Stocks across the globe have been on a recent downward slide. China twice devaluated their currency last week, hitting companies like Apple hard with worries their products would no long be affordable to the Chinese consumer. This morning the DOW Industrial Average started with a 1,000 point plunge, and AAPL sank to $94.05 a share at the opening bell, leading the massive fear-based sell off. Then Apple CEO, Tim Cook, did something unheard of for the Cupertino-based company.
Cook emailed CNBC's Jim Cramer stating the following: “Jim, As you know we don't give mid-quarter updates and we rarely comment on moves in Apple stock. But I know your question is on the minds of many investors.”
Since its climb in February of 2015 from around $110/share, Apple’s stock has been hovering between $120-$130/share for four months now. Never mind continual profits or record iPhone sales quarter after quarter. No, no. Don’t be confused that actual performance of Apple will translate into actual growth in the value of the company.
Vacationing across Australia and Indonesia, a young surfer found himself struggling to figure out how to take decent selfie of himself while on his board. Taking a 35mm camera and strapping it onto his hand – via a rubber band no less – he quickly discovered that quality and practicality was lacking, but the idea merited exploring. Nick Woodman had given birth to GoPro.
Vans to trade shows, and hard work to hustle, GoPro started going viral, finding a market replacing the point and shoot camera. Smartphones, lead by Apple's camera quality, were absorbing the pocket camera market. Canon and Nikon countered, pushing higher-end pro-sumer and HDSLR cameras. GoPro had found a solid and vacant space, going public in June of 2014. Would GoPro strike Wall Street gold as it had the quality selfie video market? On day one, GoPro closed over $31 a share. Fast forward to today and GPRO continues its meteoric climb, now over $62 a share on swelling sales. Where will it end? Perhaps in Cupertino.
Financial reports and comments on them are one thing, but getting those little morsels of coded information from Tim Cook or Luca Maestri are quite another. Today at 2:00 p.m. Pacific Time, Apple will be holding their Q3 2015 financial conference call with a host of financial analysts and investment researchers. Apple's financial statement, released at roughly 1:10 p.m. Pacific, should be fairly pedestrian. Financial analysts are anticipating 50-55 million iPhones sold, earnings at the higher end of Apple’s revenue guidance of $48 billion, all while keeping a keen eye for any Apple Watch sales information. But beyond the expected is where questions from the likes of Piper Jaffray's Gene Munster or UBS’s Steve Milunovich come forth precious nuggets of Apple’s future.
There are three major areas of commentary I'm looking for during the Q3 call. The first is HomeKit. It was a no-show at Apple’s Worldwide Developers Conference in June. The likely reason for the omission was due to the second area of interest, Apple TV. Both topics go hand-in-hand, as it is highly rumored that the next generation Apple TV will be, amongst other things, Apple’s home automation hub, requiring HomeKit specific tools. Cook will be asked about Apple TV. The question is, will he deliver any hints as to what may be coming, or how current Apple TV sales have been since the $30 price drop earlier in the year (now only $69)?
According to JMP Securities technology analyst Alex Guana, Apple’s slow launch into the wearables market has left a large opening for competitor Fitbit. Guana claims Fitbit is the “clear leader in the market with over 11 million units sold last year.” Guana continued by saying that Fitbit is currently ahead of Apple Watch as far as price points, battery life and GPS tracking. However, he did concede that long-term, Apple can bring a lot of “power” with iOS and versatility. These Apple advantages will give Fitbit some serious competition.
If you've ever wondered how Apple stacks up financially in relation to software giant Microsoft, perhaps your perspective should be flipped. It is Microsoft that must be viewed in relation to Apple’s success. During the last quarter Apple amassed an additional $32.7 billion in net income and cash, while Microsoft’s total revenue for the quarter stalled at $21.7 billion, up only 6% YOY. This meager growth barely tracks above inflation, and is not keeping pace with internal cost increases. The downward trend for Microsoft came in their net income, which saw a 5% decline in the face of larger revenues, a seriously dangerous equation. Microsoft blamed the strong US dollar for the fall, but Apple had no need for such excuses during their quarterly report. Apple’s YOY revenues grew 27%, while driving larger gross margins and a 30% rise in net income. The two companies couldn't be on more different paths.
The amazing Apple Watch was once available to own starting April 24, 2015. Now the watch is only shipping to customers who have pre-ordered the device on April 10th. Yesterday Apple removed their 04.24.2015 date stamp on the Apple Watch’s home page, replacing it with "The Watch is coming." According to The Telegraph, Apple’s Senior Vice President of Retail and Online sales, Angela Ahrendt, sent out a letter to Apple retail employees explaining the watch will not be available until June.
Apple’s fiscal second quarter iPhone sales were simply amazing, but the Cupertino company is showcasing the value in diversity more so than any of its competition. Microsoft is simply a decades old franchise, one-hundred-percent dependent on Windows. Google just showed how unsuccessful it is outside of anything but search. Apple’s model of software coupled with various hardware businesses can withstand blows, and expand in ways that continue to defy the odds — and its detractors — alike.
Microsoft, the once mighty and feared software giant, is only a footnote outside of Windows sales. Office is the monster of business workflow, but without Windows and the forced Office bundles, who would value Word or Powerpoint over other solutions available today? Everything Microsoft had, has, and will have, revolves around Windows nothing more. Bing, Xbox and Windows Phone are all long-term financial nightmares for the Redmond, WA techno-giant.
Tim Cook has lead and experienced a wave of success at Apple. The result? Suddenly everyone wants part of the action. Cook is now being lectured by kooky numb-nuts with money and platforms on how to run Apple. Clearly, these people on the outside, who have done nothing to make Apple successful, know what is better for Apple than those leading it to record setting success.
With Apple's acquisition of Beats Electronics, you would think Apple had purchased Comcast or Exxon Mobile. "Beats is Apple's biggest acquisition ever", rave the media. Apple's $3 billion purchase was good for Apple's brand and future opportunity, but sorry hype machine, it is a nearly irrelevant financial acquisition for Apple.
$3 billion is evidently the final price tag Apple and Beats settled upon. The multi-billion mark is certainly a nice payday for Jimmy Lovine and Dr. Dre, but the dollar figure is relative, and should only be viewed as a big or small figure based on the company it's coming from.