Apple Stock Rises Above $100 Per Share For First Time in Six Weeks

[TallManNY]

Fairly or unfairly, AAPL is really never positively affected by what Apple does regarding the sale of their products. AAPL is negatively affected by the downward trend in sales. Record sales quarter? AAPL flat. Another record sales quarter? AAPL flat. Flat sales quarter? AAPL down. Negative sales quarter? AAPL down. Personally, I think anyone tying their position on AAPL to the company's sales performance should probably not be playing in the market. Imo, AAPL and Apple have never really had much in common.

AAPL has a market cap of $541 billion as of the end of today. It is really hard to justify a market cap that high. That is AAPL's main problem. It needs crazy quarters of high sales to stay at this lofty level or it needs to sell the market on some growth story of high margins. But as long as it is seen as primarily a hardware company that story is much harder to make. Apple has never been able to sell the market on growth opportunity. The stock has basically just followed the actual cash flow generation for the last decade or so.

And don't dismiss Wall Street's concerns. There is a long history of margins for electronic devices being squeezed as those devices become more mainstream. Apple has enjoyed outside profits for years on all of its hardware lines, but it isn't fundamentally immune to the forces of competition.
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I'm still hesitant to say the Watch is going to ever be a huge "gotta have it" product. Fact is hardly anyone I know below 35 or so even wears a watch anymore. Can Apple motivate people that have never worn a watch to buy an additional expensive accessory that must be re-purchased every 2-3 years? I'm not sure.

I don't think you should think about it as a watch. You should think about it this way: Is it going to be convenient to have a small computer strapped to your wrist. Assuming that computer continues to become more capable, I think the answer to that is yes. The phone is super useful, but it will always need to be somewhat big to have a big enough screen. But the computer on the wrist will always be easier to get to and will always have a better ability to connect and interact with your body. So there will be some jobs the smartphone is always going to be better at. And there will be some jobs the wrist computer will be better at. You just need to make the wrist computer better and then folks will wear it.

 

[Benjamin Frost]

AAPL has a market cap of $541 billion as of the end of today. It is really hard to justify a market cap that high. That is AAPL's main problem. It needs crazy quarters of high sales to stay at this lofty level or it needs to sell the market on some growth story of high margins. But as long as it is seen as primarily a hardware company that story is much harder to make. Apple has never been able to sell the market on growth opportunity. The stock has basically just followed the actual cash flow generation for the last decade or so.

And don't dismiss Wall Street's concerns. There is a long history of margins for electronic devices being squeezed as those devices become more mainstream. Apple has enjoyed outside profits for years on all of its hardware lines, but it isn't fundamentally immune to the forces of competition.
[doublepost=1468885094][/doublepost]

I don't think you should think about it as a watch. You should think about it this way: Is it going to be convenient to have a small computer strapped to your wrist. Assuming that computer continues to become more capable, I think the answer to that is yes. The phone is super useful, but it will always need to be somewhat big to have a big enough screen. But the computer on the wrist will always be easier to get to and will always have a better ability to connect and interact with your body. So there will be some jobs the smartphone is always going to be better at. And there will be some jobs the wrist computer will be better at. You just need to make the wrist computer better and then folks will wear it.

I don't think most people are interested in having a miniature computer on their wrist, and I don't think they ever will be.

 

[TallManNY]

I don't think most people are interested in having a miniature computer on their wrist, and I don't think they ever will be.

I hear you. But I know very small computers will get more and more useful. And I also know sensors connected to the body are going to become more and more useful. These are just inevitable facts about technologies progress. So I think people will be interested in a computer placed in a handy location. And honestly saying people aren't going to be interested in having a computer on their wrist sounds a lot like how people thought that generally folks were going to be interested in (1) enterprise level computers, then (2) personal computers, then (3) cell phones in general, and then (4) smartphones. It has always been the same thing, lack of imagination about what computers and software will eventually be able to do. The trend has been the general populace getting more and more access to computing power. I see wrist computers following that trend.

 

[asfdasdf]

I hear you. But I know very small computers will get more and more useful. And I also know sensors connected to the body are going to become more and more useful. These are just inevitable facts about technologies progress. So I think people will be interested in a computer placed in a handy location. And honestly saying people aren't going to be interested in having a computer on their wrist sounds a lot like how people thought that generally folks were going to be interested in (1) enterprise level computers, then (2) personal computers, then (3) cell phones in general, and then (4) smartphones. It has always been the same thing, lack of imagination about what computers and software will eventually be able to do. The trend has been the general populace getting more and more access to computing power. I see wrist computers following that trend.

People don't know how useful can be something until it's shown to them, but once it's shown, they realice it if it's that useful. That's true when we think about what happened with PCs, laptops, smartphones... Ok, they were released and it was amazing even if they didn't work that nicely in their first gens, but that made you dream about incredible potential.

That is not happening with smartwatches. Even extreme fanboys only label them as "convenient", which is an euphemism for trendy. The Google glasses were more convenient and maybe even more useful, but they were not remotely even close to being widely interesting. They were trendy, and trends die. What smartwatches are, is an effort from companies which know that the smartphone is commoditizing and need to create a new growth product based purely on marketing, trend, loyalty and ecosystem. The problem is that they have no idea about what the next big thing is in this sector and they're just playing to entertain the investors with gimmicks, like happened so many times before.

It looks quite clear that electric autonomous vehicles + on demand car services is a "next big thing", but it's out of their expertise. They're just trying to gain time for catching that train. In 10 years the iPhone will be no more relevant market wise than the mac was in the mid 90s, that if the smartphone as a category is still on demand, which I think will be. It's the Win vs Mac all over again, and we're approaching Win95 era, they're just trying to find the new iPod, because in 5 to 7 years iOs will be really residual and I don't see people spending 1000 dollars+inflation every year from the iphone 10 on to be sincere, like users upgraded their PCs every 2-3 years in the 90s, buying 3000 USD inflation adjusted machines, but since the late 2000s, that is going more like 5 years and 800 USD machines. They are already selling a 399 USD new gen iPhone, do you need a picture or what? next step is 349 and then 299.

 

[Karma*Police]

The reason Berkshire bought Apple is because they wanted to add another poor performing stock to their portfolio.

And yes, I'm sure they'll be holding Apple for a long long time, just as they have done with American Express, IBM, Wells Fargo, etc., unless they want to take a loss on the purchase.

http://fortune.com/2016/04/29/berkshire-hathaway-stock-warren-buffett/

But that's the mentality I'm talking about.

Look at his investments over decades, and he's done amazingly well. Is it possible that Buffet lost his touch? Sure, anything is possible.

But when evaluating AAPL with his type of horizon, it looks like a no brainer so long as the investor is not expecting the kind of returns it showed for the better part of the last two decades.

 

[asfdasdf]

But that's the mentality I'm talking about.

Look at his investments over decades, and he's done amazingly well. Is it possible that Buffet lost his touch? Sure, anything is possible.

But when evaluating AAPL with his type of horizon, it looks like a no brainer so long as the investor is not expecting the kind of returns it showed for the better part of the last two decades.

Berkshire Hathaway buying AAPL does not necessarily mean that Warren Buffet bought it, there are several managers apart from him there. Anyway, he has had a number of bad decisions made in the past too, like everyone else.

 

[trevor12]

AAPL is not undervalued, Apple is Company without clear future on long scale (P/E is not main indicator for such future)

Apple is like Titanic, everything is still OK, but direction is clear and iceberg is on the place, music still played...

Apple products are more dispensable and replaceable by much more cheap substitues or for life more important goods/services ...

question is not if collision would happen but when ...

 

[asfdasdf]

AAPL is not undervalued, Apple is Company without clear future on long scale (P/E is not main indicator for such future)

Apple is like Titanic, everything is still OK, but direction is clear and iceberg is on the place, music still played...

Apple products are more dispensable and replaceable by much more cheap substitues or for life more important goods/services ...

question is not if collision would happen but when ...

First short term problem with Apple products is that they are not good enough. Simple as that. First, nowadays they are old, and if not, they are underspeced thanks to bean counting. Do what SJ said back in 1997, STOP SELLING CRAP, do the best you can and AAPL will do well eventually. When one can not clearly see the superiority in Apple when compared to Samsung and all the others, then we're talking about NOT GOOD ENOUGH products. That's the difference between a bunch of MBA chaps and bean counters in general running a company which belongs to virtually nobody and the visionary founder, the father of the company. He knew what he wanted from Apple. Bean counters only search for ways of improving financial statistics short term, they lack compromise, leadership, risk taking capacity and a clear vision of what the company should be and will be. SJ was all about designing the car and improving the way the car handles, its looks and every possible aspect; TC is all about driving the car carefully and in a fuel efficient manner, which is at the same time dangerous, because he's in a race.

Why didn't they buy Spotify instead of Beats when it was obvious than Spotify was better for example? Because buying Beats was financially more efficient / cheaper? Oh really? And then they spend 140 BILLIONS in buybacks for artificially improving EPS (earnings per share). TC is a disease.

 

[Easttime]

First short term problem with Apple products is that they are not good enough. Simple as that. First, nowadays they are old, and if not, they are underspeced thanks to bean counting. Do what SJ said back in 1997, STOP SELLING CRAP...

Crap? My iPad, iPhone and Watch are marvels. They and my 2010 MacBook are endlessly useful in my personal, work and family life all day long. And they talk to each other. I have all the computing power here that I need, packaged in elegant devices. Last thing I want is a rat race of upgrading just to stay current with unnecessary new technology.

 

[asfdasdf]

Crap? My iPad, iPhone and Watch are marvels. They and my 2010 MacBook are endlessly useful in my personal, work and family life all day long. And they talk to each other. I have all the computing power here that I need, packaged in elegant devices. Last thing I want is a rat race of upgrading just to stay current with unnecessary new technology.

I'm talking about current devices. Are you saying me that selling low res (1.366 x 768 and 1.440 x 900) laptops, for example, in 2016 for over 1000 euros is not selling crap? Don't make me laugh. Embarrasing is what it is.

Computer companies are about new technology mate, that's what they do for a living, wake up.

 

[Grolubao]

Current Apple Products are crap, let's all be honest with that... We still love them, but to be honest is more for historical reasons that anything else

 

[TallManNY]

People don't know how useful can be something until it's shown to them, but once it's shown, they realice it if it's that useful. That's true when we think about what happened with PCs, laptops, smartphones... Ok, they were released and it was amazing even if they didn't work that nicely in their first gens, but that made you dream about incredible potential.

That is not happening with smartwatches. Even extreme fanboys only label them as "convenient", which is an euphemism for trendy. The Google glasses were more convenient and maybe even more useful, but they were not remotely even close to being widely interesting. They were trendy, and trends die. What smartwatches are, is an effort from companies which know that the smartphone is commoditizing and need to create a new growth product based purely on marketing, trend, loyalty and ecosystem. The problem is that they have no idea about what the next big thing is in this sector and they're just playing to entertain the investors with gimmicks, like happened so many times before.

It looks quite clear that electric autonomous vehicles + on demand car services is a "next big thing", but it's out of their expertise. They're just trying to gain time for catching that train. In 10 years the iPhone will be no more relevant market wise than the mac was in the mid 90s, that if the smartphone as a category is still on demand, which I think will be. It's the Win vs Mac all over again, and we're approaching Win95 era, they're just trying to find the new iPod, because in 5 to 7 years iOs will be really residual and I don't see people spending 1000 dollars+inflation every year from the iphone 10 on to be sincere, like users upgraded their PCs every 2-3 years in the 90s, buying 3000 USD inflation adjusted machines, but since the late 2000s, that is going more like 5 years and 800 USD machines. They are already selling a 399 USD new gen iPhone, do you need a picture or what? next step is 349 and then 299.

Well I totally agree with you that Apple will struggle to maintain the price point and margins on their iPhones. In fact I think they drop the entry price to iPhone 7 by $50 and functionally drop it a bit more by including 32gb of storage (which is enough for most people). And I think they include a set of bluetooth headphones to add to the value proposition.

But I disagree that having a computer on the wrist is going to be a fad. It is "just" convenient now. But next generation watch will have more power CPU and maybe better bluetooth and NFC. It is the watch's ability to interconnect with the rest of the world (like opening your car and your Mac) that will make it a very convenient thing to wear. The Mac gets that feature this Fall, the Apple car will have that feature from day one. You could have a lock on your front door respond to your watch to let you in. The options are endless. And other smartwatch makers are really going to struggle to get a hold in this space. So I think this is going to be a big product for Apple.

 

[Karma*Police]

Berkshire Hathaway buying AAPL does not necessarily mean that Warren Buffet bought it, there are several managers apart from him there. Anyway, he has had a number of bad decisions made in the past too, like everyone else.

One of his trusted lieutenants bought it, actually. But they're using the same formula AFAIK. I never said Warren was perfect but clearly his good decisions FAR outweighed the bad.

More importantly, his buy and hold strategy has proven to be effective as opposed to those attempting to time markets and buying the latest fad which has shown to be a fool's errand.

And that was my original point. True investors with a long-term horizon wouldn't worry about AAPL's dips.

 

[trevor12]

imho best Warren investments are based upon buying significant ammounts of shares in Company (or majority) to send his man to board to make decision positive for Warren investment in such company, that is not case of buying AAPL (only marginal holder without force to behave so, maybe only parking cash to fill the gap in his portfolios for the interim)

 

[LordVic]

I hope we're not going to start sending links supporting each of our points of view...we'll be here all day.

I'm not necessarily disagreeing with your points. But the fact is that Apple is a hugely stable and profitable company without the iPhone. You don't have to be an "Apple fan" to like their business, just read their financials. Also, as a tech company they are under no more pressure to innovate than anyone else. I'd like to see someone point out some of the mind-blowing innovation that's currently happening at other companies instead of rehashing the same old **** about what Apple needs to be doing. Then it'll be a really slow at Mac Rumors.

Actually, Investors are worried about Apple being too reliant on the iPhone, and thats because the iPhone is Apple's halo product.

The problem stems that while on paper, all of their other business sectors look good, and it's easy to say "without the iPhone, see, everything else is profitable". it doesn't take into account that many of those other product categories have benefited, or are directly related to iPhone and the iOS ecosystem. And if iPhone sales were to drop dramatically enough, many of those other sectors would also likely see drops, especially on services that only work on iOS.

if we take the April 2016 Quarterly results for examples (https://www.macrumors.com/2016/04/26/q2-2016-earnings/) and break down what each category consists of. Investors don't believe Apple have enough diversification to maintain the revenues or profits without the iPhone

Breaking down by Category:
- Obviously a decline in iPhone sales would hit into their single largest profit centre. the iPhone.
- iPod is already a dead category
- Services relies heavily on iOS devices. Services like iTunes, iCloud, and other monetized apple services would decrease, likely in lockstep with the decrease in iOS sales.
- iPad category has been nosediving for a couple years now
- Mac sales have been declining now, with even further reports last week of further shrinking of the marketshare over concerns of lack of competitive products. Has not seen growth in 3 quarters. This category has also benefited from Apple's iPhone brand recognition.
- Other Category consists of the Apple Watch, Accessories to iOS devices, Apple TV. Many of these sales are dependant on iOS and iPhone adoption


Apple's lock in and not supporting other device's can backfire on them because of how exclusively most of their products are tied to the iPhone. it would be disingenous to believe that with decreasing iPhone sales, everything else will continue at the same levels.

it's more likely that if they saw a 30% decrease in iPhone sales, while there maybe some market lag, the rest of Apple's businesses would also see decrease. this has investors spooked, especially since Apple hasn't had a "disruptive" stand alone product since the iPad, and they want the "next big thing" already.

While I don't foresee "doom! DOOM! DOOOOOOOM!", investors are looking for increased returns and higher profits (which no matter what is unsustainable over long term, every company 'peaks'). A smaller pool of profits, means less dividends that can be paid back to stock holders. which devalues the market value of the stock
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This is prehype. After earning are released, investors will find something to be sad about and dump the stock causing the price to drop below 90 for the first time in forever.

NO New products announced at the earnings call!?

DOOOOOOOOOOOOOOOM

 

[btrach144]

NO New products announced at the earnings call!?

DOOOOOOOOOOOOOOOM

LOL new products during an earning call!!! LOLOL. NEED MOAR MACSSS.

Thank you for the laugh this morning. I needed it