in the market were clamoring for one, was not only a terrible market decision, but it also indicates incredible hubris -- that the company thinks it knows better than its customers. Maybe that was true under Steve Jobs, but certainly not under Tim Cook. This disaster of a decision ceded millions of potential phone sales to Samsung. I hope and trust that a variety of iPhone sizes will be released soon, but it's too little and too late from this investor's perspective. 2) Blaming the lack of sales in iPhone growth on a change in carriers' upgrade cycles is pathetic and embarrassing. Truly compelling and innovative products would compel customers to upgrade early. Again, this excuse is a sign of a company that is lacking leadership and vision. 3) As a CEO, Tim Cook is a lousy communicator who fails to inspire. Investors like me are losing faith in him. The general stock market is losing faith in him. We are weary of his anemic cheerleading and his vague assurances of new products in the pipeline. Sorry, but younger companies like GOOGL are increasingly seenn as hipper and more cool. Once Apple is viewed as jaded and old, it's toast -- and we're fast approaching that point. 4) Supply problems with the 5S? Absolutely unforgivable. If it's true... 5) As an investor, I'd like to know what Apple is thinking of doing with its large cash hoard. At least I'd like a general idea, and not the pure BS that we investors have been fed. Icahn at least offers an alternative. 6) I never thought I'd suggest it, but it's time to split AAPL 10:1 and make it seem affordable to small retail investors. Yes, some would deride this as a gimmick, which it is to some extent, but retail investors are fleeing this stock. Make 100 share lots affordable to the average retail buyer, who might then become Apple investors and might then be more loyal Apple retail buyers in the future...a virtuous circle. 7) Apple's Maps still suck compared to Google's, and its customer feedback mechanism is lacking compared to Google's. As an Apple user as well as an investor, the failure of Apple Maps to match the quality of Google's after all these months is incredibly alarming. Steve Jobs would NOT have tolerated this mediocrity.
    28 Jan, 01:03 AM Reply Like
  • dmattern
    , contributor
    Comments (49) | Send Message
     
    dboy53: item 6: you can buy one share for $8 commission
    28 Jan, 01:08 PM Reply Like
  • XPuR3
    , contributor
    Comments (42) | Send Message
     
    If any other company reported earnings like this they would be up 8%. Why is apple held to such a high standard?
    28 Jan, 01:03 AM Reply Like
  • chopchop0
    , contributor
    Comments (3226) | Send Message
     
    because this isn't JNJ. AAPL depends on a few main products for the majority of its earnings/profit. And in 20 years, people will still need branded JNJ drugs, bandaids and tylenol. Will they still need IPads and IPhones at that time?
    28 Jan, 01:12 AM Reply Like
  • financeminister
    , contributor
    Comments (665) | Send Message
     
    When do they announce dividend hikes?
    28 Jan, 01:42 AM Reply Like
  • viking vancouver
    , contributor
    Comments (21) | Send Message
     
    The reason the stock sold off is simple.... IPhone sales missed in North America and they missed big. IPhone is Apple's most important (profitable) product line, North America is Apple's most important (profitable) region. Q2 guidance forecasts more of the same. Looking into the future, this is a big red flag. The stock is selling off and this is rational.

     

    The offset is Tim Cook is guaranteeing at least one new product category is coming in 2014. The problem is the market has no idea what it is and what it will do to revenue or profits.

     

    I am an Apple bull. In the near term I see the stock selling off; last summer it went below $400 and iPhone sales were looking stronger. However, by Oct 2014 I do expect Apple to be trading higher than $550 (where is was trading before fiscal Q1 results were posted).
    28 Jan, 02:03 AM Reply Like
  • chopchop0
    , contributor
    Comments (3226) | Send Message
     
    "The reason the stock sold off is simple.... IPhone sales missed in North America and they missed big. IPhone is Apple's most important (profitable) product line, North America is Apple's most important (profitable) region. Q2 guidance forecasts more of the same. Looking into the future, this is a big red flag. The stock is selling off and this is rational."

     

    You are probably the most rational AAPL bull on SA. No one else seems to understand these facts
    28 Jan, 08:24 AM Reply Like
  • psychological-dividends
    , contributor
    Comments (611) | Send Message
     
    Apple is probably the most overly-capitalized business in American business history.
    28 Jan, 09:15 PM Reply Like
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