Quarterly Mac sales units down, iPad sales crater, iPhone units up only 0.4%

[Thomas E.]

Mac - 5.3 million vs. 5.5 year earlier, down 3.6%
iPad - 16.1 million vs. 21.4 year earlier, down 24.8%
iPhone - 74.8 vs. 74.5 year earlier, up 0.4%
The year-ago 2013-2014 iPhone unit growth was 45%!

Sales: $75.9 billion vs. $74.6 year earlier, up only 1.7%
The year-ago 2013-2014 dollar sales growth was 30%!

Year-on-year U.S. sales fell from $30.6 to $29.3, down 4.2%!

Net income was $18.4 billion vs. $18.0 year earlier, up only 2.2%

Services sales are important and growing - $6.1 billion vs. $5.1 year earlier, up 19.6%. Dollar sales for core hardware products are actually falling. Year-on-year iPhone, Mac and iPad sales dropped from $67.1 billion to $65.5.

Dramatically slowing unit and dollar sales growth spell longer term concerns over a dearth of innovation and new products. The latest rumor has the older, smaller, iPhone form factor coming back, a real sign of desperation. No doubt Cook will call that innovative.

Q2 guidance was well below expectations, but Apple is always conservative.

AAPL stock is down in after-hours trading.

Important news at 11.

[Thomas E.]

PS, get the report at

http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001193125-16-438421%2Etxt&FilePath=%5C2016%5C01%5C26%5C&CoName=APPLE+INC&FormType=8-K&RcvdDate=1%2F26%2F2016&pdf=

[Sandman]

In article <243e72cf-1259-4656...@googlegroups.com>, Thomas E.
wrote:

Yeah, most profitable quarter ever in the history of Apple, they're in deep
trouble now!!

--
Sandman

[Alan Baker]

AAPL stock is ALWAYS down after an Apple quarterly call, Liarboy.

Apple offers good guidance, the street sees them make their guidance but
still declares the sky is falling because Apple didn't make the
pull-out-of-their-collective-asses and the stock falls.

Then people realize the sky isn't falling and the stock recovers.

I only wish I had had the courage to short Apple just prior to every
earnings call.

[Thomas E.]

You could have shorted AAPL almost any time this year and be ahead this evening!

[Thomas E.]

Oh it will take a while before they are in DEEP trouble.

[Alan Baker]

As usual, your statement falls far short of being true.

[Thomas E.]

I said almost, and meant to say this past year. At 97.42 in after hours trading Apple stock is close to the lowest price of the year. It is lower than any close in the last 12 months except for a slightly lower period over the last 2 weeks. No close in 2015 was lower than $100. Had you shorted it on January 4, 2016, you would be about $5 a share ahead tonight. Face it bozo, the greatest days of Apple are behind us.

[Alan Baker]

Riiiiiight.

Because continuing to make money usually gets companies into "DEEP trouble".

LOL

[Sandman]

In article <98767f7c-ac0c-4259...@googlegroups.com>, Thomas E.
wrote:

> > > Thomas E.:

> > > Mac - 5.3 million vs. 5.5 year earlier, down 3.6% iPad - 16.1
> > > million vs. 21.4 year earlier, down 24.8% iPhone - 74.8 vs. 74.5
> > > year earlier, up 0.4% The year-ago 2013-2014 iPhone unit growth
> > > was 45%! Sales: $75.9 billion vs. $74.6 year earlier, up only
> > > 1.7% The year-ago 2013-2014 dollar sales growth was 30%!
> > > Year-on-year U.S. sales fell from $30.6 to $29.3, down 4.2%! Net
> > > income was $18.4 billion vs. $18.0 year earlier, up only 2.2%
> > > Services sales are important and growing - $6.1 billion vs. $5.1
> > > year earlier, up 19.6%. Dollar sales for core hardware products
> > > are actually falling. Year-on-year iPhone, Mac and iPad sales
> > > dropped from $67.1 billion to $65.5. Dramatically slowing unit
> > > and dollar sales growth spell longer term concerns over a dearth
> > > of innovation and new products. The latest rumor has the older,
> > > smaller, iPhone form factor coming back, a real sign of
> > > desperation. No doubt Cook will call that innovative. Q2
> > > guidance was well below expectations, but Apple is always
> > > conservative. AAPL stock is down in after-hours trading.
> > > Important news at 11.
> >

> > Sandman:

> > Yeah, most profitable quarter ever in the history of Apple,
> > they're in deep trouble now!! -- Sandman
>
> Oh it will take a while before they are in DEEP trouble.

I won't hold my breath :-D

--
Sandman

[-hh]

Alan Baker wrote:
> Thomas E. wrote:
> > Sandman wrote:

> >> Thomas Elam wrote:
> >>
> >>> Mac - 5.3 million vs. 5.5 year earlier, down 3.6%
> >>> iPad - 16.1 million vs. 21.4 year earlier, down 24.8%
> >>> iPhone - 74.8 vs. 74.5 year earlier, up 0.4%
> >>> The year-ago 2013-2014 iPhone unit growth was 45%!
> >>
> >>> Sales: $75.9 billion vs. $74.6 year earlier, up only 1.7%
> >>> The year-ago 2013-2014 dollar sales growth was 30%!
> >>
> >>> Year-on-year U.S. sales fell from $30.6 to $29.3, down 4.2%!
> >>
> >>> Net income was $18.4 billion vs. $18.0 year earlier, up only 2.2%
> >>
> >>> Services sales are important and growing - $6.1 billion vs. $5.1
> >>> year earlier, up 19.6%. Dollar sales for core hardware products are
> >>> actually falling. Year-on-year iPhone, Mac and iPad sales dropped
> >>> from $67.1 billion to $65.5.
> >>
> >>> Dramatically slowing unit and dollar sales growth spell longer term
> >>> concerns over a dearth of innovation and new products. The latest
> >>> rumor has the older, smaller, iPhone form factor coming back, a real
> >>> sign of desperation. No doubt Cook will call that innovative.
> >>
> >>> Q2 guidance was well below expectations, but Apple is always
> >>> conservative.
> >>
> >>> AAPL stock is down in after-hours trading.
> >>
> >>> Important news at 11.
> >>
> >> Yeah, most profitable quarter ever in the history of Apple, they're in deep
> >> trouble now!!
> >

> > Oh it will take a while before they are in DEEP trouble.
>
> Riiiiiight.
>
> Because continuing to make money usually gets companies into "DEEP trouble".
> LOL

I only had time to do a cursory read through the notes from the call, but my
impression is that there certainly is "trouble", but it comes in a form that
companies like Apple can't do all that much about, nor does Apple's response
to it automagically indicate doom n gloom.

Specifically, what caught my eye was the 'headwinds' on currency exchange rates;
if I read it correctly, it went through up to a 15% swing which pretty much shaved
right off the top...yet Apple still was able to grow net income by +2.2%.

In an environment where a product becomes ~15% more expensive, classical
supply/demand will predict that sales volume will resultantly go down. The
number is rarely linear, plus there's other fundamentals to consider such as
how the worldwide PC market is shrinking at twice the rate of the Mac, and
how economies outside the USA are changing (not for the substantially better)
which also affects consumer patterns. IMO, China's continuing slowdown is
what's probably a main driver behind the iPhone going flat (and expected by
Apple to now to contract some), but one can't totally discount how other
parts of the world are performing, such as the other BRIC members ... oil is
hammering Russia's economy, for example, and Brazil is cratering:

<http://www.bloomberg.com/news/articles/2016-01-04/brazil-analysts-ring-in-new-year-with-deeper-recession-forecast>

Moving on to the tablet numbers, they continue to be a head-scratcher...but
anecdotally, I note that the iPad product matured a couple of years ago to be
a 'good enough' (similar to PCs) and may have the problem of being "too good"
from a durability standpoint, which lengthens customer replacement cycles.
Case in point, the *newest* iPad in this household was bought back in 2013
and there's not been a real reason yet to contemplate replacing any of them
yet, other than wanting a Lightning connector or wanting more storage on the
older units. As such, this may just be a manifestation of the product having a
much longer term hardware cycle that's not been fully recognized.

Finally, from a P:E, there's no reason to sell the stock...if anything, that
particular metric screams to buy more.


-hh

[Thomas E.]

The issue is innovation and new products. Apple has not introduced anything "magical" since the iPad. That was 6 years ago. No rumors around of anything really innovative either. Cook is a caretaker. His days are numbered.

[Thomas E.]

$5 billion would have made it look a little better, but even with that the sales increases have slowed dramatically. The prior YoY 2013-2014 sales increase was 36.7%. What's going to drive that kind of increase next year?

[Thomas E.]

On Tuesday, January 26, 2016 at 7:49:31 PM UTC-5, Alan Baker wrote:

Apple insiders can't short the stock, at least not legally. However, they can sell what they have. Over the last year they have been liquidating holdings. They purchased 274,362 and sold 2,386,656 shares.

http://www.nasdaq.com/symbol/aapl/insider-trades

Lest you say that this is small compared to their holdings, here are the direct holdings of the top 5 insiders:

https://finance.yahoo.com/q/mh?s=AAPL+Major+Holders

Holder Shares Reported
LEVINSON ARTHUR D 1,133,283 May 28, 2015
COOK TIMOTHY D 1,039,598 Nov 9, 2015
FEDERIGHI CRAIG 439,728 Oct 1, 2015
SROUJI JOHNY 101,881 Dec 16, 2015
AHRENDTS ANGELA J 95,042 Jul 21, 2015

Cook has been aggressively selling, keeping his direct ownership at about 1 million shares.

[-hh]

Thomas E. wrote:

> Alan Baker wrote:
> >
> > Riiiiiight.
> > Because continuing to make money usually gets companies into "DEEP trouble".
> > LOL
>
> The issue is innovation and new products.

That's your premise. Now try supporting it with official
statements from Apple which makes it unambiguously clear
that that's their specific business plan.

Hint: growth in services.

At $5B+/Q, Apple's services business is roughly equal to
Starbucks. But now go and check to see if Starbucks is
still growing at double digits YoY.

> Apple has not introduced anything "magical" since the iPad.
> That was 6 years ago.

Well, it depends on your definition of "magical". For example,
the Apple Watch was introduced & appears to be making ~$2B/Q
in revenue (its unit is +40% YoY). But with the iPhone being
so big (its sales are two thirds of the corporate total), the
shadow it throws over these other business units performance
makes them prone to be overlooked.

For example, this +$2B/Q YoY magnitude of growth is basically
half the size of Starbucks' performance, which historically
took Starbucks the past decade to accomplish, whereas this one
Apple business unit did that in but one year...yet you're trying
to claim that that falls short of being sufficiently "magical".

> No rumors around of anything really innovative either.

Nope, never heard of "Project Titan", nor about the reports
this past week about how VP Steve Zadesky (who reportedly was
the secret project's chief) has reportedly left Apple. Ditto
for rumors that Ive was unhappy (the car wasn't thin enough! /S ).

> Cook is a caretaker. His days are numbered.

Everyone's days are numbered...including yours.


-hh

[-hh]

Thomas E. wrote:
> -hh wrote:
> > [...big snip...]

> >
> > Finally, from a P:E, there's no reason to sell the
> > stock...if anything, that particular metric screams
> > to buy more.
>

> $5 billion would have made it look a little better, ...

"More is always better ... Film at 11".

> ... but even with that the sales increases have slowed

> dramatically. The prior YoY 2013-2014 sales increase
> was 36.7%. What's going to drive that kind of increase next year?

Its not going to happen, because of the bad macroeconomic
climate in several large overseas markets. But note that
this "nope!" doesn't apply to just Apple, but to a broad
swath of companies who similarly sell to those markets.
Overall, it does look like part of Apple's strategy is to
grow their market in India (and that's already underway)
but because of size/scale, that will only moderate and
stabilize. The conventional wisdom is that the big growth
phase for Apple is passing and it is transforming from
being a growth stock to being a value stock ... and this
can be seen in who's holding it and also in their effective
dividend yield, which is roughly 2%.


-hh

[-hh]

A single datapoint hardly makes the case ... what's the five
and ten year trends for insider stock transactions? And do
note than I didn't say "AAPL Sales", because there's also
going to always be a need for portfolio diversification:
becoming too heavy on your own company would be an ENRON.


-hh

[Thomas E.]

Well, as of 11:14 am EST AAPL common is $94.13, lowest price of the year. My statement is now true.

[Thomas E.]

Cook has also been selling all or part of large option exercises immediately after exercise. See http://biz.yahoo.com/t/15/6289.html

Some of this was to pay taxes, no doubt. But he has plenty of cash, so to some extent he is cashing in his equity as soon as he acquires it.

[-hh]

Thomas E. wrote:
> [...]

>
> Well, as of 11:14 am EST AAPL common is $94.13,
> lowest price of the year. My statement is now true.

If you're interested in playing such stock games,
you might want to consider going over to look at
Samsung. As per the WSJ...

<http://blogs.wsj.com/digits/2016/01/26/samsung-earnings-what-to-watch-10/>

Their earnings report hits on Thursday and it looks
like the market expectations there are worse than
how Apple performed:

"EARNINGS FORECAST: The world's biggest smartphone maker is
expected to report that its net profit fell 8.5% [YoY]....
This is a reversal from a 29% rebound posted in the third
quarter aided by robust chip profits,.."

"The company also announced in October a plan to buy back
and cancel shares worth a total 11.3 trillion won to prop up
its stock price. Samsung has, so far, repurchased stocks
worth 4.25 trillion won under the plan. The buyback, however,
has done little to stem the continued slide in its stock
price weighed by a bleak growth outlook. The company shares
have fallen 17% since the buy back began at the end of October."


FWIW, I've not tracked Samsung at all; looks like this would
be the index chart:

<http://finance.yahoo.com/echarts?s=005930.KS+Interactive#{"range":"1mo","allowChartStacking":true}>

If so, their stock price is down by -7% so far for 2016,
which again is indicative of macroeconomic effects.


-hh

[ed]

On Wednesday, January 27, 2016 at 8:29:54 AM UTC-8, Thomas E. wrote:
...

> > > Apple insiders can't short the stock, at least not legally. However, they can sell what they have. Over the last year they have been liquidating holdings. They purchased 274,362 and sold 2,386,656 shares.
> > >
> > > http://www.nasdaq.com/symbol/aapl/insider-trades
> > >
> > > Lest you say that this is small compared to their holdings, here are the direct holdings of the top 5 insiders:
> > >
> > > https://finance.yahoo.com/q/mh?s=AAPL+Major+Holders
> > >
> > > Holder Shares Reported
> > > LEVINSON ARTHUR D 1,133,283 May 28, 2015
> > > COOK TIMOTHY D 1,039,598 Nov 9, 2015
> > > FEDERIGHI CRAIG 439,728 Oct 1, 2015
> > > SROUJI JOHNY 101,881 Dec 16, 2015
> > > AHRENDTS ANGELA J 95,042 Jul 21, 2015
> > >
> > > Cook has been aggressively selling, keeping his direct
> > > ownership at about 1 million shares.
> >
> > A single datapoint hardly makes the case ... what's the five
> > and ten year trends for insider stock transactions? And do
> > note than I didn't say "AAPL Sales", because there's also
> > going to always be a need for portfolio diversification:
> > becoming too heavy on your own company would be an ENRON.
>

> Cook has also been selling all or part of large option exercises immediately after exercise. See http://biz.yahoo.com/t/15/6289.html
>
> Some of this was to pay taxes, no doubt. But he has plenty of cash, so to some extent he is cashing in his equity as soon as he acquires it.

tim cook is worth a little short of $800M, with about $120M of that in aapl. in addition to that, he has over $600M in restricted stock options that haven't vested. so he has 15% of his wealth tied up in aapl, with a crapload more options coming down the pipe. why the f' wouldn't he sell those options out as soon as they vest to stay diversified?

[ed]

On Wednesday, January 27, 2016 at 8:35:48 AM UTC-8, -hh wrote:
> Thomas E. wrote:
> > [...]
> >
> > Well, as of 11:14 am EST AAPL common is $94.13,
> > lowest price of the year. My statement is now true.
>
> If you're interested in playing such stock games,
> you might want to consider going over to look at
> Samsung.

samsung isn't on an us exchange and don't have an adr so you need to trade them otc in the us; shorting otc stocks is extra risky, and there's a good chance his brokerage won't allow it.

...

[ed]

On Wednesday, January 27, 2016 at 3:53:17 AM UTC-8, -hh wrote:
...

> Moving on to the tablet numbers, they continue to be a head-scratcher...but
> anecdotally, I note that the iPad product matured a couple of years ago to be
> a 'good enough' (similar to PCs) and may have the problem of being "too good"
> from a durability standpoint, which lengthens customer replacement cycles.
> Case in point, the *newest* iPad in this household was bought back in 2013
> and there's not been a real reason yet to contemplate replacing any of them
> yet, other than wanting a Lightning connector or wanting more storage on the
> older units. As such, this may just be a manifestation of the product having a
> much longer term hardware cycle that's not been fully recognized.

unless something drastically changes in the tablet space and they become better differentiated from large phones (and apple and google both want to try to push it that way, starting w/ the pro and pixel c, but we'll see how that goes), they're going to die a slow death due to the continued growth in phone sizes.

...

[Walter Myer]

And down 25% from 6 months ago.

[Thomas E.]

Only if he thought the stock had a really bright future would be hold. His actions say he does not.

[ed]

he's worth almost $800M, with another $600M on the table. he doesn't exactly have to worry about timing the stock to maximize his return.

[Thomas E.]

On Wednesday, January 27, 2016 at 1:05:00 AM UTC-5, Alan Baker wrote:

The balance sheet is not as healthy as the income statement. The asset side looks great until you balance that against the sky-rocketing liabilities. Bottom line retained earnings and shareholder equity have flat-lined from 2012 forward. Borrowing to for stock buy-backs and dividend pay-outs has been the major culprit. Regardless, the financial assets are not nearly as impressive when the financial liabilities are netted out.

The outstanding stock has gone down from 6.57 million at the end of 2012 to 5.57 million at last report. Great for stockholders who got the dividends and benefited from fewer shares outstanding, but Apple has also encumbered it's reserves in the process.

[ed]

you're on crack. there is NOTHING to criticize on that balance sheet. shareholder equity has "flat lined" because they've been returning money to shareholders rather than hoarding it. flat lined equity, with billions being returned, and a 15% decrease in shares is awesome. yes, liabilities are going up because of borrowing for buy backs and dividends, and that might be cause for concern if they *had* to borrow for it - but the money exists and is just being held overseas until they can figure out a more tax advantaged way to bring it back.

[Alan Baker]

Yes, Liar-boy: people with large grants of shares quite often sell some.

[Alan Baker]

And this is the new TFBLBDOF&GP meme: Apple must produce something
"magical" on a regular schedule!

[Alan Baker]

Why must there be that kind of increase, Liarboy?

[Alan Baker]

Congratulations for admitting it your statement earlier as a lie.

[Alan Baker]

And Apple's stock price is important to you again!

How's it compare to when you declared "Parachute time!"?

:-)

[Thomas E.]

There is no tax advantaged way to figure out. That is, unless the IRS grants a tax holiday. Not likely. The real shame here is Apple has all this money locked up and can't seem to find that next product.

[Thomas E.]

Magical was a term used by Jobs to describe the iPad. Cook has not had anything to use that term with. Six years on, no major new product line!

[Thomas E.]

Not if they are really optimistic on the stock. Cook has seen what is coming. He is bailing out ahead of his demise.

[Alan Baker]

Give us an actual example...

[Alan Baker]

Yes, Liarboy. I wasn't being as literal as you seem to think. Hence the
quotes around "magical".

[Walter Myer]

On Tuesday, January 26, 2016 at 5:33:13 PM UTC-5, Thomas E. wrote:
> Mac - 5.3 million vs. 5.5 year earlier, down 3.6%
> iPad - 16.1 million vs. 21.4 year earlier, down 24.8%
> iPhone - 74.8 vs. 74.5 year earlier, up 0.4%
> The year-ago 2013-2014 iPhone unit growth was 45%!
>
> Sales: $75.9 billion vs. $74.6 year earlier, up only 1.7%
> The year-ago 2013-2014 dollar sales growth was 30%!
>
> Year-on-year U.S. sales fell from $30.6 to $29.3, down 4.2%!
>
> Net income was $18.4 billion vs. $18.0 year earlier, up only 2.2%
>
> Services sales are important and growing - $6.1 billion vs. $5.1 year earlier, up 19.6%. Dollar sales for core hardware products are actually falling. Year-on-year iPhone, Mac and iPad sales dropped from $67.1 billion to $65.5.
>
> Dramatically slowing unit and dollar sales growth spell longer term concerns over a dearth of innovation and new products. The latest rumor has the older, smaller, iPhone form factor coming back, a real sign of desperation. No doubt Cook will call that innovative.
>
> Q2 guidance was well below expectations, but Apple is always conservative.
>
> AAPL stock is down in after-hours trading.
>
> Important news at 11.

WOW!!! That same fish keeps hitting over and over and over and over..........

[ed]

On Wednesday, January 27, 2016 at 3:31:54 PM UTC-8, Thomas E. wrote:
...

> > > The balance sheet is not as healthy as the income statement. The asset side looks great until you balance that against the sky-rocketing liabilities. Bottom line retained earnings and shareholder equity have flat-lined from 2012 forward. Borrowing to for stock buy-backs and dividend pay-outs has been the major culprit. Regardless, the financial assets are not nearly as impressive when the financial liabilities are netted out.
> > >
> > > The outstanding stock has gone down from 6.57 million at the end of 2012 to 5.57 million at last report. Great for stockholders who got the dividends and benefited from fewer shares outstanding, but Apple has also encumbered it's reserves in the process.
> >
> > you're on crack. there is NOTHING to criticize on that balance sheet. shareholder equity has "flat lined" because they've been returning money to shareholders rather than hoarding it. flat lined equity, with billions being returned, and a 15% decrease in shares is awesome. yes, liabilities are going up because of borrowing for buy backs and dividends, and that might be cause for concern if they *had* to borrow for it - but the money exists and is just being held overseas until they can figure out a more tax advantaged way to bring it back.
>
> There is no tax advantaged way to figure out.
> That is, unless the IRS grants a tax holiday. Not likely.

we'll see. there was a tax holiday just in 2004. if a republican gets elected, i can easily see a push for *something* to make it cheap to bring back money.


...

[-hh]

Interesting, but not really the way I was going.

The point I was hitting on was essentially that we love our iPads. Don't want
them to shrink (i.e., to make them more pocket-sized like a smartphone), nor
are we particularly interested in their size growing dramatically either - it really
is a pretty sweet sweet spot as is.

But we're not in the market to be buying another one because the current ones
are still running so strong. Utilization wise, we've literally worn out cover cases.
As I said, until something breaks or we simply want more memory, they're not
on the schedule like a PC would be to say, "Oh, its 4 years old, time for a new one".
As such, I can't tell you really what the utilitarian replacement cycle is going to be.
Its easy now at least four years, but will it be five, six ... more? Can't really say.

As such, I'd expect a lot of consumers to be having a similar experience and the
broad implications of this are that there easily could be a big bubble of consumers
who have already bought but won't be back in the market for another couple of
years.

To use an analogy, its like all of the soldiers came home from WW2 and we
end up with the "Baby Boomer" generation: and then after that bubble, there
was a decline in birth rates - - until the replacement cycle picked up again
roughly 20 years later with the "Echo Boomers" (children of the Baby Boomers).
Until you know what the cycle time is, you can't predict the cycle.

-hh

[-hh]

Understood on the details of the mechanics; my point was
simply for Tom to try to understand his own claims in
the market's broader context.

For example, now that it is Thursday and Samsung has
done its quarterly announcement, just how did this
bigger-than-iPhone on sales volume competitor fare?

"Samsung's net profit for the October-December period plunged
40 percent from a year earlier ..."

Well, if the iPad's -25% was a "crater", then what term
is appropriate for -40%? Maybe a "mega-crater"? /S

"For the full year, it earned 19.1 trillion won ($15.8 billion),
down 19 percent from the previous year and the lowest level
in four years. It was the second year in a row with a decline
in annual net income after the company's earnings peaked at
30.5 trillion won in 2013."

-19% YoY, but on top of roughly a -23% decline the year before,
with a net sum two year decline of -37.4%

"Mega-Crater" applies, particularly since this is not just one
quarter, but the whole year performance (+!), plus it isn't
but one business division, but apparently the entire corporate
entity (+!)...so this works out to be a "Mega-Crater!!".

All quotes are from:

<http://bigstory.ap.org/article/54c0a66eb24443d394145f156abb9128/samsung-electronics-4q-earnings-sink-40-percent>

So when your main competitor has reported that they're Mega-cratering
(with two !!'s mind you), merely going flat isn't bad in macro context.


-hh