Last week I wrote about whether Tim Cook was the right guy in 2015 to lead Apple forward. I then followed with an article about the stock being in a dulldrums. While comments to both stories were not necessarily positive, both postulations may be true. Sometimes people do not like to hear the truth, especially when it goes against their preconceived ideas. Change is difficult for most, and adjusting to reality is often something people prefer to avoid.
The fact is Apple is in a funk this year. While OS X will add some nice do-dads to its plethora of features and iOS 9 looks to be a welcomed update as well, it hasn’t been since the iPad’s launch that Apple’s luster was shining bright. Sure the stock has done amazing things since the beginning of this decade as has Apple’s savings account. Tim Cook has proven to be a very good manager of what is. Incremental change over time with the direction of the company in an upward direction. But while good for the first four years of the 2010 series, year number five is proving a bit more difficult.
2012, 2013, 2014,.... 2015? Will Apple hold its fourth consecutive special event in September this year? Answer: Yes! If there is one major difference between Tim Cook and Steve Jobs it is that Cook brings us predictability with Apple special events, whereas Jobs kept us continually guessing. We were never quite sure when something was going to happen — and Jobs certainly enjoyed that aspect of his unpredictability.
For the past three years, Cook has led the charge at a special event in September, followed by one in October. October is a magic month on Apple’s calendar as it is the beginning of the new fiscal year. Therefore charging sales early in the fiscal calendar is important to ensure a good fiscal year and avoid the need to play catch-up later on. This means front loading the year with new items to sell. Typically, September events have been where Apple announces the newest iPhone. In October, some other do-dad makes the stage. Last year it was Apple Watch and Apple Pay.
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.
When Craig Federighi showed off OS X El Capitan (aka OS X 10.11), the WWDC 15 crowd’s delight grew at the turn of each new slide. OS X Yosemite promises put a sheen on some features where Yosemite fell short, while adding a few new tricks of its own.
After the initial excitement for OS X El Capitan wears off, then reality sets in. The main question on every upgrader’s minds is “Will all my apps work in OS El Capitan?” The assumption is yes, but that can sometimes be an erroneous one.
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.
When the MacBook launched this spring, it answered everyone’s questions about what Apple was going to do with the rumored 12-inch screen. Or did it? While the MacBook does use a unique 12-inch screen size (in comparison to Apple’s other notebook offerings) is that the only purpose for the 12-inch screen?
Some suggest Apple is working on a 12-inch iPad Pro device. This product would launch in the fall of this year in conjunction with the release of iOS 9 — which will allow for split screen computing. iPad sales figures have been disappointing in recent quarterly reports earnings. If these rumors are true, it appears Apple may be trying and reignite the iPad’s mojo with a larger device.
It seems like a lifetime ago when Steve Jobs took over Apple for the second time as iCEO. Jobs ran Apple for nearly 15 years before pancreatic cancer took his life. Tim Cook stepped into the CEO position and has run Apple for almost four years. At the time Tim Cook was a good choice. He was a safe choice. He wasn’t going to rock the boat or try to pretend to be Steve Jobs II. He would take what was a growing and great company and drive it forward, building on its success.
That was back in 2011, and times were different. Apple’s needs were different. While Cook has indeed grown Apple’s value and savings account, the question is what kind of leadership does Apple need going forward? Is safe and steady the right formula or does Apple once again need a visionary to lead it into unchartered waters?
Last September, during an Apple special event, Tim Cook finally showed off what engineers at Apple had secretly been working on for years — Apple Watch. It was simply amazing. The watch’s hardware was impressive as was an entirely new OS that took touch and tech to a new level. In the aftermath, many eagerly anticipated saving enough money to be the first on their block to own and wear one. Then the worst product launch in Apple’s recent history occurred.
Unfortunately, all the launch excitement for Apple Watch was sucked out the room when all of Apple's inventory had been purchased online in less than an hour. It would be another six-eight weeks before one could walk out of an Apple retail store with an Apple Watch.
You can forget yesterday’s record shattering numbers Apple CEO, Tim Cook, proudly revealed for Apple’s 3rd quarter of 2015. Ignore the fact that iPhone sales grew 35% year-over-year, or that Apple now has over $200 billion in cash for the first time in history. This is all irrelevant. None of this matters. Why? Because analysts guessed that Apple would sell between 50 - 55 million iPhones in the quarter, when in reality Apple only sold a record breaking 47.53 million iPhones. Apple did not achieve the conjured up sales figures the “experts” spewed forth, and therefore the result was Apple’s stock price must be punished. No offense to the political naive who do not understand history, but in the investment world, this makes about as much sense as, say, cutting a nuclear deal with Iran trusting they will do the right thing. The sad reality is, this vapid illogic is how the stock market largely operates each and every day. Companies stocks rise when they beat the expert guesstimates. Stocks prices fall when companies do not meet the expert expectations. It does not matter how the company actually preformed. It is all about the experts guessing game. Reason and logic need not apply.
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)?