Apple

Apple market cap goes above $1 trillion again after 2.4 percent rise on the day

Apple share price sep 31 2019

Apple (AAPL) has risen 41.4% since the start of the year, compared with 15 per cent for the Dow Jones Industrial average, making it the the best-performing Dow stock of 2019 so far. The shares rose 2.5% to $224, as JPMorgan raised its iPhone forecast and price target to $265 a share from $243 a share. The all-time high for Apple stock is $233.47 in October 2018.

Good news for Berkshire Hathaway and Warren Buffett who has around 250 million shares, 5.5 percent of the company.

Is it just me or is Steve Jobs' vision of simplicity at Apple vanishing?

I was waiting for yesterday's Apple event in great anticipation, partly because I love the brand and its products but also I am in dire need of a new iPhone and hence wanted to see what Tim Cook would unveil in that area.

But with so many options for iPhone, iPad and Mac now available to buy following yesterday's news I find something confused about what I should buy, what I really need and the benefit of one product over another.The Steve Jobs mantra of simplicity and focus seems to have slipped of late meaning that consumers have choice, but maybe too much.

The return of Steve Jobs to Apple in 1997 and the drive for focus and simplicity

So a little history!

Apple had had one its most worst quarters ever in the last quarter of 1996 under the leadership of CEO CEO Gil Amelio, with sales that fell 30% below their 1995 level. In Quarter one 1997, Apple lost $700 million, making the total losses under Amelio over $1 billion. 

 In July, the board of directors, led by Steve Jobs  supporter Ed Woolard Junior,fired Amelio and asked Steve Jobs to become the company’s new chairman and CEO. He declined, accepting only to become a member of the board and  interim CEO. At the time he was also CEO of Pixar. One of the first deals orchestrated by Jobs was a controversial deal with Microsoft which ended legal action, with Mac versions of Microsoft Office for five years in exchange of making Internet Explorer the default Web browser on the Mac, and a $150 million investment in Apple from Microsoft, in the form of non-voting shares.

In 1997 Jobs met all the product teams at Apple and all of them had to convince him that their product was vital to the company’s strategy and by the end of the process he had cut the number of products from 50 to 10. 

Jobs said "What I found when I got here was a zillion and one products. [...] It was amazing. And I started to ask people, why would I recommend a 3400 over a 4400? Or when should somebody jump up to a 6500, but not a 7300? And after three weeks, I couldn’t figure this out! And I figured if I can’t figure it out working inside Apple with all these experts telling me into it, how are our customers going to figure this out?"

Apple would drop its 20+ complex product lines and make just four great products: a consumer desktop, a consumer notebook, a pro desktop and a pro notebook.

Jobs also said "We tend to focus much more. People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of many of the things we haven't done as the things we have done." Source: Fortune, March 7 2008 .

"The organization is clean and simple to understand, and very accountable. Everything just got simpler. That's been one of my mantras -- focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains." Source: Business Week, May 12 1998 | 

Summary of the Apple event September 9th 2015 - Bill Graham Civic Auditorium, San Francisco, California

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iPad Pro

  • Apple introduced a new, 12.9-inch iPad Pro with 10 hours of battery life, and four separate surround-sound speakers. It is is 6.9 mm thick and weighs 1.57 lb with a 78% bigger screen  with than the first iPad launched in 2010 and 5.6 million pixels, more than a 15-inch MacBook Pro with Retina display. Its available in November, starting at $799 for the 32 GB model.

Smart Keyboard

  • Apple’s Smart Keyboard snaps magnetically onto the iPad. Cost $169,  available in November. 

Apple Pencil 

  • Apple Pencil is a pressure sensitive stylus that can be used on the iPad Pro. The Pencil allows different levels of pressure will draw lines of different thickness. Drawing at different angles will also change the level of shading. The Pencil will cost $99 and will be available in November.

iPhone 6S and 6S Plus

  •  There is a new 12 megapixel camera on the phones which have a larger sensor and can take larger panoramas with 4K video.The front-facing is now 5 megapixels, and the phone’s screen acts as a front-facing flash helping lighting for selfies. With “Live Photos" users can force touch on a photo and it’ll turn into a short, animated image. When you open the camera app, the iPhone will automatically record 1.5 seconds of footage on either side of the picture you’ve taken to make a live photo.
  • The new iPhones have a new version of force-touch sensitivity, called "3D Touch", the new “taptic engine” can recognize how hard you touch the screen. Long touches will bring up menus and features like right clicking a mouse e.g.on calendar you can look inside a message to see if you have free time, or live previews of websites without having to open the internet. 
  • Siri can now be used whether the iPhone is connected to power or not using “Hey Siri”. The new phones will cost the same as the 6 and 6 Plus, starting at $199 and $299 and will be available on September 25th 2015 in 12 countries.

Apple TV

  • There is the next generation of Apple TV with with a new operating system—tvOS—and a new Siri controlled remote control system. Siri will search across applications to find you the content you’re looking for including iTunes and Netflix, The new touch-sensitive Apple TV remote lets you swipe at different speeds to control the system. The new Apple TV will start at $149, and will be available in late October.

 Apple Watch

  • There a  few new versions  of Apple Watch, including three new watch designs with high-quality leather straps designed by Hermès, costing between $1,100 and $1,500 and it is now available in gold and rose gold. Apple also introduced new straps. All these additions are available immediately.
  • Apple’s is also enhancing the Watch operating system with  third-party “complications,” public transportation on maps, and lots of new apps including Facebook Messenger, and it will be available September 16. 

iOS 9.

  •  The new operating system for iPhones and iPads will be available for download from September 16th.

So what to buy and what would Mr Jobs think of all this choice?

I have a Mac Book Air already, but the new iPad Pro looks interesting and my iPhone 5S is badly in need of an upgrade so a new iPhone is on my list. The larger iPhone 6S plus might be good for enhanced internet browsing but it is too big (will it fit in my pocket??) and the new iPad Pro might be the right choice for watching movies or using the internet, but compared with the iPad Air 2 is it too cumbersome. I fancy an Apple Watch, but should I wait for the next model? GPS chip still lacking.......

Its sure getting complicated, especially as Would Steve Jobs approve? I'm not sure!

Apple's disappointment on earnings not good news for indices

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Apple represents a chunky part of both the S&P 500 and particularly the Nasdaq 100, with 4% and 14% of the indices respectively. So where Apple leads, the market may well follow particularly for the tech heavy Nasdaq.

Apple stock declined nearly 3% to $118.44 in yesterday's trading session, and currently AAPL looks weak again at $117.5 after quarterly earnings which missed analysts super optimistic earnings as iPhone sales fell behind forecasts and the outlook for the rest of 2015 remained less bullish than many thought. Some analysts remain worried about the Apple Watch after reports from suppliers that orders were slugglish.

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On a technical level Apple remains weak with a 10% fall since its February record high of $133 and it fell below its 200 day moving average on Monday.

Surprise, surprise Apple Q3 results though great aren't great enough!

Expectations for Apple's fiscal third quarter results last night were sky high and unfortunately for investors though the results were impressive, the shares fell 7% and as low as 9% in after hours trading to finish at $121.80. See my previous post on expectations, /posts/2015/7/21/apple-q3-earnings-after-the-bell-july-21st-2015-what-to-expe.html

Hopes were as follows:

EPS: $1.81

Revenue: $49.3B

iPhone: 47M

Mac:  5M

iPad:  11M

Watch: 4M

Here's the numbers.

As much as $66 billion was wiped from Apple’s market cap as China's growth, iPhone sales, gross margins and forward guidance worried investors. Concerns about the Apple Watch were also evident even though Tim Cook stressed it was early days and the company did not report seperate sales due to worries about competitor activity.

Revenues for the three months ending in June were up 33% to $49.6bn, ahead of estimates with earnings up 45% to $1.85 per share, ahead ahead of expectations and the ninth consecutive quarter that Apple has exceeded estimates. 

China revenues more than doubled to $13.2 billion and on future weakness concerns Tim Cook said “I think generally, as we see it … that this worry is probably overstated,” he said. “We would be foolish to change our plans”, which include a rapid expansion of its Apple Stores in the region.

But iPhone sales, the heart of the company, came in light at 47.5 milliion units and iPad sales continue to disappoint.

On Apple Watch Cook said “Sales of the Watch did exceed our expectation and they did so despite supply still trailing demand at the end of the quarter,” Mr Cook insisted, noting that the device — which costs upwards of $350 — had sold better than the original iPhone and iPad at the same point after their launch. “We feel really great about how we did.”

Fourth quarter fiscal revenue guidance were estimated by Apple to be  between $49 and $51 billion, below Wall Street estimates which failed to excite. 

So in summary it was a great quarter for Apple, but everyone was hoping for something really amazing and it was not to be because of iPhone and now all eyes are on the next generation device likely to be launched in the Autumn. Time and again ultra bullish sentiment can be a strong sign to sell shares since more often than not a company's performance cannot keep pace with the most optimistic of Wall Street forecasts. With the $200 billion plus cash pile, Apple shares now trade at around 10 times forward earnings, not expensive, with the new devices due to come on stream and the Watch likely to have its next version soon as the company learns more about the user experience.

Apple Q3 earnings after the bell July 21st 2015 - what to expect

Over the last 10 years, Apple has missed earnings expectations just three times and beat 37 times. Analysis from Kensho, a data analytics platform for financial markets, shows that since 2005, Apple shares have risen 1.2 percent on average in the week following earnings. Apple shares go positive 70 percent of the time.


Yesterday Apple shares hit $132.52, up 40% in the last 12 months as iPhone sales have zoomed ahead, predominantly because of China. In the last three months of 2014, Apple posted the biggest quarterlly earnings in corporate history of $18 billion. For Apple's fiscal year ending in September 2015, the company will earn close to $53 billion which would be the largest annual profit ever from any company in the world (Exxon Mobil made $45 billion in 2008).The company's market capitalisation is currently a gigantic $747 billion, Steve Jobs would sure be proud.

For Apple's fiscal third quarter, analysts on average predict revenue of $49.25 billion and EPS of $1.81.

With so much hype expectations are massively high for Apple stock, will Tim Cook pull the big numbers out of the bag? Analysts are saying buy, buy, buy which is normally a contrarian indicator and with the shares having risen so fast this year let's see what happens after the bell tonight!