Apple Stock Forecasted to Rise as Lifetime iPhone Sales Reach 1 Billion

[IJ Reilly]

Stock isn't a "loan". you're right thats what Bonds are. Stock IS a purchase of ownership. And once IPO has completed, none of the money in day to day stock trading goes towards the company. Company only receives cash on initial purchase only.

And most growing cmopanies don't pay dividends, because they re-invest capital in growth. However, no large, multi-billion dollar corporation, doesn't pay dividends.

There's a point in every company, especially very large ones where the prospect of accelerated growth (like Apple's last decade) isn't feasible. and to maintain stock price growth or consistency, there has to be a return for investors. These stocks are generally considered "blue chip", These large companies with solid reputations keep their stock values because the return on investment to the shareholder is in lengevity of it's dividend payout, not the prospect of stock price increase.

I think Apple is currently in a state of flux. it doesn't know if it wants to be "blue chip" and transition to a reliable dividend yeilding stock with long term investors purchasing it, or still believes they can continue to grow enough to give promise of larger return in the future.

But the guy you're commenting with is also correct in his estimation that if you were to buy Apple stock for dividend payout, at $100 and only $2 dividends, the rate of return on this stock is only 2% / qtr. There are far greater investments than Apple stock that will offer greater return.

A lot of people here and elsewhere militated against Apple paying a dividend. I wasn't one of them. The payout represents only a small fraction of their excess free cashflow. Yet nobody should be buying AAPL for the dividends alone. The argument is absurd on its face, because Apple is still a growth company with lots of potential to reward stockholders with rising earnings. But even if you did buy the stock for the dividends alone, you'd still be receiving a rate of return greater than on a 10-year treasury note, so that's hardly shabby. In this sense, the dividend helps support the stock price.

It is not entirely true that a public company never sees any income from stock sales beyond the IPO. Most issue stock options to their employees. When exercised, new stock is created and the exerciser pays the strike price to the company. They also use outright grants of shares as compensation, so in that sense they are also cash surrogates.

Apple knows what it wants to be. We would not be having this conversation but for the period they going through for the last two quarters. The earnings malaise is being felt market-wide, globally. Longterm investors have seen this many times before and know it does not change anything fundamentally.

 

[kdarling]

You're right... market share is different than usage share. They are measuring two different things completely.

However... they might be more closely related than you think.

Testing this theory, I looked up two sources of US data.

• Kantar reports market share as most people think of it: sales over a short period.
• ComScore reports the carrier subscriber base at a moment in time.

Sales (market) share can swing a lot depending on new model intros. But the overall subscriber base changes more slowly, as one would expect, and lags behind sales... but is not too far off on average.

For example, here's a chart showing US market stats from both sources. Even though the market (sales) shares changed more, the overall user share stayed pretty steady:

 

[toke lahti]

A billion sold.
How many in use?

 

[LordVic]

A lot of people here and elsewhere militated against Apple paying a dividend. I wasn't one of them. The payout represents only a small fraction of their excess free cashflow. Yet nobody should be buying AAPL for the dividends alone. The argument is absurd on its face, because Apple is still a growth company with lots of potential to reward stockholders with rising earnings. But even if you did buy the stock for the dividends alone, you'd still be receiving a rate of return greater than on a 10-year treasury note, so that's hardly shabby. In this sense, the dividend helps support the stock price.

It is not entirely true that a public company never sees any income from stock sales beyond the IPO. Most issue stock options to their employees. When exercised, new stock is created and the exerciser pays the strike price to the company. They also use outright grants of shares as compensation, so in that sense they are also cash surrogates.

Apple knows what it wants to be. We would not be having this conversation but for the period they going through for the last two quarters. The earnings malaise is being felt market-wide, globally. Longterm investors have seen this many times before and know it does not change anything fundamentally.

yes, that was simple the way I put it. but there are methods this way.

Where I think we differ right now is our future forecast for Apple. But I'm just someoen whose overly critical of everyone. I don't believe Apple will be a future growth company anymore, but I do see them being a very stable company, and potential to be a real blue chip stock.

but hey, thats what market speculation is all about, and not everyone will have the same predictions.

 

[IJ Reilly]

yes, that was simple the way I put it. but there are methods this way.

Where I think we differ right now is our future forecast for Apple. But I'm just someoen whose overly critical of everyone. I don't believe Apple will be a future growth company anymore, but I do see them being a very stable company, and potential to be a real blue chip stock.

but hey, thats what market speculation is all about, and not everyone will have the same predictions.

I don't really make predictions. All I am arguing against here is that AAPL is a stock you buy (if you choose to buy) for the dividend only. That said I would not anticipate them returning to the 30-40% annual growth rates they were enjoying during the glory years, but I can see investors being perfectly happy with 10%, and I don't see how that is not achievable.

 

[Michael Scrip]

The idea that sales should translate to usage is completely wrong. The majority of Android phones sold around the world are low-end junk devices. Apple only sells high-end phones. You can't claim that people buying $50-100 phones are going to keep them for as long as someone buying a $700 iPhone. There's a multi-billion dollar repair industry built around the iPhone/iPad. There's also a very healthy resale market for used devices. Apple also makes iOS updates available for iOS devices for several years after they were new. In short, iPhones are the types of devices that are kept in service for a very long time. $50-100 phones are simply tossed and replaced with another. In other words, they are disposable.

Another area is to look at is all the other metrics where iOS dominates:

- App Store revenues are 4x higher than Google Play per user than Android (same for last 2 years).
- Online shopping is 5x the revenue on iOS vs Android (been this way for 3 years running).
- Digital content sales (music, movies and the like) were 6x higher on iOS than Android (last time I saw numbers for this was 2 years ago).

These numbers simply don't add up if iOS were to only have 15% of the subscriber share in the world. Surely if Android had 5x the users as iOS worldwide we shouldn't see iOS dominating these categories.

The highest worldwide quarterly market share ever achieved by the iPhone was 21%... and that was two years ago. It has averaged somewhere between 15% and 20% over the last few years.

So are you suggesting that iPhones are now 30% of all active smartphones in the world? Or 40%? 50%?

How would that even be possible? (edit: see below)

Android phones sell 5 times more than iPhones. The last year alone Android phones sold 1.4 billion units... compared to 230 million iPhones. And in 2014 it was around 1 billion Android phones and 170 million iPhones.

But even if most Android phones are junk... and junk Android phones don't last as long... they will still be replaced by another junk Android phone. So the percentage of active Android phones would be approximately the same, right?

Someone isn't gonna stop using a smartphone altogether if their junk Android phone breaks. And they won't replace their $100 junk Android phone with a $600 iPhone either. They will buy another junk Android phone and it will become active.

Look... I'm an iPhone fan. I realize how well iPhone does despite not being a high percentage of sales or active users. It shouldn't be a surprise that iPhone owners who spend more money on a phone in the first place makes them more likely to buy more apps, spend more on online shopping, and digital content. This is well documented and is a story for another day.

The issue here is... take all the active smartphones in the world... and let's figure out how many are Android and how many are iPhones.

I believe it's gonna be closer to 80% Android.

And if so... it would be curiously similar to what their quarterly market share has been over the last few years.


EDIT: new information

http://ben-evans.com/benedictevans/2016/7/25/platform-wars-final-score

This article estimates that there were around 2.4 billion total active Android* phones and iPhones in use as of March 2016.

And he estimates that there were 630 million active iPhones at that same time.

This would put the iPhone at around 27% of active smartphones and Android at 73% of active smartphones if we just looked at iPhones and Android. I'm not sure how much Windows Phone and Blackberry would affect these percentages.

*These Android numbers include Chinese Android phones that don't use Google services.


So after reading this new information... I'm gonna say Android are 72-73% of active smartphones... and iPhones are 26-27% of active smartphones.

That's not too far off from my around 80% Android prediction.

 

[the8thark]

While he wasn't ultimately right about a keyboard being necessary for business users, he was dead on with the primary objection he had, which was the upfront price:

He was mostly mocking the $500 cost to get one, as being too far out of American's comfort zone for a device that also had a required data plan (which would normally subsidize a phone).

And he was totally correct. It took less than two months before Apple figured out the same thing, and dropped the price by $200. Moreover their next model was subsidized normally, just as Ballmer said would be necessary to get lots of sales.

Balmer was wrong about many of his iPhone predictions. The physical keyboard for one. But the upfront price point, he was totally correct here. I agree. The iPhone only exists as a thing because the majority of iPhone users are on a plan which allows most of the iPhone cost to be paid over 2 years.

Most peole only see the $200 or whatever as the iPhone cost and the rest of the cost bundled in with their plan is just taken for granted as part of the monthly expence to own an iPhone.

Sure what the iPhone is contributed to it's sales. But Apple being able to slowly over the years get agreements with the hostile phone carrier market to sell subsidised iPhones is also a key part of the iPhone's success. Without it and there would no be iPhone today. it'd have died out years ago.