Apple's Third Quarter Earnings Call Takeaways: Work on AI, Vision Pro Demo Success, iPad and Mac Sales to Fall in Q4

[CarAnalogy]

Let’s be honest, revenues are down because for most products, pricing has gotten ridiculous. Especially in international markets. But we all know Apple’s solution will be to squeeze even more out of those willing to pay and not lower margins in favour of higher volumes.

Gotta admire their ability to control profits. Most businesses would kill for 40% gross margins. Probably the only things more profitable are energy and finance.

Just annoying that they attribute it to things like environmentalism and paying artists. Meanwhile they are practically in a civil war over the App Store.

 

[CarAnalogy]

More shares to buy.

Maybe not right now, they keep setting 52 week highs.

 

[SFjohn]

A dividend of just 20% is ridiculous. What are they doing with all the money? We got high inflation. Is the ROI of this money higher? The owners like Berkshire should talk business with Tim.

Apple knows what it’s doing, you wanting even more of their money is laughable. It’s important for a company like Apple to have a lot of cash on hand: to buy companies, or survive a massive downturn in the market, tax minimization, etc…

What Should A Business Do With Extra Cash?

Some companies have a good bit of cash these days. Holding cash in an inflationary environment doesn’t sound smart, but having cash headed into a recession does sound smart.

www.forbes.com

 

[name99]

It appears we are in agreement that inflation exists. People in 1984 weren’t making what people do in 2023. 😝

One can be more precise.
You can dance around whether to use median vs mean, individual vs household incomes, before vs after-tax, etc, but they all play out the same sort of way.
Using median individual after-tax income, we have
1984: $8,198 nominal dollars
2021: $28,869 nominal dollars

So a Mac in 1984 ($2500 nominal dollars) cost you 30% of a year's median work.
A Vision Pro in 2023 ($3500 nominal dollars) will cost <~12% of a year's median work.
Substantially cheaper!

 

[Abazigal]

Buybacks do reduce the total amount of shares, which increases the eps — the stock price is separate from this.

I absolutely agree on dividends. Share buybacks have increased shareholder value far greater. I would rather they put those dividend funds towards growth opportunities like r&d, talent acquisition, m&a, etc.

You just reminded me of another purpose of stock buybacks - it reduces the amount of free cash Apple is holding, which also reduces the pressure on Apple management to do something (stupid) with the money, like say, acquire Netflix (which would be akin to shovelling $100 bills into a furnace 24/7).

Apple does already use their money for R&D and acquisitions, so it's not like this is mutually exclusive in that regard. They just won't do huge flashy deals that add zero value to the company.

 

[freedomlinux]

[...] Apple still has way too much of their revenue wrapped up in a single product (iPhone). The truth is that iPad & wearables are completely dependent on iPhone and not really independent segments. If iPhone declines they all fall with it. The only independent revenue streams are Mac and services. Services is independent with music and Apple TV plus and icloud to a lesser degree. I would be curious to know how services break down.

Consider also - how much of Services revenue is the App Store % cut?

A decrease in iDevices eventually leads to a decrease in App Store revenue.

 

[BuddyTronic]

OMG I used to hit Radio Shack every Saturday after paying my paper route to play with their computers.

Pretty sure my version of “Hello World” was:

10 PRINT “I Am Awesome! “;
20 GOTO 10

Yep yep.

It was a race to the bus for me after school. Kids from all over would try to get there first. If you were not first, you had to wait in line and watch.

One day the store guy hooked up a cassette tape drive. So finally all our BASIC code could be saved to cassette tape instead of the usual power down of the computer and lose everything! Thursdays was open till 9PM - so that was the day to get serious

 

[_Spinn_]

Impressive numbers from services.

 

[CarAnalogy]

One can be more precise.
You can dance around whether to use median vs mean, individual vs household incomes, before vs after-tax, etc, but they all play out the same sort of way.
Using median individual after-tax income, we have
1984: $8,198 nominal dollars
2021: $28,869 nominal dollars

So a Mac in 1984 ($2500 nominal dollars) cost you 30% of a year's median work.
A Vision Pro in 2023 ($3500 nominal dollars) will cost <~12% of a year's median work.
Substantially cheaper!

The more I look at the price of Apple’s products the more I think they nailed it pricing the Vision Pro at $3500, at least this generation. As always, they have priced it at the exact peak of what the market will bear, no more no less. When a Mac Pro costs you $3000 for the PCI slots alone it starts to look like a downright steal.