Warren Buffett Bets Big on Apple, Buying the iPhone Company, Buffett on Apple Share Repurchases
Today's Above Avalon email includes the following stories:
- Warren Buffett Bets Big on Apple
- Buying the iPhone Company
- Buffett on Apple Share Repurchases
Today's email is focused on Warren Buffett and Berkshire Hathaway becoming the fourth largest Apple shareholder by purchasing an additional 72M Apple shares last month. We begin by going over the timeline of Berkshire Hathaway's Apple share purchase activity, as well as why Buffett is willing to talk now about his Apple purchases. The email then turns to Buffett's motivation for buying a $18B stake in Apple. He doesn't look at Apple as just a technology company. We then look at Buffett's commentary regarding share repurchases and how it relates to Apple's current share repurchase program. The email concludes with my thoughts on Buffett's shockingly simple thesis regarding his Apple investment going forward.
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iPhone Sales Estimate Methodology, 1Q17 iPhone Installed Base Estimates, New 2017 and 2018 iPhone Sales Estimates
Today's Above Avalon email includes the following stories:
- iPhone Sales Estimate Methodology
- 1Q17 iPhone Installed Base Estimates
- New 2017 and 2018 iPhone Sales Estimates
Today's email is focused on iPhone sales estimates. We begin by discussing my methodology for deriving iPhone unit sales estimates. The email then turns to the iPhone installed base. I share my estimates for the number of new iPhone users per year from 2007 to 2018, including my revised estimate for the size of the iPhone installed base and user base as of December 31, 2016. We conclude with my revised iPhone unit sales estimates for FY2017 and FY2018. We also go over my thoughts and observations on the idea of a "mega upgrade" cycle being kicked off by new iPhones later this year.
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Apple Park and Steve Jobs Theater, Fitbit Is in Denial, Garmin 4Q16 Earnings
Today's Above Avalon email includes the following stories:
- Apple Park and Steve Jobs Theater
- Fitbit Is in Denial
- Garmin 4Q16 Earnings
We begin today's email by taking a closer look at Apple's announcement regarding Apple Park (formerly known as Apple Campus 2) and Steve Jobs Theater. There are a few items that stood out to me regarding Apple Park and the theater. The email then takes a deep dive into Fitbit's earnings conference call last evening. The company is in complete denial when it comes to the wearables market. We go over the major takeaways from the call. The discussion then turns to Garmin's 4Q16 earnings. Garmin is one of three legitimate companies in the smartwatch industry. Management had a number of interesting observations regarding the changing wrist wearables market.
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Additional Thoughts on Apple/Netflix, Microsoft HoloLens Pushed out to 2019, Samsung Wins Big OLED Order from Apple
Today's Above Avalon emails includes the following stories:
- Additional Thoughts on Apple/Netflix
- Microsoft HoloLens Pushed out to 2019
- Samsung Wins Big OLED Order from Apple
We begin today's email by continuing the discussion kicked off in my article, "Apple Doesn't Need to Buy Netflix." We go over why I am firmly in the camp that a Netflix acquisition does not make sense for Apple. The email then turns to news that Microsoft is pushing back HoloLens updates to 2019. Is everything going okay with Microsoft's mixed reality strategy? We look at the broader trend of companies struggling to bring AR to the mass market. We conclude with a closer look at Samsung's large OLED order from Apple, and the major takeaways as to what the order means for FY17 and FY18 iPhone estimates.
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The New iPad Pro Ad Campaign, Fossil Seeing Smartwatch Strength
Today's Above Avalon email includes the following stories:
- The New iPad Pro Ad Campaign
- Fossil Seeing Smartwatch Strength
We begin today's email with a closer look at Apple's new iPad Pro ad campaign. This is the first multi-ad campaign for the iPad Pro. We discuss the target market Apple is going after with these ads and what it tells us about Apple's iPad strategy. We also go over a few additional observations on the ads. The email then turns to Fossil management's commentary regarding the watch industry during this past holiday quarter. The company is seeing something different than many other wrist wearables companies.
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Apple's M&A "Struggles," Apple Considered Buying Imagine Entertainment, Thursday Q&A
Today's Above Avalon stories:
- Apple's M&A "Struggles"
- Apple Considered Buying Imagine Entertainment
- Thursday Q&A
We begin today's email with my thoughts on Bloomberg's article, "Apple Struggles to Make Big Deals, Hampering Strategy Shifts." We discuss why I'm surprised Bloomberg ran the story and how the narratives critical of Apple are starting to change. The email then turns to news that Apple considered buying Imagine Entertainment as part of its content strategy play. We discuss what Apple likely saw in Imagine Entertainment and what it tells us about Apple's evolving content strategy. We end the email with the latest installment of member Q&A, and I answer the following questions from Above Avalon members:
- How big of a deal is it that Berkshire Hathaway continues to increase its stake in AAPL?
- Is Apple considering future stock splits through their share repurchase strategy?
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Apple CFO's Fireside Chat at Goldman Sachs, Thoughts on AAPL Shares Reaching All-Time High
Today's Above Avalon stories:
- Apple CFO's Fireside Chat at Goldman Sachs
- Thoughts on AAPL Shares Reaching All-Time High
We begin today's email by going through Apple CFO Luca Maestri's presentation at the Goldman Sachs Technology and Internet Conference in San Francisco. We go over 13 topics from the talk. The discussion then turns to my thoughts and observations on AAPL shares hitting an all-time high yesterday. We go over four takeaways that I had regarding AAPL's stock price performance.
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Eddy Cue's Awkward Recode Interview, The "Why" Behind Apple Video Content, Apple M&A for Content
Today's Above Avalon stories:
- Eddy Cue's Awkward Recode Interview
- The "Why" Behind Apple Video Content
- Apple M&A for Content
We begin today's email by taking a closer look at Eddy Cue's keynote interview at Recode's Code Media conference. There were a fair share of awkward moments and exchanges. We discuss Apple's motivation in doing the interview and some of the primary takeaways. The discussion then turns to addressing the "why" behind Apple getting into original video content. How does Plant of the Apps and Carpool Karaoke: The Series fit in with Apple's overall product strategy? The email concludes with my thoughts and observations on Apple using M&A to advance its content strategy. How would a Netflix or Time Warner purchase help/deter Apple's entertainment plans?
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Apple's Excess Cash Dilemma, Probability of Apple Launching a Tender Offer, Tim Cook Applies Augmented Reality Brakes
Today's Above Avalon stories:
- Apple's Excess Cash Dilemma
- Probability of Apple Launching a Tender Offer
- Tim Cook Applies Augmented Reality Brakes
We begin today's email by continuing the discussion kicked off in my article, "Apple on Track to Buy 50% of Itself in Three Years." Specifically, we take a closer look at Apple's changing cash dilemma. What was once a foreign cash dilemma is now shifting to an overall excess cash predicament. The discussion then turns to tender offers and the likelihood of Apple launching a tender offer for buying back a significant portion of the company. The email concludes with a closer look at Tim Cook's latest comments about augmented reality (AR). We go over my thoughts and observations regarding Cook's comments and what it implies for Apple's developing AR strategy.
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The iPad's Software "Problem," Finding the iPad's Place in an iPhone World, Thursday Q&A
Today's Above Avalon stories:
- The iPad's Software "Problem"
- Finding the iPad's Place in an iPhone World
- Thursday Q&A
We begin today's email with my thoughts and observations on the idea that the iPad is being held back in some way due to lackluster software. We break apart the thesis, taking a look at where there are significant holes (and some valid points). The email then turns to a discussion of the much bigger problem facing iPad: finding its place in today's tech landscape. We end the email with the latest installment of member Q&A, and I answer the following questions from Above Avalon members:
- How do I envision cooperation between Nike and Apple in the future ?
- What is the tax rate that Apple uses when calculating their earnings?
- Why doesn't Fitbit lower its pricing and become more like Xiaomi?
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Deriving 1Q17 Apple Watch Sales, Jimmy Iovine Talks Apple Content Strategy, Apple Poaches Amazon Fire TV Head
Today's Above Avalon stories:
- Deriving 1Q17 Apple Watch Sales
- Jimmy Iovine Talks Apple Content Strategy
- Apple Poaches Amazon Fire TV Head
We begin today's email by taking a deep dive into how I derive Apple Watch revenue and unit sales from Apple's 1Q17 financial results. We go over my complete methodology, including all of the various assumptions and estimates that go into the exercise. The discussion turns to a few stress case scenarios in order to reach the floor/ceiling for 1Q17 Apple Watch unit sales. The email then turns to Jimmy Iovine discussing Apple's broader content strategy. This is no longer just about music. We conclude with a closer look at news of Apple poaching the former head of Amazon Fire TV. We go over three key observations that I had regarding the news.
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Apple 1Q17 10-Q Takeaways, GoPro 4Q16 Earnings, Keep an Eye on GoPro
Today's Above Avalon stories:
- Apple 1Q17 10-Q Takeaways
- GoPro 4Q16 Earnings
- Keep an Eye on GoPro
We begin today's email by going through Apple's 1Q17 10-Q. We go over nine takeaways from the filing. The discussion then turns to GoPro's 4Q16 earnings report. While results were weak, as expected, the company appears to be up to something. There is a growing number of reasons to keep an eye on GoPro as it goes through a turnaround strategy with a former Apple Industrial Designer potentially playing a key role.
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Deep Dive into Snap's IPO Filing, Snap's Key Advantage, Snap's Major Problem
Today's Above Avalon stories:
- Deep Dive into Snap's IPO Filing
- Snap's Key Advantage
- Snap's Major Problem
Today's email is focused on Snap. The company released its IPO paperwork last week. Snap is a company worth monitoring from Apple's perspective. The two are playing in similar fields. We begin the email by taking a deep dive into Snap's S-1 filing and going over the major takeaways. The discussion then turns to Snap's key advantage in its quest to be a camera company. This leads us to the major problem found with Snap's narrative and how this issue is manifesting itself into Snap's IPO.
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Apple 1Q17 Earnings Review: Details
Today's daily update is the second half of my Apple 1Q17 earnings review. Yesterday's update was focused on the major themes (available here). The email covers my perspective on the details from Apple's earnings release and conference call. Twenty-six topics are covered, including iPhone 7 Plus trends, iPhone upgrading, Apple's Services goal, and margins.
The full earnings review is available for Above Avalon members. To continue reading, click here.
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Apple 1Q17 Earnings Review: Major Themes
Today's daily update is focused on reviewing Apple's 1Q17 earnings. Along with a big picture overall of the quarter, the email covers five major themes from the report and conference call:
- Apple 1Q17: A Good Quarter
- The Stable iPhone
- Apple Watch Was a Big Winner
- An iPad Asterisk
- Apple Turns up Services Narrative
- Management Buying Back Shares Like There's No Tomorrow
Tomorrow's daily update will include additional thoughts and observations on Apple's quarter.
The full earnings review is available for Above Avalon members. To continue reading, click here.
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