Tags Wall Street

Analysts pile the pressure on AAPL saying company over-optimistic or “deliberately overstating” position

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As if Apple’s management wasn’t under enough pressure from the stock falling below $100 yesterday, two firms of analysts have said that the company was either over-optimistic in its iPhone sales expectations or has even been guilty of “deliberately overstating underlying trends.”

Business Insider quotes excerpts from investor notes from Pacific Crest and UBS, each suggesting that Apple has over-estimated iPhone demand. Both point to apparent contradictions between Apple’s predictions of continued growth and supply-chain reports of reduced orders.

UBS says that it believes Apple has been taken by surprise with the relatively low numbers of people upgrading from older iPhones.

We think the most likely reason for a shortfall is that the upgrader portion of unit demand has stalled significantly in recent months and is failing to meet Apple’s own expectations.

The note from Pacific Crest goes much further.

Management’s confidence now looks highly likely to be misplaced, which suggests that it was either ignorant of the challenges it faced or deliberately overstating underlying trends. The former seems unlikely, which suggests that management has taken a much more aggressive tone as growth in the high-end smartphone market has slowed. This reduces our confidence in Apple’s commentary going forward.

Business Insider notes that the Wall Street consensus is for significant year-on-year fall in the current quarter, ranging from Stifel, Aaron Rakers and team forecasting an 8% drop in sales through to Pacific Crest at 18%. Even noted Apple bull Katy Huberty at Morgan Stanley is predicting a 15% fall this quarter.

As we noted earlier, Apple’s guidance for the current quarter will be issued when it reports its holiday quarter numbers on January 26th.

Photo: wallpapersfine.com


Filed under: AAPL Company Tagged: AAPL, Apple Inc, iPhone, iPhone sales, Morgan Stanley, Supply chain, Wall Street

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Ben Lovejoy

January 8th

Apple

Mac

Bank of America Wants to Use Robots to Manage Your Money

We’re trusting robots with more and more these days: Our luggage , our meals —even our lives on the road . Why not add finances to the list? Bank of America is joining several other banks that want to do just that.

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Bryan Lufkin

November 6th

Uncategorized

AAPL earnings will come in well above upper end of company’s guidance, say analysts, at $68.3B

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Fortune has done its usual analyst poll ahead of Apple announcing its Q1 earnings tomorrow, and Wall Street is expecting the company to significantly out-perform its earnings guidance of $63.5 to $66.5B.

The consensus among the analysts Fortune polled — 20 professionals and 15 amateurs — is that Apple’s total sales for fiscal Q1 2015 will come in at about $68.3 billion, up 21% year over year.

That would be $1.8B above the upper end of the expectations Apple set back in October … 

Apple also said then that it expected its gross margin to come in between 37.5% and 38.5%, but it has been suggested that the popularity of the iPhone 6 Plus, along with customers upgrading to the middle storage tier after Apple boosted it to 64GB, may have boosted margins.

Fortune suggests that anticipated high sales numbers of the iPhone 6 Plus will have played a major role in analyst expectations, with the all-time high in Mac sales forecast predicted by IDC also contributing to high expectations despite declining iPad sales.

Apple stock has climbed in recent days, currently sitting within 6% of its all-time high. Subsequent share movements are likely to reflect any difference between expectation and reality, as well as the company’s guidance for the following quarter.

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As always, we’ll be bringing you all the numbers tomorrow.


Filed under: AAPL Company Tagged: AAPL, Apple Inc, earnings, Fortune (magazine), Gross margin, International Data Corporation, iPad, iPhone, Mac, Q1 2015 earnings, Wall Street

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Ben Lovejoy

January 26th

Apple

Mac

GT Advanced court filings reveal $50M penalty Apple imposes for leaking product information

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Not much is known about Apple’s deals with its suppliers, but court filings by former sapphire supplier GT Advanced reveal that the contract included a $50M penalty for any leak of Apple product information, reports the Financial Times.

While the amount of the penalty clause may vary according to the size of the supplier, it seems likely that a substantial leak penalty is a standard condition of supplying product components to Apple – though the number of leaks over the iPhone 6 suggests that such penalties offer limited protection.

Contracts between Apple and its suppliers will undoubtedly be subject to strict non-disclosure agreements, but lawyers for GT Advanced are asking the court to allow details to be made public … 

Ahead of a court hearing on Wednesday in New Hampshire, GT’s lawyers are arguing that even more information about its relationship with Apple should be published, in the interests of creditors and shareholders.

The argument is that Apple’s supplier agreement was “oppressive and burdensome,” suggesting that shareholders might seek compensation from Apple over the bankruptcy of GT Advanced.

Apple originally signed a five-year contract with the sapphire manufacturer, lending the company more than half a billion dollars to set up the plant in Arizona. It had been strongly rumored that at least high-end models of the iPhone 6/Plus would have a sapphire display, with Tim Cook fuelling speculation during an ABC interview (at the 2:30 time-point):

GT Advanced’s stock fell sharply when this turned out not to be the case. While Time suggested that this was never in Apple’s plans, the WSJ reported that it had been Apple’s intention to use sapphire for the iPhone, but that GT Advanced had been unable to meet this requirement – and that it was this that led to the company’s collapse.

The demise of GT Advanced is unlikely to impact Apple’s plans for the Apple Watch, says KGI, as there are sufficient competitor suppliers able to provide sapphire in the smaller sizes needed for this.

Should the court agree to the request, we may learn more about Apple’s contractual relationships with its suppliers in the coming days and weeks.


Filed under: AAPL Company, Apple Watch, iOS Devices Tagged: Apple, Apple watch, Arizona, Financial Times, GT Advanced, GT Advanced Technologies, GTAT, iPhone, iPhone 6, iphone 6 plus, Sapphire, Wall Street

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Ben Lovejoy

October 13th

Apple

Mac

AAPL’s report card: how Q3 results fared against analyst expectations

aapl

Here’s how Apple’s Q3 results stack up against the analyst expectations compiled by Fortune. Revenue grew 6 percent, but Wall Street was expecting more. Earnings per share was marginally higher than expected, at $1.28 per diluted share. Gross margin was higher than expected at 39.4 percent.

iPhone sales were slightly lower than expected, while iPad sales were significantly below analyst predictions. Mac and iPod sales, in contrast, were higher.

Overall, market reaction was muted, with a slight drop in the share price in post-market trading – but with overall results broadly in line with expectations, all eyes now will be on Q4. Apple has issued wider than usual revenue guidance of $37 to $40 billion, but with the WSJ reporting that the company has ordered a record number of iPhones from suppliers, expectations will be at the high end.


Filed under: AAPL Company, iOS Devices Tagged: $40 billion, AAPL, AAPL Q3 2014, AAPL Q3 2014 earnings, Apple, Gross margin, iPad, iPhone, iPhone 6, iPod, Wall Street, WSJ

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Ben Lovejoy

July 23rd

Apple

Mac

Apple patent granted today shows dockable ‘iTime’ watch concept as well as conventional smartwatch

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A patent application filed by Apple three years ago and approved today illustrates a new twist on the iWatch concept: a sensor-packed strap acting as a dock which allows a range of interchangeable modules to be snapped into place.

9to5-image 2014-07-22 at 10.49.53 AMIt’s not anything we’re likely to see make it into production: the docking concept dates back to 2011, and was probably intended by Apple to house an iPod Nano, converting it into a smartwatch in a more sophisticated version of the watch-straps sold in Apple Stores since way back in 2010. But the patent does tell us two things … 

First, Apple has been working on a smartwatch concept for a long time. Apple has always said that it believes in taking its time and launching a new product only when it is convinced it has everything right. While Wall Street has been impatiently demanding new product categories, Apple has been quietly working away behind the scenes on refining the idea.

Second, the focus on fitness and health has been there from the start: the patent describes the strap containing circuitry for things like a heartrate monitor and motion-sensor.

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For both docking and standalone approaches, Apple describes how gestures could be used to control the device instead of taps and swipes.

The gesture might be a horizontal movement for one user input option (eg decline incoming call), and might be a vertical movement for another user input option (eg accept incoming call)

As ever, Apple patents give us few clues as to what to expect. The company that famously says no a thousand times for every yes patents everything imaginable and implements little of it. So while this will doubtless give fresh impetus to the rumor mill, don’t be surprised if the actual user-interface is a little more conventional.

We’ve heard plenty of iWatch rumors already, among them that it will come in three different models, in line with earlier suggestions of at least two different sizes, and that it will enter mass production in November. Morgan Stanley has suggested that the ecosystem and brand loyalty could see iWatch sales grow as fast as the iPhone or iPad.

As 9to5Mac has previously reported, Apple has assembled a team of health, fitness, and fashion experts to work on the project.

 


Filed under: AAPL Company, iOS Devices Tagged: Apple, iPhone, IPod Nano, iWatch, Morgan Stanley, Patent, Wall Street

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Ben Lovejoy

July 22nd

Apple

Mac

Here’s what analysts expect Apple to announce today: revenue up 8.5 percent, earnings up 18 percent

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With Fortune having now filled in the blanks in its analyst roundup, above are the final numbers Wall Street expects Apple to announce at around 1.30pm PT/4.30pm ET this afternoon.

With all 34 analysts having revealed their predictions, the consensus view is for year-on-year revenue to have grown by 8.5 percent, with earnings up 18.1 percent … 

Unsurprisingly, the bulk of that growth is expected to be from iPhone sales, which are expected to have climbed by 14.5 percent. CIRP yesterday indicated that Q3 sales are likely to include a higher percentage of flagship models than was the case last year.

Mac sales, accessory sales and iTunes revenues are all expected to be up on last year, while iPad sales are predicted to be flat. iPod sales are expected to have almost halved, Apple describing it as a “declining business.”

The rise in iPhone sales is large attributed to Chinese and Japanese sales. In addition to the high profile China Mobile and NTT DoCoMo deals, Apple added 49 other international carriers last year.

As ever, we’ll bring you the actual numbers as soon as Apple announces them, with live coverage of the earnings call that follows.


Filed under: AAPL Company, iOS Devices, Mac Tagged: AAPL, AAPL Q3 2014, AAPL Q3 2014 earnings, AAPL Q3 2014 financials, AAPL Q3 2014 results, Apple, China Mobile, iPad, iPhone, iPod, iTunes, NTT DoCoMo, Wall Street

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Ben Lovejoy

July 22nd

Apple

Mac

Apple will beat its own top-end guidance when it announces Q3 results tomorrow, say analysts

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Fortune ran its usual poll of more than two dozen analysts, with the consensus view echoing earlier predictions that Apple will beat its revenue guidance of $36-38B by reporting $38.4B for its fiscal Q3 (calendar Q2). Gross margin is also expected to exceed Apple’s guidance of 37-38 percent, at 38.1 percent. This follows forecasts that iPhone sales would climb 15 percent year-on-year, while iPad sales will be flat.

Business Insider reports that Wall Street is once again expecting significant growth from AAPL.

46 Apple analysts rate the stock a buy, 13 call it a hold, and only 4 thinks it’s a sell. Citigroup, which was bearish on the stock, changed its analyst coverage and rated the stock a new “buy.” JMP securities upgraded the stock to outperform Monday morning. Other analysts have raised their price target …

Although fiscal Q3 iPhone sales are generally quiet, with everyone waiting for the new model in September, Chinese and Japanese sales are expected to offset this factor this year.

Sherri Scribner at Deutsche Bank says that might not be a huge drag on the iPhone this year because, “Over the past year, Apple has added 51 new carrier relationships, including China Mobile (with 785 million subscribers) and NTT DoCoMo.”

As with forecasts of iOS devices, predictions of Q3 Mac sales were pretty diverse, ranging from Credit Suisse’s 3.53 million to Janey’s 4.3 million. The average estimate of 3.9M would represent year-on-year growth of 4.2 percent, and would mean “Mac shipments [...] outpaced PC shipments for the 32nd time in 33 quarters.”

While Mac sales are typically seen as of largely academic interest compared to iPhone and iPad sales, Needham’s Charlie Wolf says this may not always be the case.

“Even though the Mac’s share of the PC market has increased from 1.8% to 5.5%, it is still miniscule,” he writes. “We estimate the Mac’s installed base has increased from 16 million users to over 50 million courtesy of the halo effect. However, this does not imply the halo effect will fade. Apple now has over 800 million credit cards on file. The company has sold over 500 million iPhones and over 200 million iPads. So that’s a substantial group of consumers who have yet to decide between a Mac and a PC.”

On revenue forecasts, Elmer-DeWitt noted that the gap between the amateurs and pros has substantially narrowed over the years.

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Fortune notes that Apple’s gross margins are largely dictated by how much it is spending on tooling-up for new products.

Apple’s gross margins tend follow their own internal rhythms, falling when the company is tooling up to build new products and rising as efficiencies increase and component prices fall.

Gross margins peaked in Q2 2012 at an extraordinary 47.4% on the strength of sales of iPhone 4S and dropped to below 37.9% in Q3 2013 as Apple was gearing up to launch, in the same quarter, two new iPhones and pair of iPads.

Apple will announce the actual numbers on tomorrow at around 1.30pm PT/4.30pm ET, with its conference call to discuss the results starting half an hour later. We will, of course, bring you live coverage.

(Photo credit: usapics.net)


Filed under: AAPL Company, iOS Devices Tagged: AAPL, AAPL Q3 2014, AAPL Q3 2014 earnings, Apple, Charlie Wolf, iPad, iPhone, NTT DoCoMo, Philip Elmer-DeWitt, Wall Street

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Ben Lovejoy

July 21st

Apple

Mac

Wall Street ranks Apple world’s most respected company, analysts raise target share prices

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Barron’s reports that institutional investors have returned Apple to its number one slot in its annual ranking of the world’s most respected companies, after it was beaten last year by Berkshire Hathaway.

Apple topped this year’s ranking by scoring 3.94, giving it a wide margin of victory. Berkshire scored 3.58, and the mean was 2.37. Apple received the highest number of Highly Respect votes …

Berkshire Hathaway moved to the number two slot, ahead of Boeing and Google in third and fourth places.

Apple has taken top billing in the annual money managers’ survey in four of the past five years. Barron’s said that “Apple’s iPhones, iPads, and Mac computers have enhanced the lives of billions” and that investors were impressed by “a dividend hike, stock buybacks, and a 7-for-1 stock split.”

Apple is of course no stranger to awards, topping the J.D. Powers smartphone satisfaction awards back in April, and doing the same with tablets in May. Apple was also rated most valuable Silicon Valley brand, though it lost top billing to Google in Millward Brown’s annual calculation of the most valuable brands.

Fortune found a similar view amongst Wall Street analysts, with almost two-thirds of them setting price targets above $100 a share (equivalent to $700 prior to the stock-split).  The largest increase seen was by BTIG’s Walter Piecyk, who said that new plans by Verizon and AT&T would allow iPhone owners to upgrade in the fall for no up-front cost.

We expect AT&T’s new Mobile Share Value plan to increase the percentage of AT&T post-paid subscriber base eligible to upgrade to over 65% by the time the next iPhone launches. In absolute terms that is the difference between 10 or 11 million eligible for upgrades and 45-50 million.

Only four of the 24 analysts surveyed by Fortune expected the share price to fall.

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Photo credit: Buck Ennis, crainsnewyork.com


Filed under: AAPL Company Tagged: AAPL, Apple, Apple awards, Barron, Berkshire Hathaway, Google, iPad, iPhone, Macintosh, Wall Street, World's most respected companies

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Ben Lovejoy

July 2nd

Apple

Mac

Android migration means there’s more iPhone growth to come, suggests Cook

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With so many new iOS and OS X features being introduced in yesterday’s WWDC keynote, the numbers that kicked off the show perhaps didn’t get the attention they otherwise might have done.

While the Wall Street line is that the smartphone market is saturated and iPhone and iPad growth is done, Tim Cook clearly thinks otherwise. Business Insider highlighted Cook’s comment on the migration Apple is seeing from Android phones.

“Over 130 million customers who bought an iOS device in the past 12 months were buying their first Apple device,” said Cook before introducing iOS 8, the new software for the iPhone and iPad. “Many of these customers were switchers from Android. They had bought an Android phone — by mistake. Then had sought a better experience … And a better life. And decided to check out iPhone and iOS.”

He added, “Nearly half of our customers in China in the past six months switch from Android to iPhone. This is incredible.”

There are a couple of important riders here. “Incredible” is over-stating it for China when the China Mobile deal unleashed a lot of pent-up demand for iPhone in a short space of time. All the same, almost 50 percent switching from Android is impressive.

And that 130 million figure isn’t broken down. Some will be first-time smartphone buyers, switching from a featurephone, and the use of the word “many” rather than “most” or “almost half” tells us that it’s still a minority – but not a small one.

For iOS to be grabbing significant numbers of Android users already is encouraging – a phenomenon that is likely to get a substantial boost when Apple has a larger-screened iPhone with many Androidesque new features included in iOS 8.

The first weekend numbers following the launch of the iPhone 6 are going to make very interesting reading.


Filed under: AAPL Company, iOS Devices Tagged: Android, Apple, Apple Worldwide Developers Conference, china, China Mobile, iOS, iOS 8, iPad, iPad growth, iPhone, iPhone 6, iPhone growth, OS X, Wall Street, yosemite

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Ben Lovejoy

June 3rd

Apple

Mac
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