The financial markets are usually right. Not always, but usually. Today Apple stock is trading higher, following the iPhone 5 launch. It’s only 2 percent higher, but it tells you that most people were quite happy with what Apple announced, from a financial perspective.
Apple already revolutionized the smartphone market. They’ve revolutionized a few markets in their time on this planet. First they brought us the GUI and mouse. Then they created the iPod. Now they’ve brought multi-touch mobile computing to the masses. Let’s not debate who invented each particular item. In the end, execution is what matters. Apple is creative, smart, and executes well.
Last week we saw Amazon drop a bit of a bomb on the competition by offering a $50 per year data plan. At 250MB a month, it isn’t a very good data plan, but people will buy it. I wondered how Amazon could have negotiated such a good deal with AT&T. Perhaps they’re cutting them in on revenue from users who shop on Amazon while using a Kindle Fire HD via the LTE data network? It was purely speculation, but it intrigued me enough that I spent a bit more time thinking about this whole topic. And I quickly realized that Apple actually has a pretty well-established iTunes affiliate program.
On Thursday afternoon, Amazon’s Jeff Bezos got up on stage and introduced the world to an awesome set of updates to the Kindle Fire. Amazon doesn’t just want to have the best priced tablet (Kindle Fire is now $159), but it also wants to have the best tablet “at any price”.
To that end, the 8.9” Kindle Fire HD is hitting the market in November. It has great technical specs, and comes with a $299 price point (16 GB, Wi-Fi only) and a $499 price point, which includes 4G (LTE) and 32 GB of memory. That’s between $200 and $230 cheaper than a comparable iPad.
In a few short weeks, the iPhone 5 should be upon us. One of the interesting metrics that has been talked about of the iPhone is how all new models effectively outsell the cumulative total of prior models. For example, the iPhone 4 sold more than the total of all original iPhone, 3G, and 3G models.
So far the iPhone 4S has not yet reached this goal, but it will by the time next quarter’s results are reported. By my estimate, after 3 quarters of sales, Apple has sold about 83 million of the iPhone 4S compared to 88 million of the iPhone 4.
Here’s a chart showing how many of each iPhone model Apple has sold to date. The totals add up to Apple’s reported numbers, but the splits are based on an educated guess. My assumption is that when a new model is released, the vast majority of shipments are for the new model. Not really rocket science.
The value of a company is whatever people are willing to pay for it. And for public companies like Apple, that value equates to an open market stock price times however many shares there are in existence. Street lingo for this is market capitalization, or simply “market cap”.
Apple is the world’s most valuable company. Period. Not just among technology companies, but among all companies in the world. Apple is worth a staggering $624 billion as I write this paragraph. It’s stock price is hovering around $673 and since there are 937 million shares outstanding, multiplying those two numbers together gives us that immense market cap.
To hit a $1 trillion market cap, the stock price needs to climb to $1067, which is 59% higher than today’s price. Of course, one trillion dollars is an arbitrary number. But lots of public companies are worth over $100 billion, and the next zero to be added gets you to a trillion. So it’s psychologically important. Will Apple be the first company to achieve it?
Lately on iMore, and other websites, there has been a lot of discussion around the idea of Apple selling a lower cost tablet. So I thought it would be worth writing about this topic from the perspective of an Apple investor. Is a cheaper tablet a good idea? Is it necessary?
For the last few years, industry pundits have been reporting on the surprising gap between Apple’s share of shipments compared to its share of profits. Investors care more about profits than market share.
On Monday of this week, John Paczkowski of AllThingsD wrote another one of these stories, quoting a report from analyst Tavis McCourt of Raymond James. Tavis is a sell-side analyst, and we’ve met many times at various trade shows and analyst events. I think he’s a smart guy, so I am happy to pay attention to stuff that he writes. And it does raise a really interesting question...
There’s an interesting story over at Businessweek talking about the possibility of Apple splitting its stock price, and possibly even earning a coveted spot as one of the 30 stocks that make up the Dow Jones Industrial Average (DJIA). This is all due to a research piece that Toni Sacconaghi, the Apple analyst at Bernstein, published recently.
The gist of the story? Sacconaghi makes the interesting point that Apple is the only dividend-paying company with a market cap over $215 billion that isn’t included in the Dow. But if it were included in the index, its would command a large weighting. This is because the DJIA uses stock price as the weighting mechanism. The solution is for Apple to split its stock in order to improve its chances of being added to the index.
Other technology companies in the index include Cisco, Microsoft, HP, IBM and Intel. Given that Apple is not only the largest company in the world (by market cap), shouldn't it be included?
Yesterday, iMore broke the news that Apple would be holding a special event on September 12th, with a release of the iPhone 5 on September 21st. Several other websites including AllThingsD, The Loop, The Verge, and most major news services have now reported on this too.
I think this new information really helps to explain the financial guidance that Apple provided to Wall Street on its conference call last week.
Last night Apple reported Q3 fiscal 2012 earnings. If you look at some of the headlines floating around, you’d think Apple was in some kind of trouble. Phrases like “iPhone slump” and “big earnings miss” are being tossed around as if the sky is falling on Cupertino.
What a joke. I think this just proves how short term Wall Street’s memory can be. And I’ll get to that in a bit. For now, let’s go through the basic numbers to understand what all the fuss is about.
Monday was packed with the pure excitement and adrenalin of Apple's annual WWDC keynote. Sure, the stock may have declined slightly that day, but this is mostly due to overall market weakness that day and not Apple pessimism. Now that we’ve had a couple of days to digest Apple’s announcements let’s discuss what it means to investors.
Industry research firm Gartner just released its latest data on mobile phone sales for the first quarter of 2012. There are some interesting points to be pulled out of this report that I wanted to address.
If a carrier, like AT&T, wants to improve profitability on iPhone sales, it has to do so by reducing the subsidy. The only way to reduce the subsidy is to get Apple to drop its pricing, or to sell at a higher contract price
Yesterday, on Wall Street, we saw something rare. An Apple analyst downgraded the stock from a “buy” to “neutral” rating. Most analysts who cover Apple are incredibly bullish. So it’s interesting to think about why this analyst, Walter Piecyk from BTIG Research, disagrees.
I haven’t seen his research report with my own eyes, so I’m relying on the good reporting done by AllThingsD here. The crux of the downgrade reasoning seems to come down to subsidies.
The PC market developed very differently from how the smartphone market is taking form. Because of this, it’s interesting to think about how the tablet market will unfold.
Will it be more like the PC market, where we had one dominant OS (Microsoft) and one much smaller player (Apple)? Or will it develop more like the smartphone market where we have multiple viable platforms including iOS, Android, BlackBerry and Windows Phone?
Apple lays out $45 billion, 3 year strategy to attract new investors and neutralize dilution
As expected, and hinted at by Apple CEO Tim Cook, Apple announced the start of a regular quarterly dividend this morning. They also announced intentions to buy back stock, although the dividend is the bigger news, and drew more questions from analysts on the call.
73% of Mobile Nations iPad 2 owners are planning to upgrade, but to what exactly?
While we wait for tomorrow’s big iPad event, I thought it would be fun and informative to explore whether or not the next iPad (iPad 3 or iPad HD depending on which rumor you listen to) would drive massive upgrades for Apple.
Late last week, the feds showed up at the home of John Kinnucan and arrested him on charges related to insider trading.
John Kinnucan is an equity analyst who founded his own research firm, Broadband Research, LLC. Firms like this employ analysts to do research on stocks. They then “sell” that research to institutional investors. In case the term “institutional investor” is new to you, it just means hedge funds, mutual funds, pension funds, or any other “professional” money manager.
"Is it also possible that Browett’s experience at Dixons, and before that Tesco (the world’s third largest retailer) might just be right what Apple needs as it continues on its path towards world domination?"
We, and pretty much the rest of the blogosphere were, shall we say, slightly bewildered when Apple announced its new SVP of Retail, John Browett.
Browett is, at first glance, an unusual hire because the retail organization he is leaving seems to be the exact opposite of what Apple stands for. He was the CEO of Dixons, the well known British technology retailer.
Big box retailers couldn’t be further from Apple’s model of clean, spacious, bright and minimalistic. Apple employees always want to help, knowing that when you are in their store you have already chosen their brand. They are highly service-oriented. Big box sales staff are all about making the sale. They couldn’t care less what brand of TV you jam into your SUV after you slip the cashier your credit card.