from July 2015, Financial Results
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.
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)?