Apple Comments on iPhone XR Sales, A Sign of Apple Product Sales Disclosure to Come?, Thursday Q&A

Today's Above Avalon daily update includes the following topics: 

  • Apple Comments on iPhone XR Sales

  • A Sign of Apple Product Sales Disclosure to Come?

  • Thursday Q&A

We kick off today’s email with a closer look at Apple VP Greg Joswiak’s comments about iPhone XR sales. We go over both what Joz said, and didn’t say, about iPhone XR demand. In addition, we look at what his comments suggest about the overall iPhone sales mix heading into 2019. The discussion then turns to the topic of how Apple may address false narratives regarding product demand mix without providing unit sales data. We conclude with the latest installment of Thursday Q&A. I answer the following questions from Above Avalon members:

  • Berkshire vs. Apple. Why has Berkshire Hathaway’s stock remained near its all-time high while its largest equity investment, Apple, has fallen by more than 20%? 

  • iPhone 8 vs. iPhone XR. What is the implication for Apple’s iPhone strategy given an uptick in iPhone 8 sales after the XR launch? In a mature market with late adopters, does this limit Apple’s ability to push the market forward and take risks, such as with the Face ID/all-screen design?

  • Screen Sizes. The iPhone X performed very well at $999, although the XR doesn't appear to be selling any better at $749. Could Apple have been too aggressive with larger screens at the mid-priced segment? Is it possible that the mid-tier prefers more size options?

  • Buyback Pace. How much leeway does management have quarter to quarter for share buyback? Given the decline in Apple's share price, could we see an uptick in the buyback pace?

  • Buyback’s Impact on EPS. How would you think about Apple's share buyback and the lower share price when it comes to 1Q19 EPS expectations? How could a lower share price and/or larger buyback affect EPS?

  • Marketing. Why has there been such little marketing for some of Apple's new products?

  • iPhone Sales. What would a worst case scenario look like for iPhone sales? 

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