The End of Apple




Search  

ORIGINAL POST

Posted by Ed 3 mths ago
At the customary time of 4:30pm ET for Apple, the world's largest company saw its stock unexpectedly halted, when just a few months after Apple shocked investors when it announced it would no longer break out iPhone sales, Tim Cook delivered even more bad news for AAPL investors warning that it was slashing Q1 revenue guidance, saying "our revenue will be lower than our original guidance for the quarter" blaming it all on iPhone sales in China, i.e., "lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline", and now expects to make only $84 billion in the first fiscal quarter, an 8% drop from the consensus estimate of $91 billion.

The stated reason for the revenue guidance cut - weakness across emerging markets, with China in particular, to wit:

https://www.zerohedge.com/news/2019-01-02/apple-cuts-q1-revenue-guidance-blames-china-stock-halted

COMMENTS

Ed 3 mths ago
iPhone Sales Croak, China’s Economy Deteriorating Faster than Expected, Apple Warns. Shares Plunge

“We did not foresee the magnitude of the economic deceleration.” Oh dude, starting the year out on the right foot.


On Wednesday after the market closed, Apple released a letter to shareholders in which it said that revenues are going to be a lot worse in the quarter ended December 29 than its guidance two months ago, that iPhone revenues have dropped year-over-year, that China’s economic problems are deeper than expected, and that iPhone revenues are hurting elsewhere too. This confirms a series of revenue warnings from Apple suppliers.

Shares plunged 7.5% after hours to $146. If shares close at this level on Thursday, it would be the lowest close since November 7, 2017. Shares have plunged 38% in three months.

Wow, this was quick.

https://wolfstreet.com/wp-content/uploads/2019/01/US-Apple-2019-02-02.png


In its “Letter from Tim Cook,” Apple slashed its revenue guidance by 6% to 10% from its prior guidance two months ago, to about $84 billion in the quarter, down from its previous guidance of $89 billion to $93 billion.

iPhone Sales Croak, China’s Economy Deteriorating Faster than Expected, Apple Warns. Shares Plunge
by Wolf Richter • Jan 2, 2019 • 6 Comments
“We did not foresee the magnitude of the economic deceleration.” Oh dude, starting the year out on the right foot.
On Wednesday after the market closed, Apple released a letter to shareholders in which it said that revenues are going to be a lot worse in the quarter ended December 29 than its guidance two months ago, that iPhone revenues have dropped year-over-year, that China’s economic problems are deeper than expected, and that iPhone revenues are hurting elsewhere too. This confirms a series of revenue warnings from Apple suppliers.

Shares plunged 7.5% after hours to $146. If shares close at this level on Thursday, it would be the lowest close since November 7, 2017. Shares have plunged 38% in three months. Wow, this was quick:



In its “Letter from Tim Cook,” Apple slashed its revenue guidance by 6% to 10% from its prior guidance two months ago, to about $84 billion in the quarter, down from its previous guidance of $89 billion to $93 billion.



Just to get this straight, this revenue guidance of $84 billion represents a 5% revenue decline from the quarter a year ago. The price increases of its new models aren’t exactly helping a lot, it seems.

Here are some of the key points Apple made in its letter (emphasis added):

https://wolfstreet.com/2019/01/02/iphone-sales-croak-china-particularly-bad-apple-warns-shares-plunge/

Ed 3 mths ago
Apple Isn’t the Only Casualty of China's Slowdown

https://www.bloomberg.com/news/articles/2019-01-03/china-s-slowdown-claims-biggest-corporate-scalp-yet-with-apple

Ed 2 mths ago
Imagining Apple’s Post-iPhone Future

The tech giant needs to do more to make its products compatible with competitors’.

Apple’s reported plans to cut iPhone production by 10 percent in the first quarter of 2019 make increasingly clear that the company’s base of loyal users isn’t an inexhaustible resource from whom it can forever extract a rent through its services offerings.

Apple needs to compete more vigorously in all the other markets in which it’s present, without relying on the network effects of its large installed base.

Whether you blame economic headwinds in key markets such as China (as Apple Chief Executive Officer Tim Cook did in a recent letter to investors) or the company’s own mistakes (as my Bloomberg Opinion colleague Shira Ovide has done), or any combination of these factors, Apple appears about to slide down the table of biggest smartphone suppliers by unit sales.

It’s already the third-biggest supplier after Samsung and Huawei, having lost the second spot to the Chinese company earlier this year. And if it can’t sell as many phones as it once hoped at its super-premium prices, and if the pricing doesn’t change, other companies will pass it as they’ve already done in China.

https://www.bloomberg.com/opinion/articles/2019-01-09/time-to-start-imagining-a-post-iphone-apple

Ed 2 mths ago
Commentary: How Apple’s iPhone lost its lustre


Apple's iPhone setback marks the passing of a golden age of smartphones, says the Financial Times' John Gapper.

LONDON: As Joni Mitchell sang in Big Yellow Taxi:

Don’t it always seem to go, that you don’t know what you’ve got ’til it’s gone.

Apple knows it now, from the abrupt fall in its share price last week as it admitted that customers in China and elsewhere are taking their time in buying new iPhones.

It was a wonderful streak while it lasted, as it has done (with some ups and downs) since the iPhone’s launch in 2007.

It is rare for people to replace an expensive consumer product every two years because the next model is so alluring, although the existing one still works perfectly well. That is about as virtuous a circle as any company can hope to achieve.

For a while, Apple gained all the benefits of planned obsolescence without any of the disgrace.



People rushed to trade in iPhones even though they still loved them — they lined up to proclaim their excitement at being allowed to ascend to the next level. No taint attached to Apple for making ephemeral goods.

“We want the man who buys one of our cars never to have to buy another,” Henry Ford said in 1922 of his Model T, a car that came with a repair kit for customers to keep it going.

The following year, Alfred Sloan of General Motors unveiled the 1923 Chevrolet, a car with an old chassis but a stylish design that started the Detroit tradition of the annual model upgrade.

Sloan’s approach won out over Ford’s in many consumer industries — companies realised that making durable products was a recipe for strangling their sales and opted for disposability instead.


Read more at https://www.channelnewsasia.com/news/commentary/how-apple-iphone-lost-its-lustre-revenue-stock-share-fall-11102084

Ed 2 mths ago
Not worth it? Chinese resellers cut iPhone prices after Apple bombshell warning

China-based retailers have rolled out huge discounts on Apple phones, including the latest iPhone XR model. The generous offering comes after the US giant had to issue a rare gloomy revenue forecast for its sales in the country.

https://www.rt.com/business/448574-iphone-sales-chinese-retailers/

Ed 59 days ago
The End Of Apple

“Oh man, that’s almost a month’s rent for me…”

Here I am sitting in a cab in New York City.

I’m headed uptown to Columbia University where we’ll hold the first-ever American Disruption Summit. (You can register to watch for free here.)

The driver and I are talking about the absurd price tag of the latest Apple (AAPL) iPhone.

He’s shocked when I tell him the cheapest model is $1,149.

“Who can afford that?” he asks.

Apple’s Imminent Crash Has Begun


Apple has had an incredible decade.

Since the iPhone debuted in 2007, the company’s sales have jumped tenfold. The stock has soared over 700%.

And up until last November, it was the world’s largest publicly traded company.

But two weeks ago, Apple issued a rare warning that shocked investors.

YOU MAY ALSO LIKE


For the first time since 2002, the company slashed its earnings forecast. The stock plunged 10% for its worst day in six years.

This capped off a horrible few months in which Apple stock crashed about 35% from its November peak.

https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fblogs-images.forbes.com%2Fstephenmcbride1%2Ffiles%2F2019%2F01%2FApple1.jpg


That erased $446 billion in shareholder value—the biggest wipeout of wealth in a single stock ever.

And it’s only the beginning…

Apple’s Strong Revenue Growth Hides a Dirty Secret

If you looked at Apple’s sales numbers, you wouldn’t see anything wrong.

Since 2001, Apple has seen steady revenue growth:


https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fblogs-images.forbes.com%2Fstephenmcbride1%2Ffiles%2F2019%2F01%2FApple2.jpg

By this measure, Apple’s business seems perfectly healthy. But there’s a secret hidden behind these headline numbers.

Despite the revenue growth, Apple is selling fewer iPhones every year.

In fact, iPhone unit sales peaked way back in 2015. Last year, Apple sold 14 million fewer phones than it did three years ago.

Apple Kept Revenue Growth Only by Raising iPhone Prices

In 2010, you could buy a brand-new iPhone 4 for 199 bucks.

In 2014, the newly released iPhone 6 cost 299 bucks.

Today the cheapest model of the latest iPhone X costs $1,149!

It’s a 500% hike from what Apple charged eight years ago.

But technology always gets cheaper over time.

Not so long ago, a flat-screen high-definition TV was a luxury. Even a small one cost thousands of dollars. Today you can get a 55-inch one from Best Buy for $500.

In 1984, Motorola sold the first cell phone for $4,000. The average price for a smartphone today is $320, according to research firm IDC.

Cell phone prices have come down roughly 92%. And yet, Apple has hiked its smartphone prices by 500%!

Frankly, it’s remarkable that Apple has managed to pull this off.

But let me tell you this…

Apple Can’t Raise Prices Anymore

It comes down to the lifecycle of disruptive businesses.

Twelve years ago, only 120 million people owned a cell phone. Today over five billion people own a smartphone, according to IDC.

Apple was the driving force behind this explosion. As the dominant player in a rapidly growing market, it become the most profitable publicly traded company in history.

Then iPhone sales growth stalled in 2015. This would’ve been the end for most businesses.

But Apple did a masterful job of extending its prime through price hikes.

Its prestigious brand and army of die-hard fans allowed it to charge prices that seemed crazy just a few years ago.

But now iPhone price hikes have gone about as far as they can go.

After all, what’s the most you would pay for a smartphone?

$1,500?

$2,000?

How bad is this? It’s so bad that Apple now keeps it a secret.

In November, Apple announced it would stop disclosing iPhone unit sales.

This is a very important piece of information. Investors deserve to know it. Yet Apple now keeps it secret.

Keep in Mind, the iPhone is Apple’s Crown Jewel

iPhone generates two-thirds of Apple’s overall sales.

Let that sink in…

A publicly traded company that makes most of its money from selling phones is no longer telling investors how many phones it sells!

And its other business lines can’t pick up the slack for falling iPhone sales.

Twenty percent of Apple’s revenue comes from iPads and computers. Those segments are also stagnant.

Which means 86% of Apple’s business is going nowhere.

Could Apple go the other way and slash iPhone prices?

I ran the numbers.

If Apple cut prices back to 2016 levels, it would have to sell 41 million additional phones just to match 2018’s revenue.

Will Apple Meet Nokia’s Fate?

Before Apple, Nokia (NOK) was king of cell phones.

In 2007 the front-cover headline of a major business magazine read:

“Nokia: One billion customers—can anyone catch the cell phone king?”

The iPhone debuted in 2007. Here’s Nokia’s stock chart since then:

https://www.forbes.com/sites/stephenmcbride1/2019/01/21/the-end-of-apple/#1c8726956dc0

Ed 52 days ago
Apple’s Next Forecast Will Likely Show Sales Are Still Falling

Anyone looking for an upbeat forecast from Apple Inc. is likely to be disappointed when the company reports results later on Tuesday.

The company is set to report its first holiday quarter sales decline since the iPhone launched, and analysts are predicting revenue will keep shrinking in the current quarter.


https://www.bloomberg.com/news/articles/2019-01-29/apple-s-next-forecast-will-likely-show-sales-are-still-falling?srnd=premium

Ed 51 days ago
Apple's Sales Drop in China Means $5 Billion in Lost Revenue

https://www.bloomberg.com/news/articles/2019-01-29/apple-s-sales-drop-in-china-means-5-billion-in-lost-revenue?srnd=premium


< Back to main category


>

Login now