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Apple Inc. (AAPL)

  • Fri, Feb. 13, 7:44 PM
    • In non-electric car news, Apple's (NASDAQ:AAPL) Tim Cook slipped some Apple Pay details into his talk today at Stanford's cybersecurity summit, mainly that the U.S. government would begin accepting the payment solution: "Like for example when you pay for admission to your favorite national park."
    • More than 2,000 banks have signed on to the service so far and the government is a major new merchant.
    • The bigger deal may come in a related move: enabling the service for federal payment cards, including Social Security and veteran benefits, as well as federal expense reimbursement.
    • Social Security benefits go to 55M Americans to the tune of $71B/month in traffic.
  • Fri, Feb. 13, 6:17 PM
    • Some more color on reports that Apple (NASDAQ:AAPL) has been hiring auto engineers, including from Tesla (NASDAQ:TSLA): The company has several hundred employees working on project "Titan," toward an Apple-brand electric car that one source says resembles a minivan, The Wall Street Journal reports.
    • It might not end up as a released car, the report notes -- lots of work along the way could be used to boost other Apple products -- but the size of the team is telling.
    • VP Steve Zadesky was reportedly given permission to create a 1,000-person team for the project and to work off-site from Apple HQ.
    • Building cars is expensive, requiring billion-dollar plants, but Apple's $178B in cash means the barrier to entry is far smaller than for others.
    • A self-driving car (a la Google (NASDAQ:GOOG)) is not in Apple's plans, a source says.
    • After hours, TSLA -0.9%.
    • Previously: Talent showdown between Tesla Motors and Apple (Feb. 10 2015)
  • Fri, Feb. 13, 2:22 PM
    • Apple (NASDAQ:AAPL) is actively recruiting automobile industry experts to work at a secret lab, sources tell Financial Times.
    • The hires are reported to include vehicle design experts.
    • Earlier this week, CEO Tim Cook called CarPlay (auto OS) a key technology platform for the company in the future.
    • CarPlay is expected to be included in some future Ferrari, Daimler, Volvo, and Volkswagen models.
    • Though this week's events have rekindled some rumors of an iCar, there's nothing solid yet from Apple indicating it's heading in that direction.
    • The plans of Apple in auto has some bearing on Tesla Motors (NASDAQ:TSLA), BMW (OTCPK:BAMXY), and even General Motors (NYSE:GM) with its OnStar asset.
    • Apple isn't the only tech giant dabbling in the auto sector, Google has ambitious self-driving car and Android integration projects of its own.
    • Related: Talent showdown between Tesla Motors and Apple.
  • Wed, Feb. 11, 3:09 PM
    • Four months after setting a $203 Apple (AAPL +2.1%) target in an open letter, Carl Icahn has upped his target to a lofty $216 in a new letter.
    • Icahn's target is based on a multiple of 20x an FY15 (ends Sep. '15) EPS estimate of $9.70 - up from a prior $9.60 and well above an $8.57 consensus - and $22/share in cash.
    • Notably, Icahn's EPS estimate is based on a 20% "real cash earnings" tax rate, rather than the 26.2% "effective" tax rate used by Apple, which recognizes taxes on unremitted foreign earnings. He declares his estimate is only $0.39 above consensus if the tax rate difference is accounted for.
    • As one would expect, the activist investor uses his aggressive target to renew his call for larger buybacks. "[W]e continue to hope that Tim Cook and Apple’s Board of Directors, on behalf of all shareholders, take advantage of this dramatic market value anomaly and increase the magnitude and rate of share repurchases while this remarkable opportunity still exists."
    • Apple, whose shares were already rallying before Icahn's letter was published (perhaps aided by Tim Cook's Goldman conference talk), has made new highs and is closing in on $125.
  • Tue, Feb. 10, 4:11 PM
    • Tim Cook (NASDAQ:AAPL) states during a Goldman conference talk Apple is partnering with First Solar (NASDAQ:FSLR) on an $850M California solar farm. Apple is a week removed from announcing plans to invest $2B to build a Mesa, AZ global "command center" for its data center infrastructure that will run on renewable energy. (live blog, webcast)
    • Cook also states the Apple Pay rollout is "going faster than I thought it would, much faster." Apple has provided few details thus far about total Apple Pay transaction volumes.
    • He asserts once more Apple Watch (set to ship in April) will be a game-changing product, as debate continues to swirl about the size of its market opportunity. "The customizable nature of the Apple Watch is incredible."
    • Apple closed up 1.9%, making new highs and becoming the first U.S. company to post a $700B+ market cap along the way. First Solar closed up 4.8%, spiking in the final minutes of trading thanks to Cook's disclosure.
    • Update: First Solar has issued a PR about the solar project. It's located in Monterey County, and is expected to be finished by the end of 2016 after starting construction in mid-2015. Apple will receive 130MW of electricity through a 25-year power purchase agreement, and PG&E the other 150MW.
  • Tue, Feb. 10, 11:34 AM
    • Some anecdotal evidence suggests a tug-of-war has broken out between Apple (NASDAQ:AAPL) and Tesla Motors (TSLA -0.5%) over top talent.
    • Tesla has hired over 150 Apple employees across divisions, according to a Bloomberg report issued last week.
    • But no reason for worry in Cupertino, Apple has hired about 50 engineers from Tesla in what a tipster tells Business Insider is a vehicle development project.
    • The best guess from analysts is that the companies might compete on next-gen infotainment OS and vehicle-to-vehicle communication standards.
    • If Apple were to make a strong entry into the automobile sector it opens up a few interesting questions for investors on where to place their bets.
  • Sat, Feb. 7, 3:09 PM
    • "We have developed a new product that will provide sapphire-like scratch resistance while maintaining the legendary toughness and break resistance of Gorilla Glass," Corning (NYSE:GLW) exec James Clappin stated at yesterday's investor meeting. Corning plans to start selling the composite, known for now as Project Phire, later this year.
    • Though Apple (NASDAQ:AAPL) stuck with Gorilla Glass for the iPhone 6 and would-be Apple sapphire supplier GT Advanced (OTCPK:GTATQ) filed for bankruptcy - it's now trying to sell ~2K sapphire furnaces to pay off creditors, with stockholders getting anything left over - there's still strong industry interest in sapphire as a potential smartphone cover glass solution due to its scratch-resistance and thinness; Apple has said it will "continue evaluating" GT's sapphire progress.
    • Meanwhile, Apple Watch and other smartwatches have adopted sapphire cover glass, and sapphire wafer/materials provider Rubicon (NASDAQ:RBCN) recently announced it's working on "scratch-resistant sapphire-coated faceplates for smartphones and larger devices," as part of a broader effort to expand into new markets. Concerns about the material's cost and brittleness remain.
    • Also disclosed by Corning: 1) The Display Technologies (LCD glass) segment is expected to see 2015 earnings growth comparable with 2014 levels. 2) Corning's glass sales related to large-size LCD TVs rose over 50% in 2014 on a unit basis; it forecasts 30%+ growth in large-size LCD viewing area by 2016. 3) The Optical Communications (fiber) business is expected to see high-single digit 2015 growth, aided by strong sales to the last-mile fiber, data center, and distributed antenna markets. (investor day slides)
  • Wed, Feb. 4, 7:21 PM
    • Re/code, which has a good track record with Apple (NASDAQ:AAPL) scoops, reports (citing TV industry execs) Apple is in talks with programmers about content deals that would let it offer a Web-based TV service, similar to the one recently announced by Dish (will go for $20/month) and the one being prepped by Sony
    • Re/code: "The theory is that Apple would put together bundles of programming — but not the entire TV lineup that pay TV providers generally offer — and sell it directly to consumers, over the Web." Naturally, Apple would develop its own UI and control the user experience.
    • Though Apple has shown programmers demos of its planned service, Re/code cautions "talks seem to be in the early stages, which means terms like pricing and timing aren’t close to being ironed out."
    • Past remarks from Apple execs have suggested both a strong dislike of the current TV-viewing experience, and an interest in improving it if the industry is willing to play ball. Reports last year stated Apple has talked with Time Warner Cable and others about supporting pay-TV content on a new Apple TV set-top.
  • Mon, Feb. 2, 3:51 PM
    • Apple (AAPL +1.2%) plans to spend $2B to turn what used to be GT Advanced's (OTCPK:GTATQ -1.4%) sapphire manufacturing plant (located in Mesa, AZ) into a data center that will serve as a "command center" for its global data center infrastructure.
    • The 1.3M+ sq. foot plant will employ 150 full-time Apple workers, create 300-500 construction/trade jobs, and be powered by renewable energy. While GT owned the furnaces installed within the facility - they're now being sold to pay off GT's debt to Apple, as part of its Chap. 11 restructuring - Apple controls the facility itself.
    • Apple has been on a data center building spree over the last several years. The company has set a $13B FY15 (ends Sep. '15) capex budget, up from FY14's $11B and equal to nearly 6% of its FY15 revenue consensus.
    • Earlier: Apple plans $5B debt offering
  • Mon, Feb. 2, 9:16 AM
    • Apple (NASDAQ:AAPL) has filed to sell $5B worth of floating rate and fixed-rate notes. The floating-rate notes are due 2020, and the fixed-rate notes due 2020, 2022, 2025, and 2045. (prospectus)
    • Pricing hasn't been set yet. Goldman and Deutsche are underwriting. Given Apple's huge cash balance, and its history with such offerings, buybacks are a likely use of the proceeds.
    • Apple's cash/marketable securities balance totaled $178B at the end of FQ1 (much of it offshore), and its debt balance stood at $36.4B. The company spent $5B on buybacks during the quarter, and has spent $73B on them over the history of its $130B capital return program.
    • AAPL +0.7% premarket.
    • Update: Apple upsized the offering to $6.5B. Interest rates were predictably low, with the 2045 notes carrying just a 3.45% coupon.
  • Thu, Jan. 29, 6:00 AM
    • Apple (NASDAQ:AAPL) overtook Hermes International (OTCPK:HESAF, OTCPK:HESAY) as #1 luxury gifting spot in China.
    • Apple posted a 70% rise in sales in China in the last three months of 2014.
    • Overall, spending on gift-giving fell 5% Y/Y, following a 25% drop in 2013. Beijing has been cracking down on corruption and luxury spending among public officials.
  • Wed, Jan. 28, 1:03 PM
    • Himax (HIMX +6.7%), QuickLogic (QUIK +7.4%), and Pixelworks (PXLW +5.4%) are posting big gains on a day that has seen many mobile chipmakers rally in the wake of Apple's strong FQ1 iPhone sales print.
    • Himax's LCD driver ICs and QuickLogic's sensor hubs go into Android devices rather than Apple's mobile hardware. Pixelworks counts Apple as a client, but details about the business relationship are limited. Many think an SoC being developed by Pixelworks for large-screen applications (through a "co-development partnership") is meant for Apple.
    • Possibly helping Pixelworks' cause: Tim Cook stated on Apple's (NASDAQ:AAPL) CC (transcript) 25M Apple TV units have now been cumulatively shipped, up from 20M last April, and that the product is one which Apple "[continues] to look at and work on and find a way that we can make even greater contribution than what we’re doing."
    • QuickLogic reports on Feb. 4, Pixelworks on Feb. 5, and Himax on Feb. 12.
  • Wed, Jan. 28, 10:36 AM
    • Apple (NASDAQ:AAPL) has seen at least ten target hikes after soundly beating FQ1 estimates on the back of a big iPhone sales print. Shares are less than $2.50 away from a high of $119.75.
    • UBS' Steve Milunovich: "The 74.5mn unit iPhone figure deserves all the adjectives analysts can muster, especially given that (1) supply/demand balance was not achieved until Jan, and (2) 49% sell-thru growth bettered the sell-in increase of 46% ... our guess that iPhone 6+ was 30% of total iPhone units likely was near the mark." He sees an 18% iPad unit decline and "flattish" iTunes revenue as the only negatives.
    • BTIG' Walter Piecyk: "The strongest criticism you may hear today is that Apple created too difficult a comp for the December 2015 quarter based on an unsupported assumption that ‘everyone upgraded their phone in 2014.’ We believe that assumption is wrong."
    • Citi believes new smartphone upgrade/installment plan options from carriers are providing a lift, as is interest in 64GB models. It adds shares are still only trading at 13x forward EPS (10.4x exc. cash).
    • On SA, Orange Peel Investments sees room for shares to run to $150 (18x forward earnings), aided by smartphone and PC share gains and China growth. Paulo Santos offers a contrarian take, arguing the improving quality of cheap Android phones is a threat.
    • Prior Apple earnings coverage
    • Update (12:45PM): Carl Icahn has chimed in on CNBC. He now asserts Apple is worth $215/share (above a prior $203 target), and reiterates his call for bigger buybacks.
  • Wed, Jan. 28, 9:14 AM
  • Tue, Jan. 27, 5:47 PM
    • Tim Cook has provided a more concrete timetable for Apple's (NASDAQ:AAPL) smartwatch launch on the FQ1 CC. 9to5 Mac previously reported hearing the Watch would launch by the end of March; Apple had before only said it would ship in "early 2015." (live blogs: WSJ, BI)
    • CFO Luca Maestri notes forex headwinds had a 4% impact on revenue growth (plenty of other tech giants can relate), with the yen and ruble the biggest culprits. He suggests the impact going forward will be around 5%; more favorable component costs will partly offset.
    • Maestri adds iPhone channel inventory fell by 200K Q/Q, and that supply only met up with demand in January. iPad inventory rose by 1M.
    • Other details: 1) iPhone sales more than doubled Y/Y in mainland China and Brazil. 2) App Store revenue rose 41% Y/Y. iTunes/media revenue rose by $200M to $2.6B. 3) Apple now has 447 retail stores (182 outside the U.S.).
    • AAPL +4.9% AH. FQ1 results, details.
  • Tue, Jan. 27, 4:57 PM
    • Thanks to a stronger-than-expected iPhone mix, Apple (NASDAQ:AAPL) had an FQ1 gross margin of 39.9%, up 200 bps Y/Y and above guidance of 37.5%-38.5%. FQ2 GM guidance is at 38.5%-39.5%.
    • Product line performance: iPhone revenue (69% of total revenue) +57% Y/Y to $51.2B; units +46%. iPad -22% to $9B; units -18%. Mac +9% to $6.9B; units +14%. Services (iTunes, App Store, Apple Pay, etc.) +9% to $4.8B. Other products (iPod, Apple TV, Beats, accessories, etc.) -5% to $2.7B.
    • Regional performance: Americas revenue +23% to $30.6B. Europe +20% to $17.2B. Greater China +70% to $16.1B (pent-up demand for bigger iPhones). Japan +8% to $5.4B. Rest of Asia-Pac +33% to $5.2B. International sales were 65% of revenue.
    • With the 6 Plus providing a boost, iPhone ASP rose to $687 from $603 in FQ4 and $561 in FQ3. iPad ASP fell to $419 from $432 and $443. Mac ASP rose to $1,258 from $1,200 and $1,255.
    • SG&A spend rose 18% Y/Y to $3.6B, and R&D spend 43% to $1.9B.
    • $5B was spent on buybacks. Apple ended FQ1 with over $177B in cash/investments, and over $36B in debt.
    • AAPL +5.3% AH to $114.90. FQ1 results, PR.
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Company Description
Apple Inc designs, manufactures, & markets mobile communication & media devices, personal computers, & portable digital music players, & sells a variety of related software, services, accessories, networking solutions, & third-party digital content.
Sector: Technology
Country: United States