Jesus, did I ever bet the wrong horse. $50 billion in market cap gone in the blink of an eye. Brutal. Yes, I'm talking about AAPL and the fact that it's down about $50 a share pre-market thanks to whiffing on revenues for the third quarter in a row. Wanna know how smart I am? I sold all my GOOG a week ago Tuesday to avoid a margin call on my AAPL. Bastards.
I love how the fanbois over at TechCrunch are able to find the pony buried under all the horseshit, too. Despite slowing sales and evaporating margins, AAPL now has $137 billion in cash - which would be great if they were in the cash hoarding business. The fact that they're outpacing Vietnam's GDP with their cash in the bank isn't selling anyone an iPhone. At least Tim Cook has the right attitude about it, right? Well, errr....
“We aren’t interested in revenue for revenue’s sake. We could put the Apple brand on a lot of things and sell a lot more stuff. The most important thing to us is that our customers love our products, not just buy them but love them.”
Now obviously I'm just bitching because I'm long and wrong. The earnings were actually pretty stellar, and if it were any company other than AAPL the stock would probably be rocking. But the market has such high expectations for AAPL that it suffers from its own cult of personality.
Looks like I'll be buying more today, if for no other reason than to bring my average cost down (again). I'm currently at $590 a share, so I think anything I buy under $450 will make a pretty meaningful difference. Of course, it could be on its way to $200 (or $20 for that matter). You just never know.
How much do I sound like a dipshit client right now?
Had the same conversation with a client after close y'day. Good thing he got out most of his holdings at 690+, but I took a beating in my private portfolio.
Race to 1000 my ass.
I never understood the trillion dollar logic.
How much more could Apple possibly grow? Basic economics state that over time profit margins will dwindle. Did everyone really think they were going to maintain a 40% gross margin indefinitely, as a manufacturer no less?
Thankfully, I sold Apple and bought Tesla, Solarcity, Salesforce.com, and Goldman Sachs.
come on now.......fyi tons of hedge funds (last i saw over 200..and dont forget thats REPORTED funds) own appl, all racing to the exists........im not in equity research valuation, but 400 sounds about right price for appl
Margins in the device business (Apple's core) are bound to follow the same trend as PCs starting in the late 1990's. That is, they'll rapidly decline. With Apple's margins sky high, they're bound to suffer.
It would have only been down to 480-490 on the rev and margins. It was their admission of no longer sand bagging guidance going forward during the QA that took it to 460.
Yup
Yup Yup. Gotta love how big APPL is. Big enough for 400 funds to take positions in, volatile enough to make longs and shorts happy.
Agreed. The substantial fall is due to news on their guidance going forward, not just the earnings. Honestly, I think APPL will recover and correct in the coming weeks. This is just temporary -- will def recommend hold for anyone who has APPL stock.
Don't own any shares myself but if you're long there's nothing you can do but hold at this point. The numbers should bring it back to ~500 level after all the hoopla dies down in a week or so.
I think Apple will lose its market share overtime in the smartphone business.
Reason : The differences in the level of techonologies among handset makers are not that markedly different these days. They all use the same application processers(the part that determines the overall performance of the smartphone. You can think of it as CPUs that are embedded in computers) that are designed by ARM, Qualcomm, and other design houses/fabless companies, they all use the same chipsets that are manufactured somewhere in Asia, they all use the same touchscreens, etc.
The parts that are used to manufacture the smartphone is not that differnet among handset makers. They all use the parts that have the same level of technologies.
When I saw the value chain, there were at least 3~7 big companies and numerous other small companies that directly competes against each other in the same product line. I can't say for only this reason that it is a buyer's market, but overtime, I think parts manufacturers will increase their capacity in face of increased demand all over the world and it's short product life cycle(probably between 1~2 years?).
This will give leverage to the buyers, and as the handset makers get more discretionary and flexibility in pricing their products, smartphone products will be divided into ranging from the premium models to the low-priced ones. Although we are expecting the smartphone business to continously swell, introduction of models with various price levels will eat up the market portiion of what Apple has now as Apple will mostly focus on premium models like their laptops.
Some people could argue that the i-phone model has more applications, but Android and other O/S's will soonly catch up, and this factor will not serve as their edge anymore.
I breifly talked about the manufacturing aspect at the first part, and to state further, handset makers who have either their own manfacturing facilities or have close ties with their sub-contractors are making this small device from moudules, which minimizes the production process. This effectively shortens the lead time, and in an industry which strives to be faster than others, this will be a defining factor.
Korean companies, espeically Samsung, has very close ties with their sub-contractors and will introduce new models every 3~6 months time span. On the other hand, Apple, which lacks the manufacturing edge, will not be able to compete in speed, and rather focus on product lines that are expensive and more design-focused than others.
Adding insult to injury, not only Samsung, but other handset markers like Motorolla, LC, Microsoft, and others, who were all not visible until now, will all start to act like serious competitors in the smartphone market.
I think the market will be still dominated by Apple and Samsung for some time, but they or only Apple won't be able to retain their current positions.
Finally, I think Apple's share price was a fad, of course for a legitimite reasion at the time. But nobody expected there would be such a strong competitor arising from Asia, and down the road, there are only more to come.
I am not trying to bash Apple or anything (I actually love their stroy, Steve Jobs, and all of their products)but they never had a history of making products that appeals to every income level and every people. They were very good at designing products that appealed to small group of people. For this reason, and for the reasons mentioned above, I don't think there are more growth opportunities left for Apple for a forseeable future - if they had, I would they be piling up cash at this level? They will just merely refine and change the functionalities a bit, but there would be no radical changes.
They'll have to start over, and pioneer a new thing, which they are the best at. I don't want them to make all kinds of products, only resulting in diluting their reputation and brand image.
Great opening post. Tons of cash and zero debt on the balance sheet doesn't mean anyone is buying an iPhone. The margins will continue to shrink, and fast, but I Apple isn't going anywhere. They lost the mastermind Steve Jobs, but they have the talent and resources to continue to innovate. I say now is the perfect time to buy.
Not crying in my beer; not happy either. Originally bought in the $280's, been holding; just bought more @ $492; will probably buy more today to average. Still, playing with the houses's $$$. Can't get past the cash holding's-looking for an increased dividend/stock buy-back.
Do you need anymore proof that the market is not efficient? The most analyzed stock in human history has a 14% swing after earnings are released......
Eddie, I feel for you, but this post made me laugh. I was the guy posting 2-3 weeks ago that I was thinking about buying calls that would expire soon hoping for a jump after earnings.
I agree that their phone margins will dwindle, but I don't believe it will be too drastic. Also, Apple's share as a % of smart phone sales in the US grew YoY and is above 50% (Android phones only slightly decreased, most of AAPL's gains weer thanks to RIM)
I took a nice gain when I sold ~$620. I'm thinking about getting back in today.
http://www.kantarworldpanel.com/global/News/news-articles/US-iOS-Mainta…
sanjose04 hit it right on the head.
Until Apple spends its billions investing in R&D rather than paying Bernanke to hold its money, I see no reason for the hyper optimism of the apple fanboys.
Stoks suk
you suck
Concerned with people basing their "cheap" comments on the current 490 pps as a relativity measure. Being cheap doesn't necessarily relate to the fact that the TTM average price is 600 (or whatever it is) if fundamentals/growth prospects have changed. Interesting write up though.
i think apple will rebound on the fact that they will eventually have to begin distributing its cash in the form of stock buybacks or dividends. Even with the worst possible management, no manager could burn through 137 billion dollars of cash and 40 billion dollars of annual FCF
Told you.
As I said before, when you have many people pulling for a belief it is usually wrong.
LOL. I see what you did there...
what 'bout science?
apple never made its money on its volume, it made its money on its margin. Their costs have gone up, and their prices have had to compete with other products. They dont have the market share they used to have. I can see them selling more products to more people, but not at the prices they used to have.
systematically overpriced, brand premium too high translated to diluted volatility in stocks, unsustainable
Delete
What do you mean by "diluted volatility"? Do you just mean weaker volatility?
just saying AAPL's intrinsic volatility at such unjustifiably high price is masked by its expected growth and dominance, we all well know the nature of expectations.
When Steve Job is gone, Apple will soon be gone And this has happened once
Just bout 35 shares, fuck it
double post
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