Apple 3Q15 Earnings
Today's Above Avalon stories:
On a granular level, I picked out five sub-themes that I saw from Apple's 3Q15 earnings report and conference call (the full email is 3,000 words):
- Big Picture
- Stock Price Reaction
- iPhone: Relatively Quiet (Which is Good)
- Apple Watch: It's Very Early and Things Look Okay
- iPad Sales Growth: Fact vs. Theory
- Share Buyback: It's Slowing
- Additional Earnings Call Notes
Apple reported strong 3Q results due to sustained iPhone 6 and 6 Plus sales momentum throughout the world, especially in China, Europe, Japan, and emerging markets. Revenue growth would have been 41% excluding FX impact, which is downright remarkable given Apple's size. Not only are larger screen iPhones resonating with consumers, but they continue to provide Apple with margin expansion and pricing power. The iPhone 6 Plus may end up impacting the smartphone landscape more than any other phone in the market. While Apple gave enough clues to reach Apple Watch sales of between 2-3 million units, it is simply too early to draw any long-term conclusions about the device's sales potential.
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Apple Car Development is Advancing, Judging Apple Watch Success/Failure
Today's Above Avalon stories:
- Apple Car Development is Advancing
- Judging Apple Watch Success/Failure
For today's email, we will discuss the WSJ report indicating Apple continues to hire auto-related talent. The closer you look at these hires, the more convincing the evidence that Apple's automobile plans are indeed moving forward and are just as ambitious as I first thought. Next, we will discuss the article I published yesterday titled "Flops, Winners, and Outliers." I continue to think a lot about the Apple Watch and am ready to begin laying out the groundwork that my analysis is going to follow.
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The Wild Ride on Wall Street, Beme and the iPhone Ecosystem, Apple Music - A Few Thoughts Three Weeks In
Today's Above Avalon stories:
- The Wild Ride on Wall Street - We take a closer look at what drove such strong price performance in not only GOOG and NFLX following earnings, but the entire tech landscape last week. Do last week's stock price moves shed any light on Apple's upcoming earnings report on Tuesday and possible Wall Street reaction?
- Beme and the iPhone Ecosystem - There is much to think about with Casey Neistat's new company and app called Beme, which launched this past Friday. The app is increasingly shaping up to be a useful litmus test for the App Store and iPhone ecosystem.
- Apple Music - A Few Thoughts Three Weeks In - A quick update on how I am using Apple Music and what it may suggest about the music service.
Today, we kick things off by circling back to the wild ride on Wall Street last week, including Google and Netflix's earnings. There are lessons included in each report that can be used to better understand how Wall Street looks at Apple earnings and how to think about post-earnings stock reactions. Next, we discuss Beme, one of the more high-profile iOS app launches in a while and how I am using the app as a litmus test for a number of different things dealing with the App Store and larger iPhone ecosystem. We conclude with a few words on my Apple Music usage three weeks in.
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The New iPod Touch is an Updated iPod, AAPL Earnings Preview (Continued), Thursday Q&A
Today's Above Avalon stories:
- The New iPod Touch is an Updated iPod - After looking at the most recent iPod sales, it is clear why Apple updated the iPod touch. However, many are making errors when arriving at long-term implications from the change, including comparing the iPod touch to an iPhone.
- AAPL Earnings Preview - Guidance, Capital Management, Wall Street Expectations - We conclude our detailed preview of Apple's earnings next week by discussing guidance, buyback, and how Wall Street is positioning itself ahead of earnings.
- Thursday Q&A - We discuss two questions submitted by members. This week's topics include whether a higher dividend payout ratio would help Apple's valuation and what Apple can do to change investors' perception and a higher P/E multiple.
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Expecting Another Strong iPhone Quarter, Live TV Will be Apple TV's Killer Feature, Burberry Executives in High Demand
Today's Above Avalon stories:
- Expecting Another Strong iPhone Quarter - I discuss my latest iPhone sales estimate. China is shaping up to be the driving force of 40% iPhone unit growth year-over-year.
- Live TV Will be Apple TV's Killer Feature - We take a closer look at how offering live TV via more than 850 affiliate stations could be a very big deal for Apple's new video streaming service.
- Burberry Executives are in High Demand - Following news that Tesla hired a senior Burberry executive, we look into what may be going on with technology luxury retail and how it will impact Apple.
We kick things off by going over my iPhone unit sales estimate for Apple's upcoming earnings. It is shaping up to be another strong quarter thanks to China. Next, we shift over to the latest report from the New York Post about Apple looking to position local TV programming as a key feature of its rumored TV/video services. We conclude by discussing why Burberry executives seem to be in such high demand in technology with news that Tesla has hired a senior Burberry executive to lead North American sales.
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Apple Earnings Preview Part One - Apple Watch, Mac, and iPad
Today's Above Avalon stories:
- Establishing Quarterly Apple Watch Sales Estimate - Even though Apple will lump in Apple Watch revenue with Other Products, there will be ways of reaching Apple Watch unit sales estimate. After discussing Apple Watch supply/demand, I provide an easy cheat sheet to convert Other Products revenue to Apple Watch sales estimate.
- Setting Quarterly Mac Sales Expectations - The Mac continues to take share in a category that is struggling. We discuss Gartner/IDC reports and how they have matched up with actual Mac shipments and what the latest reports may point to for the latest Mac sales.
- iPad Sales Continue to Look Weak - We discuss the iPad line and where things may be headed from here.
We kick off today's email by going over my thoughts on Apple Watch sales estimates for the quarter. I included a "cheat sheet" to easily distinguish Apple Watch sales from the Other Product revenue line item that Apple will report next week. We next shift over to the Mac category, in which all signs point to continued solid sales momentum this past quarter. We conclude with the iPad and a few reasons why sales will continue to be on the weak side. You will find that much of the discussion today involves the products themselves, which I think is more useful than strictly talking dollars and cents given the iPhone's oversized impact on Apple's earnings.
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The iPhone is Taking Over Apple, Apple is Producing Music Videos, The U.S. Government is Sniffing Around the App Store
Today's Above Avalon stories:
- The iPhone is Taking Over Apple (Inside Commentary) - Apple will be the iPhone company for the foreseeable future. Even though the product presents certain risks and benefits to the company, Apple's most significant risk factors aren't related to quarterly sales gyrations caused by the iPhone representing 80% of earnings.
- Apple is Producing Music Videos - We discuss the Pitchfork article that Apple is producing a few music videos in-house. What does this suggest about Apple's future plans and producing its own content?
- The U.S. Government is Sniffing Around Apple's App Store - The FTC is taking a closer look at the complaints that Apple's App Store is uncompetitive to rivals. We take a closer look at which restrictions some third-parties are not happy with.
Today, we start by going over how the iPhone is taking over Apple. While Apple faces risks associated with the iPhone, the company's largest risks have nothing to do with the iPhone. We next discuss Pitchfork's report that Apple is producing music videos and what that may mean about Apple's future in content creation. Finally, we conclude with the FTC looking at complaints from third-parties saying the App Store is uncompetitive and why it may be a tough argument to win when going up against Apple.
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Spotify Seems Desperate, Apple Plans Record iPhone Production, Q&A Thursday
Today's Above Avalon stories:
- Spotify Seems Desperate - Not only is Spotify is seemingly battling Apple Music, but their latest move to go up against Apple's App Store smells of desperation.
- Apple Plans Record iPhone Production - We take a closer look at the WSJ report indicating Apple is planning on producing 85-90 million units of two new iPhone models and what it suggests for Apple's iPhone business.
- Q&A Thursday - I answer a few questions from members. This week's questions include what Wall Street looks for in AAPL to determine if it is a buy or sell, Apple's sensitivity to interest rates, ResearchKit, and why Apple is embracing human curation.
Today's first story deals with Spotify and what increasingly looks like moves of desperation being taken by the leading music streaming service. Next, we shift over to the WSJ story that includes the first supply data for the new iPhones expected to be announced in approximately two months. We conclude with the second installment of Q&A Thursday.
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Quiet Apple Watch Tables (Continued), Chinese Stock Market Crash Impact on Apple, Showtime Arrives on Apple TV
Today's Above Avalon stories:
- Quiet Apple Watch Tables in Apple Retail Stores (Continued) - After making one additional point about those quiet Apple Watch tables in Apple retail stores, we discuss the Marketwatch report saying Apple Watch is flopping and how to approach Slice Intelligence data.
- Chinese Stock Market Crash Impact on Apple - I discuss my experience with the 2008 and 2009 U.S. financial crisis, before going over the Chinese stock market crash and what the ongoing situation means for AAPL.
- Showtime Arrives on Apple TV - The future of TV is actually closer than one would expect and it is looking expensive.
We kick off today's email with a few additional comments on those quiet Apple Watch tables and a new "report" from MarketWatch making the rounds indicating the Apple Watch is truly flopping. Next, we shift over to the developing situation in China as various stock indexes continue to crash. While one assumes this can't be a good situation for Apple given its exposure to China, there is much more to the story than what meets the eye. We conclude with Showtime coming to Apple TV and how a la carte TV is quickly becoming an expensive option for some consumers.
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App Store Economics, Empty Apple Watch Tables, Samsung Preannounces Weak Earnings
Today's Above Avalon stories:
- App Store Economics: Troubled Indie Business Models - We take a closer look at Brent Simmons' piece about the App Store becoming an environment in which it is too difficult for indie artists to compete. I use a real-world example of a funded app company to show what is really happening in the iOS ecosystem.
- Empty Apple Watch Tables in Apple Stores - I continue to have people tell me that they are surprised with the lack of people around Apple Watch tables. Is this something to be concerned about? What is going on?
- Samsung Preannounces Weak Earnings - Samsung's issues may be deeper than just market dynamics.
We kick things off by diving into the topic of App Store economics and the recent string of posts from iOS developers, beginning with Brent Simmons, that look at the App Store environment and conclude the indie app business model is in big trouble. We then shift over to one topic that has been on my mind lately concerning empty Apple Watch tables in Apple retail stores. We conclude with a quick overview of Samsung's earnings preannouncement.
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Apple Music is Very Apple, Casio Wants to Sell a Smartwatch
Today's Above Avalon stories:
- Apple Music is Very Apple
- Casio Wants to Sell a Smartwatch
Welcome to a new week. We kick things off closing up some loose ends with Apple Music after last week's launch. Think of this as looking at the big picture. Apple is taking a big risk with Apple Music, giving consumers something that they may want before they knew they wanted it. We next go over news that Casio is the latest watchmaker targeting the smartwatch market, which is somewhat ironic news given the company's past as one of the first to market a "smart" watch.
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Apple is Growing Faster than Xiaomi, Trent Reznor Talks Apple Music, Q&A Thursday
Today's Above Avalon stories:
- Apple is Growing Faster than Xiaomi
- Trent Reznor Talks Apple Music
- Q&A Thursday (answering questions from Above Avalon members about everything and anything)
We kick things off by looking at the latest sales numbers from Xiaomi and discovering an interesting development that has been occurring in 2015. Next, we take a closer look at Trent Reznor's interview about Apple Music with Pitchfork. We conclude with the inaugural Thursday Q&A, a list of questions submitted by all of you concerning various topics and subjects.
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Apple Music Observations, Android Switcher Rates Bode Well for iPhone Sales
Today's Above Avalon stories:
- Apple Music Observations
- Android Switcher Rates Bode Well for iPhone Sales
We begin today's email with Apple Music and observations and notes about Apple's entry into the music streaming era. It is clear that Apple did their homework, but it is hard to ignore some of the risks and future problems. Then we will switch over to the latest report from Kantar, which contains data on Android switcher rates. With Apple earnings coming up, this data is quite useful when contemplating iPhone sales trends for the past three months.
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Apple Music's Problem, Reflections on iPhone's 8th Anniversary, Greece's Impact on Apple
Today's Above Avalon stories:
- Apple Music's Problem
- Reflections on iPhone's 8th Anniversary
- Greece's Impact on Apple
Today, we kick things off by diving a bit deeper into my article about Apple Music's "problem" concerning the $10 per month price being too high. Next, we take a few moments to reflect on the iPhone's 8th anniversary, which led me to think of a few things about what the iPhone means to Apple and if Apple will ever have another "iPhone" in the future. We conclude by talking about Greece and how to think about ongoing economic turmoil in Greece and Europe when thinking about Apple.
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Attaching a Price to Apple's Free Music Trial, The Big Bet Behind Beats 1, New iPhones Entering Production
Today's Above Avalon stories:
- Attaching a Price to Apple's Free Music Trial
- The Big Bet Behind Beats 1
- New iPhones Entering Production
We are still in Apple Music mode with tomorrow's launch. Apple signed deals with the indie labels after deciding to pay music rights holders during the three month trial period. With new information in hand, I wanted to dive a bit deeper and attach a price tag to Apple's music trial period. Next, Zane Lowe was profiled by the New York Times. Beats 1 is increasingly being positioned as a key aspect of Apple Music which has implications going forward. Finally, we have the first reports of new iPhones going into production, so we take a look at how this years's iPhone update cycle is looking.
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