Earlier this week, Asymco’s Horrace Dediu wrote a wonderful post about the huge differences between Microsoft and Apple in China. He makes a very strong case for how difficult of a position Microsoft is in. I encourage you to the Asymco post in detail to understand his arguments. Pretty compelling stuff.
Christmas Day is a huge day for mobile device activations, obviously. Once we finish unwrapping our gifts and scarfing down a big breakfast, we all become children and want to immediately play with our gifts. For smartphones and tablets, that means activating your device on a network, and downloading a slew of apps. Once we install these apps (like Twitter), we start telling followers about our new device. Two pieces of research hit my radar today. They’re both quite fascinating and paint a picture of Apple dominating the scene.
It seems you can’t read about Apple these days without someone saying that they’re about to make a big splash into the television market. Apple, of course, hasn't and won't pre-announced anything. But that hasn't stopped Wall Street analysts claiming that the company’s TV strategy is flawed. That's right, Apple's unannounced, unreleased, entirely presumed by someone not-Apple, strategy is flawed. But I digress.
There is no question that Apple has done some amazing things. It has become the largest company in the world, by market value, because it has redefined industries. It redefined the music business, it redefined smartphones and it redefined tablet computing. Apple did not invent these businesses. Most observers would argue that the likes of Handspring/Palm and RIM invented smartphones and stylus-oriented computing devices, including Apple's Newton and Microsoft's Tablet PC certainly pre-dated the iPad. But Apple massively and permanently redefined consumers’ expectations in these markets. While doing so, they built up an incredibly profitable hardware business.
So why is it that Apple’s stock hasn’t actually outperformed Amazon by that much?
Now that the iPad mini has been available for a while, we’re starting to see some interesting industry research headlines pop up, based on consumer surveys. Earlier this week, Cowen and Co. made headlines with one particular study that I wanted to bring up for discussion.
The equity research arm of Barclays just put out a report on Apple, and it has a handy chart summarizing all of the main concerns investors have with the stock right now.
The concerns are: 1) Long term operating margins; 2) competition for iPhone; 3) competition for iPad; 4) no “next big thing; 5) concerns over maps; 6) management changes; 7) production execution; 8) execution risks in vertical integration
Yes, Apple is still the biggest company in the world. But since hitting a high of over $700 in late September, the stock is off about 20%. Putting this in dollar terms, the value of Apple, as a company, has fallen by nearly $140 billion compared to the September highs.
During this 20% drop, Apple’s market value has fallen by 32x the total market value of RIM. Talk about a metric that puts things in perspective! Apple has also lost more value than 60% of Google’s total market capitalization, and more than Verizon’s entire market cap. Why?
Last night Apple reported Q4 fiscal 2012 earnings. In what seems like a case of deja-vu, the stock slipped by a few percentage points in after market trading. What’s knocking Apple down this time? Well, they shipped a lower number of iPads than Wall Street expected in the quarter, and guidance for the holiday quarter is lower than expected. And the sooner we learn to ignore the short-term nature of Wall Street thinking, the better.
This Fall season, Apple is busier than ever before. Back in 2010, Apple had their product launches spaced out. Spring saw the original iPad. Summer had the iPhone 4 in its traditional spot. Fall saw new iPods. This year, however, they just finished rolling out the iPhone 5 and iOS 6, and they’ve given us impressive new updates to the iPod lineup as well, mirroring many of the updates in the iPhone 5. Soon enough it looks like we’ll be seeing the iPad mini announced.
Apple’s iOS 6 is now out, and if you've read iMore's detailed iOS 6 review you've already seen people complaining about the new Maps app. Whether it be incorrect data or simply a slew of features that are missing compared to the old, Google-powered Maps app.
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.