Neil Cybart 8/11/23 Neil Cybart 8/11/23

Disney 3Q23 Earnings, Iger Setting Low Expectations, Disney Raises DTC Streaming Prices

Hello everyone. We end the week with one of the more anticipated earnings releases of the current cycle: Disney. Let’s jump right in.

Disney 3Q23 Earnings

This was not the disaster of a quarter that some were expecting. One could go so far as to say it was an OK quarter, although there are caveats found with that statement.

There were several moving parts found in Disney’s earnings. Expectations of this release being a disaster were never realistic to begin with. More on that shortly.

The moving parts:

Linear Networks (cable/broadcast) results weren’t great with revenue down 7% and operating income down 23%. The weak numbers were found in both Domestic and International.
Parks & Experiences benefited from an easy year-over-year compare for Shanghai Disney Resort (related to COVID closures). Domestic results were on the weak side with just 4% revenue growth. Lower volumes at Disney World were partially offset by Disneyland results that were modestly better year-over-year. The numbers add credibility to the WSJ’s article about fewer visitors at Disney World.

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Neil Cybart 8/9/23 Neil Cybart 8/9/23

Apple 3Q23 10-Q Takeaways, Apple's Share Buyback Update, Apple R&D Expense Growth Slows

Happy Wednesday. Today’s update will conclude our Apple 3Q23 earnings review.

Friday (Aug 4): Apple 3Q23: By the Numbers, The Most Impressive Apple Number, About That Weak iPad Number
Monday (Aug 7): Apple's 3Q23 in Three Charts
Tuesday (Aug 8): Reading Between the Lines of Apple's 3Q23 Earnings Q&A With Analysts

In today’s update, we will go over Apple’s 3Q23 10-Q. We will then discuss Apple’s latest share buyback and R&D expense trends.

Let’s jump right in.

Apple 3Q23 10-Q Takeaways

Published at the end of FY1Q, 2Q, and 3Q, 10-Q filings provide additional commentary and disclosures regarding a company's business and financial results.

The following items from Apple's 3Q23 10-Q jumped out at me.

Product Details. Apple provided additional commentary behind sales trends for its major product categories.

iPhone. Net sales decreased in 3Q23 due “primarily to lower net sales from certain iPhone models, partially offset by higher net sales of iPhone 14 Pro models.” Based on that wording, higher iPhone ASP was registered in 3Q23 causing iPhone revenue growth to exceed unit sales growth. My model has iPhone ASP up 4% while unit sales were down 6%.
Services. Net sales increased in 3Q23 due “primarily to higher net sales from advertising, cloud services, and the App Store.” Last quarter, the ordering was cloud services, music and advertising. Advertising includes licensing revenue. App Store revenue was likely up a few percentage points year-over-year.

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Neil Cybart 8/8/23 Neil Cybart 8/8/23

Reading Between the Lines of Apple’s 3Q23 Earnings Q&A With Analysts

Hello everyone.

In today’s update, we will focus on Apple’s 3Q23 earnings Q&A session with analysts. After recapping each question-and-answer exchange that occurred on the call between Apple and sell-side analysts, we will go over my thoughts / response to the exchange. Let’s go beyond what was talked about on the call.

NOTE: The following earnings call questions (“Q (Sell-Side Firm)”) and answers (“Cook” or “Luca”) have been cut, summarized, paraphrased, and rearranged for clarity. To read the full question and answer exchanges, Seeking Alpha offers a written transcript here.

Reading Between the Lines of Apple’s 3Q23 Earnings Q&A With Analysts

Consumer Behavior

Q (Morgan Stanley): How is the consumer behaving today versus 90 days ago? Are there geographical differences?

Cook: Emerging markets was a strength. China saw acceleration. Europe saw a record for the June quarter. There are “some really good signs in most places in the world.” The smartphone market remains challenging in the U.S.

My response: The going theory for why the U.S. has been the outlier in terms of iPhone weakness is that economic anxiety (higher inflation and rates) combined with consumer behavior shifts (budget shift to services, leisure, eating out, and travel) have strained the appetite for consumer electronics. It also should be pointed out that the U.S. has one of, if not the highest, iPhone sales share in the world. There are fewer people in a position to switch to iPhone.

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Neil Cybart 8/7/23 Neil Cybart 8/7/23

Apple's 3Q23 in Three Charts

Hello everyone. Welcome to Monday and a new week. We will continue our Apple 3Q23 review.

Given how the past few quarters for Apple have contained similar themes, we are going to try something different for this quarter's review. We will focus on three charts that sum up Apple's 3Q23. As we will see, there is quite a bit of consistency on display with each chart. (We will cover all of the granular takeaways from Apple's 3Q23 earnings call in tomorrow’s update.)

Before jumping into today’s update, one clarification regarding Friday’s update. When talking about Apple’s hardware margins, the commentary was garbled. That part of the update should have read:

Products (HW) gross margin: 35.4% (vs. my 35.7%). My iPhone gross margin estimate was a tad bit too optimistic. On a year-over-year basis, HW gross margins were up by 85 basis points.

Apple's 3Q23 in Three Charts

Gross Profit Resiliency

3Q23 results: $36B gross profit (up 1.5% from 3Q22)

There has been much attention placed on Apple’s gross margins (and rightly so). Gross margin is cost of goods subtracted from revenue. Based on management commentary, the company will come close to reporting a 11-year quarterly high for gross margin percentage 1Q24. Management provided a 44.0% to 45.0% range. Gross margin percentages don’t tell the full story though. Instead, we need to look at gross profit in absolute terms to obtain a cleaner assessment of Apple’s business.

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Neil Cybart 8/4/23 Neil Cybart 8/4/23

Apple 3Q23: By the Numbers, The Most Impressive Apple Number, About That Weak iPad Number

Today's special Friday edition of the Daily Update will be focused on reviewing Apple’s earnings. The idea is to keep things broad and look at the big picture takeaways. We also examine how Apple’s results compared to Neil’s expectations. The discussion will continue next week.

Hello everyone. We will begin reviewing Apple's FY3Q23 results. Let's jump right in.

Apple 3Q23: By the Numbers

The themes that guided the past few quarters for Apple were present in the company’s FY3Q23 results. Emerging markets strength is being offset by a slowdown in iPhone upgrading in the U.S. Meanwhile, solid Services revenue generation is being offset by weak Mac and iPad results. The result is mostly flat revenue growth with FX continuing to serve as a growth headwind (Apple’s FX hedging program creates a lag in receiving any weaker dollar benefit).

This past Monday, we went over three factors that point to FY2024 being a better one for Apple financially. Following Apple’s FY3Q23 results and earnings call, there has been no change in my thinking.

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Neil Cybart 8/2/23 Neil Cybart 8/2/23

Alphabet 2Q23 Earnings, Ruth Porat to Oversee Alphabet’s Other Bets, My Updated Apple Earnings Model

We begin with Neil’s thoughts on Alphabet’s earnings. The discussion includes commentary on Alphabet/Google CFO Ruth Porat transitioning to a new role at the company. We conclude with Neil’s updated Apple earnings model and how the model has changed over the past three months. Access to Neil’s Apple earnings model is a benefit associated with Above Avalon membership at no additional cost.

Hello everyone.

In keeping with our usual practice, tomorrow’s update (Thursday) will be pushed back a day so that we have a special Friday edition of the update to review Apple’s earnings. Apple will release earnings Thursday at 4:30 pm ET.

For today, we will focus on Alphabet’s earnings.

Alphabet 2Q23 Earnings

Alphabet reported a solid quarter as delays in some expenses and investments helped to boost CY2Q23 profitability.

Revenue was up 7% (up 9% excluding FX) with gross margins up 140 basis points year over year. Operating income was up 12%. Free cash flow was $22B.

While much of Alphabet’s earnings call was dedicated to AI, the more tangible takeaway was continued stabilization in the digital ads market. Like Meta, Google saw additional improvement in its core ads business. As macro issues subside, the purveyors over the most valuable pieces of digital real estate are positioned to see a return to ad revenue growth.

There is an asterisk found with the preceding statement.

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Neil Cybart 8/1/23 Neil Cybart 8/1/23

My FY3Q23 Apple Estimates, Early Thoughts on Apple’s FY4Q23

Apple reports FY3Q23 earnings on Thursday. Today’s update contains the second half of Neil’s earnings preview. The first half is available here. The update begins with Neil’s granular financial estimates. The discussion includes qualitative explanations for each of Apple’s product categories. We then look at Neil’s expectations for what Apple will say about guidance (FY4Q23).

Hello everyone. Welcome to August.

We will continue our Apple 3Q23 earnings preview with a look at my granular estimates. The update will conclude with a few thoughts on what Apple may say regarding 4Q23 guidance. My updated earnings model will be available in tomorrow’s update.

My 3Q23 Apple Estimates

Here are my granular estimates for Apple’s 3Q23:

Revenue: $82.0B (consensus: $81.6B)
Overall gross margin: 44.4% (guidance: 43.5% to 44.5%)
Gross margin (HW): 35.7%

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Neil Cybart 7/31/23 Neil Cybart 7/31/23

Setting the Stage for Apple’s FY3Q23 Earnings

Apple reports FY3Q23 earnings (results from April to June) later this week. Today’s update includes Neil’s big picture thoughts heading into Apple’s earnings.

Happy Monday.

Apple reports earnings on Thursday. For those of you who may be new to Above Avalon membership, I wanted to quickly discuss the typical game plan for Apple earnings coverage.

Prior to Apple’s earnings release, we go over my expectations for what will be announced. These expectations cover both qualitative and quantitative items. Expectations are important given the role they play in adding context to a company’s results. My Apple earnings previews typically extend across two, possibly three, updates.

Once Apple reports earnings, we will then go over everything there is to say about the release, the earnings conference call, and even the 10-Q or 10-K. By the end of the process, we have a comprehensive overview of both Apple’s results for the prior three months and analysis of guidance for the current quarter.

Today, we will kick off my Apple earnings preview with an overview of the setup heading into Thursday’s release.

Setting the Stage for Apple’s FY3Q23 Earnings

Over the next few months, the setup is becoming more positive for Apple’s financial results. My expectation is that when Apple reports earnings on Thursday, we will begin to see and hear the early signs of this improvement. Apple’s guidance for FY4Q23 could still point to the business facing macro pressures, but that would then clear the deck in a way for an all-around better FY2024.

There are three factors behind this “improvement on the horizon” theme:

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Neil Cybart 7/28/23 Neil Cybart 7/28/23

Meta 2Q23 Earnings, Reality Labs Losses, Meta Stock

Happy Thursday. We will continue our earnings reviews with Meta. The discussion includes Neil’s thoughts on Meta’s 2Q23 results, the significant loses associated with Reality Labs (AR/VR), and Meta’s stock rollercoaster. Apple reports earnings a week from today – Thursday, August 3rd.

Meta 2Q23 Earnings

Meta’s core business of monetizing user attention via advertising continues to stabilize. We saw the early stages of this improvement in Meta’s last earnings release three months ago.

Management provided a few factors behind the continued improvement in 2Q23:

An easier year-over-year compare. 2022 saw weakened results. 2Q marked a full quarter without Russia revenue.
Improved Reels monetization.
Increased ad supply.
FX turning from a revenue growth headwind to tailwind. (This is something to note with Apple’s earnings next week.)

There is a simpler explanation at play for the continued stabilization: Thanks to Reels, Meta’s TikTok copycat, Meta is holding its own on the engagement front against TikTok. Not only is Reels keeping users on Facebook and Instagram, but it appears to be successfully adding new people into the Meta fold.

Key Meta data points from the quarter:

3.9B people use at least one Meta property on a monthly basis.
3.1B people use at least one Meta property on a daily basis in June.

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Neil Cybart 7/26/23 Neil Cybart 7/26/23

Microsoft FY4Q23 Earnings, The Microsoft Business, Apple vs. Microsoft

Hello everyone. We will continue our earnings reviews with the second-largest market cap company: Microsoft. The discussion includes Neil’s thoughts on Microsoft’s FY1Q24 guidance, the big picture regarding Microsoft’s business, and the competitive dynamic found with Microsoft and Apple.

Microsoft FY4Q23 Earnings

When it comes to Microsoft's quarterly earnings releases, there usually aren’t many surprises. Management gives very detailed segment guidance for the current quarter. It’s not common for results to deviate from those numbers. This is one benefit found with having so much enterprise-focused recurring revenue – it’s easier for management teams to forecast out for the remainder of the quarter (i.e. two months). As a result, earnings focus is usually put squarely on management’s new guidance and insights as to how business has been trending during the current quarter.

Along those lines, there weren’t many surprises found with Microsoft’s FY1Q24 guidance, although it’s easy to see why some people may have been spooked. Microsoft (smartly) downplayed revenue contribution from AI in the near-term (i.e. don’t expect much acceleration in cloud revenue growth) while mentioning a larger increase in cost of revenue (i.e. don’t expect much margin improvement) and a need for greater capex in FY24.

It's been easy to talk away slowing or steady revenue growth in the current environment as long as

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Neil Cybart 7/25/23 Neil Cybart 7/25/23

Tesla Earnings, Tesla's Cost Reductions, Apple’s Project Titan Implications

We kick things off with Neil’s thoughts on Tesla earnings. The discussion covers two themes that are beginning to appear in both Tesla’s results and the broader EV space. We conclude with how these trends stand to impact Apple’s transportation goals.

Happy Tuesday.

Before we get to today’s stories, a little follow-up to yesterday’s "Barbie" discussion. The $150M marketing budget for the film was an estimated figure. There is little to no disclosure regarding how much is spent marketing films.

While it would not be unprecedented for a film’s marketing budget to exceed its production costs, the thing that truly stands out about "Barbie’s" marketing budget is how unique the dollars were used. Warner Bros. was able to leverage its marketing budget. On Twitter, Aakash Gupta shared 50 Barbie marketing examples including building a Barbie house in Malibu, a Barbie-themed hotel, catchy billboards, and plenty of other websites, interviews, and licensing deals. The marketing wasn’t really about a movie, but rather about the Barbie brand.

As we see with other shows like "Ted Lasso," it is possible for other films and shows to play in the zeitgeist. In some ways, that is the goal every streamer is going for: to have some shows become part of culture. Warner Bros. succeeded in that goal with "Barbie." However, the question still remains, what would alternative methods have looked like for "Barbie" distribution? What if David Zaslav had introduced an ultra-premium tier to Max that allowed fans to watch "Barbie" at home, at the same time as the theatrical release?

Tesla Earnings

In a sea of change and evolution, we are starting to get glimmers of a trend materializing in the auto sector. This trend was seen with Tesla’s latest earnings release that came out last week.

A few weeks ago, Tesla reported 2Q23 delivery and production volume. The numbers were good. However, we needed to wait for earnings to see how profitable those vehicle sales were.

Not surprisingly, Tesla’s auto margins are falling. Higher sales volume has not offset the negative impact on margin from substantial price cuts.

The following comment from Elon Musk on Tesla’s earnings Q&A jumped out at me:

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Neil Cybart 7/24/23 Neil Cybart 7/24/23

"Barbenheimer" Wins at the Box Office, How Did "Barbenheimer" Do It?, Apple and Messi

Hello everyone.

Over the weekend, Neil went through Tesla’s earnings and Q&A. In breaking everything down there were two themes that jumped out at him. We will get to that tomorrow.

For today, we will kick things off with movies. There is a lot to be said about what happened at the box office over the weekend with “Barbie” and “Oppenheimer.” Many people are assessing what the movies will do to the media space including decisions around IP, streaming, and movie theaters. The email concludes with Neil’s thoughts on Apple playing a role in Lionel Messi signing with MLS.

“Barbenheimer" Wins at the Box Office

Here’s the NYT:

“The movie business lives!

Greta Gerwig’s gender wars ‘Barbie’ and Christopher Nolan’s nuclear war ‘Oppenheimer’ blew past already-stratospheric prelease expectations at the weekend box office to collect a combined $235.5 million in the United States and Canada, an astounding total that sent a clear message to Hollywood: If you want to commandeer the culture, you must give moviegoers something new — not just the same old threadbare franchises…

‘Barbie’ arrived as a full-blown cultural event, with thousands of moviegoers draping themselves in pink for screenings, doll memes flooding social media and marketers scrambling (sometimes awkwardly) to glom onto the moment. The audience was 65 percent female. ‘For a film this pink, you would have expected the audience to be closer to 90 percent female — we got a ton of guys,’ said Jeff Goldstein, president of domestic distribution at Warner Bros. ‘It exploded everywhere: large markets, small markets, coast to coast.'"

There have been varied takes this morning from analysts, industry folk, and pundits.

One quote from Paul Dergarabedian, a senior Comscore analyst, caught my attention. He positioned movie theaters as being the big winners from this past weekend, saying "Barbie" and "Oppenheimer" "solidified the movie theater as a culture hub and epicenter of social interaction.” Not surprisingly, movie theater operators said versions of that.

Others viewed the movies as one-off events that benefited from fresh IP, huge marketing budgets, and difficult to replicate societal buzz that took months to build.

If choosing between those two camps,

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Neil Cybart 7/21/23 Neil Cybart 7/21/23

Netflix Earnings, Netflix Won't Want to Be Compared to YouTube

Hello everyone. The CY2Q23 earnings season covering April to June has officially begun. We kick things off in streaming land with Netflix. The update begins with Neil’s thoughts on Netflix’s earnings. The discussion then turns to why Neil doesn’t think Netflix will want to be compared to YouTube.

Netflix Earnings

Three months ago, the major takeaway from Netflix earnings was subscriber gains had returned at the potential risk of less attractive user economics (i.e. lower profitability per user). That major theme remained intact with Netflix’s 2Q23 earnings release.

As shown below, Netflix’s subscriber growth appears to be firmly back on track.

Netflix is back up to 18M new subs on a TTM basis. Although that’s roughly half of where growth was during the pandemic, it is up materially from the 2022 lows. This will likely alleviate concerns held by those who were disappointed at Netflix seemingly hitting a paid subscriber ceiling of 220M to 230M accounts.

Price cuts outside the U.S., the launch of an ad-supported tier in a number of countries, and to a lesser extent, the password sharing crackdown, are leading to renewed paid subscriber growth.

On the surface, strong subscriber growth is great news for Netflix. However, there are a few elements to the growth that caught my attention.

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Neil Cybart 7/19/23 Neil Cybart 7/19/23

Parsing Iger’s ESPN Comments, ESPN’s Value, Thoughts on an Apple / ESPN Partnership

Hello everyone. We need one more update to close some loose ends regarding Disney, ESPN, and Apple. The update kicks off with an examination of Iger’s comments to CNBC regarding ESPN. We then turn to ESPN’s potential value and one difficulty found in valuing the subsidiary. The discussion then turns to Neil’s thoughts on a potential Apple/ESPN partnership, including what each company would bring to the table and what such a partnership would look like.

Let’s jump right in.

Parsing Iger’s ESPN Comments

As we discussed yesterday, Iger sounded relatively upbeat about ESPN in his interview with CNBC’s David Faber at Sun Valley. However, Iger admitted that ESPN needed work with the big one being a shift to direct to consumer.

Iger wouldn’t comment on timelines for such a shift other than to say he’s “much more certain about when.” Disney can’t prematurely announce such a move without upsetting its legacy business. There are also media rights deals to consider.

Here's a key exchange between Iger and Faber about ESPN:

“IGER: We’ve had a great business [with ESPN], and we want to stay in that business. That said we’re going to be open minded there too. Not necessarily about spinning ESPN off, but about looking for strategic partners that could either help us with distribution or content, but we want to stay in the sports business.

FABER: What would a strategic partner look like with distribution or content then for ESPN?

IGER: Well, I think you could again, I’m not gonna get too detailed about it, but we’re bullish about sports in general as a media property.”

Iger’s comment about someone helping ESPN with content stood out to me. The chatter has been focused on ESPN’s media rights for the NBA. It’s a critical deal for ESPN and the rights expire after the 2024 to 2025 season. Iger is likely

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Neil Cybart 7/18/23 Neil Cybart 7/18/23

Bob Iger’s CEO Contract Extended (Again), The Bob Iger Question, Iger Hints at Divestitures and Partnerships

Hello everyone. It’s good to be a back after a mini summer vacation.

We kick things off where we left off: with Disney. There was quite a bit of news on the Disney front and Apple is once again being pulled into the story. The update begins with Neil’s thoughts on Bob Iger’s CEO contract being extended for another two years. We then look at the question that needs to be asked regarding Iger and Disney. The discussion concludes with the major takeaways from Iger’s interview with CNBC at Sun Valley.

Let’s jump right in.

Bob Iger’s CEO Contract Extended (Again)

Back in November 2022, the Disney board fired CEO Bob Chapek and appointed his predecessor Bob Iger, as his replacement with a two-year contract.

One of Iger’s top priorities was said to be identifying his successor – something that he supposedly spent years doing prior to hand-picking Chapek to succeed him. This past February, Iger told CNBC he had no intention in staying longer than two years.

It looks like Iger needs more time to find that successor. In a press release issued on July 12th, here’s Disney:

"The Walt Disney Company Board of Directors announced today that Robert A. Iger has agreed to continue to serve as Chief Executive Officer through December 31, 2026. In voting unanimously to extend Mr. Iger’s contract by two years, the independent members of the Board of Directors noted that Iger’s extension provides continuity of leadership during the Company’s ongoing transformation, and allows more time to execute a transition plan for CEO succession, which remains a priority for the Board."

This marks the fifth CEO contract extension for Iger, going back to 2013. In the 2010s, a Bob Iger contract extension was accompanied by confidence and relief that Disney got to benefit from Iger’s expertise for more time. Today, it’s the opposite. An extension only raises more questions and doubt about the company’s leadership and lack of succession. The explanation given by Iger last week

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Neil Cybart 7/13/23 Neil Cybart 7/13/23

Apple Cornering Market on Premium Headset Components, Disney's Troubles Grow, Apple’s Leverage Against Disney

Hello everyone. We kick things off with Neil’s thoughts on how competitors may struggle going up against Vision Pro from a hardware perspective due to Apple’s supply chain actions. The discussion then turns to Disney and the growing list of issues plaguing the company. The situation is creating a dynamic that be considered advantageous to Apple.

Apple Cornering Market on Premium Headset Components

As reports of severe Vision Pro supply constraints continue to be digested, there is a corollary found with the news that hasn’t received much attention.

Competitors face an uphill battle to even assemble the supply chain, components, and partners that would be needed to produce a headset that can go up against Vision Pro. Yesterday’s discussion touched upon this briefly when talking about Vision Pro’s supply issues likely not representing much of an opening for competitors in 2024.

There are already two examples that we can point to. (This likely won't be the exhaustive list):

OLEDoS (two displays are found in Vision Pro – one for each eye). Sony is reportedly the only company supplying the postage stamp-sized OLED on Silicon displays. The lack of production capacity is said to be a major factor for Vision Pro supply constraints.

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Neil Cybart 7/11/23 Neil Cybart 7/11/23

App Store Turns 15, Head of Google's AR Software Quits, Vision Pro’s Influence Already Being Felt

Hello everyone. Happy Tuesday. We kick things off with Neil’s thoughts on the App Store turning 15 years old. The discussion then turns to Mark Lucovsky, who led Google’s AR software efforts, quitting Google in a very public way. We conclude with how the Apple Vision Pro unveiling has already impacted the AR/VR market.

App Store Turns 15

Yesterday marked the 15th anniversary of Apple launching the App Store.

Five years ago, we recapped the App Store’s trajectory at the 10-year mark. A year prior, Apple had announced a major redesign to the App Store that included the Today, Games, and Apps tabs. Apple also unveiled the App Store’s editorial direction.

For today’s discussion, it’s worth looking at the major App Store developments that have materialized over the past five years.

Apple Arcade. After a few strategy shifts and changes, Apple landed on what has been Apple Arcade's current strategy of being more of an essential service grabbing subscriber time and attention (versus having games that subscribers would play when they had a few minutes of down time). The 100-game soft ceiling was expanded to more than 200 games (with no advertising or in-app purchases). The higher game total also reflected Apple including older iOS games with a proven track record of market success in the service.

Advertising. By expanding Apple Search Ads

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Neil Cybart 7/11/23 Neil Cybart 7/11/23

Samsung Announces Foldables Event in Seoul, Foldables in 2023, Samsung Rethinks Headset Approach

Hello everyone. Welcome to a new week. Today’s update will have a Samsung theme. We begin with Neil’s thoughts on Samsung announcing its first Unpacked event in South Korea. The announcement caught Neil’s attention for a few reasons. The discussion then turns to the current state of foldables in 2023. We conclude with Samsung reportedly rethinking its headset approach after seeing Apple Vision Pro.

Let’s jump right in.

Samsung Announces Foldables Event in Seoul

Here’s The Korea Times:

“Samsung Electronics will hold its Galaxy Unpacked event in Seoul at the end of July, to introduce its latest foldable smartphones, the company said Wednesday.

According to the company, the 27th Galaxy Unpacked event will be held at the COEX convention center in southern Seoul, which will be the first Unpacked event in Korea. Though Samsung did not officially announce the name of the products, it is expected that the Galaxy Z Flip 5 and the Z Fold 5 foldable smartphones will be unveiled at the event.

Samsung began holding Galaxy Unpacked in March 2010 with the unveiling of the first Galaxy S Model in Las Vegas and has since held the unveiling events in major cities around the world, including New York, San Francisco, London, Berlin and Barcelona…

Speaking about why it decided to hold the event on its home soil for the first time, Samsung said it aims to assure the world of its pride as the originator of foldable smartphones at a time when Chinese rivals and Google have also been launching foldable products.

‘Since the company first introduced foldable smartphones in 2019, it has been improving the perfection of foldable smartphones and growing the market every year. As a result, we've seen that latecomers are joining the market. Under these circumstances, Samsung plans to unveil a new foldable product in Korea to make its pride as a foldable originator clear to the world,’ Samsung said."

This announcement caught my attention for a few reasons.

Samsung has relied on a revolving host city strategy for the past 13 years of Unpacked product unveilings. While there was never an obvious direct theme between the Samsung products being announced and the location where the products were unveiled, one could have made the connection of Samsung hosting events where it wanted to make the most (cultural) impact. Up to now, that has primarily been the U.S. and Europe.

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Neil Cybart 7/6/23 Neil Cybart 7/6/23

Tesla 2Q23 Deliveries, Ford’s EV Strategy, Doug Field’s Odd Interview With the AP

Hello everyone. For today’s update, we will take a spin through the EV space. While headsets have grabbed the attention in recent months, the EV industry continues to evolve in an effort to find itself. We begin with Neil’s thoughts on Tesla’s latest deliveries numbers. The discussion then turns to Ford’s EV strategy, including quite the odd interview from Doug Field regarding Ford’s transition to EVs.

Let’s jump right in.

Tesla 2Q23 Deliveries

In a press release issued on Sunday, here’s Tesla:

“In the second quarter, we produced nearly 480,000 vehicles and delivered over 466,000 vehicles.”

Here are Tesla's 2Q23 deliveries broken out by model:

Analysts were expecting Tesla to report 445,000 deliveries in 2Q23 so 466,000 is a 5% beat to consensus. In 2Q22, Tesla deliveries were constrained due to COVID lockdowns in China. Backing out that one-time impact, Tesla deliveries were up around 45%. Given recent questions surrounding demand, that will be considered a good growth number.

The following chart shows delivery growth on a year-over-year basis (using a trailing twelve months basis).

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Neil Cybart 7/5/23 Neil Cybart 7/5/23

More Smoke for Apple Vision Pro Production Issues, Goldman Sachs Looking For Way out of Apple Partnership

Hello everyone. It's good to be back after a long weekend. We will kick off this holiday-shortened week with two news stories that appeared on Neil’s radar. The update begins with Neil’s thoughts on the latest news from the Apple Vision Pro supply chain. Odds are increasing that we won’t know Vision Pro demand for quite some time after launch. The discussion then turns to Goldman Sachs reportedly looking to get out of its Apple partnership which raised various implications for Apple.

More Smoke for Apple Vision Pro Production Issues

Here’s The Financial Times:

“Apple has been forced to make drastic cuts to production forecasts for the mixed-reality Vision Pro headset, unveiled last month after seven years in development and hailed as its most significant product launch since the iPhone.

The complexity of the headset design and difficulties in production are behind the scaling back of targets, while plans for a more affordable version of the device have had to be pushed back, according to multiple people with direct knowledge of the manufacturing process...

Two people close to Apple and Luxshare, the Chinese contract manufacturer that will initially assemble the device, said it was preparing to make fewer than 400,000 units in 2024. Multiple industry sources said Luxshare was currently Apple’s only assembler of the device. Separately, two China-based sole suppliers of certain components for the Vision Pro said Apple was only asking them for enough for 130,000 to 150,000 units in the first year.”

The FT’s report adds credibility to TheElec’s report from last month which said Sony will be able to produce enough OLEDoS (OLED on Silicon) for about 450,000 headsets. Each headset contains two postage stamp-sized OLEDoS displays (one for each eye).

The ~450,000 headsets per year figure didn’t appear to include any impact from yield issues or other manufacturing difficulties. With those issues in mind, a more realistic supply figure would be

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