Fitbit Earnings, 4Q18 Smartwatch Sales, Thursday Q&A
Today's Above Avalon daily update includes the following topics:
Fitbit Earnings
4Q18 Smartwatch Sales
Thursday Q&A
We begin today’s update with Fitbit’s 4Q18 earnings. We go over the major takeaways from Fitbit’s earnings release and conference call. The discussion then turns to overall 4Q18 smartwatch sales. We go over my smartwatch unit sales and revenue estimates for Apple, Fitbit, Fossil, Garmin, Samsung, and Huawei. We conclude with the latest installment of Thursday Q&A. I answer the following questions from Above Avalon members:
Apple's operating margin, as a percentage of revenue, has been declining. Do you have any concerns or thoughts about this?
Will Apple create a foldable iPhone? Will Apple create a dual-screen Mac? What are you assumptions around each and how far out may they be?
Apple management claims approximately half of Mac and iPad buyers are new users. Does 50% seem high to you?
What do you think are the real opportunities that Apple may have missed? Which missed opportunities pose as potential risks?
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Jeff Williams Talks Apple Pricing, A Different Look at iPhone Sales in China, VW and Ford Planning New Venture
Today's Above Avalon daily update includes the following topics:
Jeff Williams Talks Apple Pricing
A Different Look at iPhone Sales in China
VW and Ford Planning New Venture
We kick off today’s update with a closer look at pricing comments made by Apple COO Jeff Williams during a recent talk at Elon University. The discussion then turns to smartphone sales share from Kantar and why the data provides a different look at how 4Q18 unfolded from a competitive perspective in key geographies including China and the U.S. The email concludes with my thoughts on Volkswagen and Ford being in discussions to form a new venture involving electric vehicles and autonomous systems.
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Jony Ive Talks with Naoto Fukasawa, Apple and Goldman Sachs to Launch Credit Card, Apple's Path into Consumer Finance
Today's Above Avalon daily update includes the following topics:
Jony Ive Talks with Naoto Fukasawa
Apple and Goldman Sachs to Launch Credit Card
Apple's Path into Consumer Finance
Naoto Fukasawa has been described as one of the most influential industrial designers of the modern era. AXIS magazine, a design publication, recently arranged a meeting / talk between Jony Ive and Fukasawa. We kick off today’s email with my takeaways from the talk. The discussion then turns to Apple and Goldman Sachs reportedly launching a credit card together. We go over the news and then take a broader view of how and why Apple would enter the consumer finance space.
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Apple in the Home, Apple Hires Sam Jadallah, Warren Buffett on Apple
Today's Above Avalon daily update includes the following topics:
Apple in the Home
Apple Hires Sam Jadallah
Warren Buffett on Apple
We begin today’s update with additional comments on the latest Above Avalon article, “Revamping Apple’s Home Strategy.” In particular, we look at the home’s place in the new tech landscape. The discussion then turns to Sam Jadallah, formerly of Otto, joining Apple to oversee home initiatives. The email concludes with Warren Buffett providing the clearest explanation yet as to why he built such a large Apple stake.
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Thoughts on Samsung’s Event and New Products
Today's Above Avalon daily update is dedicated to discussing Samsung’s big product event in San Francisco.
The 2,300-word email includes the following sections:
The Event
Galaxy Fold
Galaxy S10 Lineup
Samsung Wearables
Samsung's Vision
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Disney Discusses DTC Strategy, Disney and Apple Underestimated in DTC, Apple Acquires PullString
Today's Above Avalon daily update includes the following topics:
Disney Discusses DTC Strategy
Disney and Apple Underestimated in DTC
Apple Acquires PullString
With Apple expected to unveil its revamped video strategy next month at Steve Jobs Theater, there is value in staying up to date with the dramatically changing video streaming landscape. Accordingly, Disney shared quite a few details about its new DTC (direct-to-consumer) strategy when reporting 4Q18 earnings. We will go over those details and how Disney and Apple are being underestimated in the DTC space. The email concludes with some Apple M&A news and my thoughts on Apple acquiring PullString.
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Apple Employees Rattled by Leadership Changes, Assessing the Real Change Underway at Apple, The Role Given to Beats Headphones
Today's Above Avalon daily update includes the following topics:
Apple Employees Rattled by Leadership Changes
Assessing the Real Change Underway at Apple
The Role Given to Beats Headphones
We kick off today’s update with my thoughts on the WSJ’s article regarding recent leadership and organizational changes rattling Apple employees. I disagree with the thesis found in the article. We then take a closer look at the major changes underway at Apple and what they imply about Apple management’s focus and priorities. We conclude with an observation that I had regarding Beats headphones and their role in Apple’s product line.
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Additional Thoughts on a Paid Apple News Subscription, First Look at Apple's Self-Driving Car Fleet Data, Thursday Q&A
Today's Above Avalon daily update includes the following topics:
Additional Thoughts on a Paid Apple News Subscription
First Look at Apple's Self-Driving Car Fleet Data
Thursday Q&A
We begin today’s update by going over my additional thoughts regarding Apple’s upcoming paid News subscription service. In particular, we look at the role Apple’s Texture acquisition will play. In addition, we run through some revenue scenarios to see why the big news publishers would be initially skeptical about a paid Apple News service (and what would change their minds). The email then turns to going through Apple’s first disengagement report regarding its fleet of self-driving test cars in California. Many publications used the data incorrectly to reach false conclusions about Apple’s progress in autonomous car R&D. We conclude with the latest installment of Thursday Q&A. I answer the following questions from Above Avalon members:
Would you publish Above Avalon on a paid Apple News service?
Given the subtleties of AirPods, should/would Apple take advantage of the relaxed US standards for hearing devices to move into hearing aids as another anchor point in its health arena?
Why doesn't Apple simply cut iPhone XR, XS and XS Max pricing by $100 to boost sales?
What would be the primary user input method for a device like smart glasses?
Given your Grand Unified Theory of Apple Products, what role would a pair of smart glasses handle?
What do you think protects Apple from extremely pricing-aggressive competitors like Xiaomi both in the short and the long term?
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The WSJ’s Confusing Article About Apple News, Making Sense of a Paid Apple News Subscription, Apple to Hold March Event
Today's Above Avalon daily update includes the following topics:
The WSJ’s Confusing Article About Apple News
Making Sense of a Paid Apple News Subscription
Apple to Hold March Event
We kick off today’s update with my thoughts on the WSJ’s article regarding news publishers battling Apple over a paid Apple News service. There were three major issues with the report. The email then turns to discussing how a paid Apple News subscription would work. We go over Apple’s sales pitch to publishers, the potential sticking points, Apple’s revenue share arrangements, and which publications would do well in such a paid service. We conclude the discussion with BuzzFeed reporting Apple is planning to hold a product event in March. There were a few things about the report that stood out to me.
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Viral AirPods, Amazon to Buy Eero, Estimating Apple’s Google TAC Revenue
Today's Above Avalon daily update includes the following topics:
Viral AirPods
Amazon to Buy Eero
Estimating Apple’s Google TAC Revenue
We begin today’s update with additional comments on the latest Above Avalon article, “AirPods Have Gone Viral.” In particular, we take a closer look at the commonality found with the three factors behind AirPods going viral. The discussion then turns to Amazon announcing it will acquire Eero, a mesh Wi-Fi router start-up. We go over Amazon’s rationale for the acquisition and revisit Apple’s decision to get out of the wireless router business. The email concludes with Google’s traffic acquisition cost (TAC) payments to Apple. We take a look at Alphabet’s most recent earnings and derive the amount Apple earned from Google TAC in 2018.
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Deirdre O’Brien as Apple CEO Candidate, Apple’s CEO Funnel, Apple Brings Modem R&D In-House
Today's Above Avalon daily update includes the following topics:
Deirdre O’Brien as Apple CEO Candidate
Apple’s CEO Funnel
Apple Brings Modem R&D In-House
We kick off today’s email by discussing Apple’s new retail chief Deirdre O’Brien’s prospects as an Apple CEO candidate. The discussion then takes a broader view on how Apple is cultivating future CEO candidates. The email concludes with news of Apple bringing modem R&D into its in-house technology group. We go over why Apple continues to work on its own modems and where the initiative is ultimately aimed.
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Spotify Earnings, Daniel Ek’s Audio Manifesto, Sonos Earnings
Today's Above Avalon daily update includes the following topics:
Spotify Earnings
Daniel Ek’s Audio Manifesto
Sonos Earnings
We kick off today’s email by going over Spotify’s 4Q18 earnings. In particular, we discuss where Spotify is growing and how it compares to Apple Music growth. The discussion then turns to Spotify co-founder and CEO Daniel Ek’s blog post regarding an audio-first path ahead for Spotify. We also discuss the idea of Apple following Spotify into original audio storytelling (exclusive podcasts). The update concludes with a look at Sonos earnings. Things aren’t looking good for Sonos.
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Angela Ahrendts to Leave Apple
Today's Above Avalon daily update is dedicated to discussing Angela Ahrendts, Apple SVP of Retail, leaving Apple and Deirdre O’Brien being promoted to SVP of Retail and People.
The 3,200-word email includes the following sections:
Angela Ahrendts to Leave Apple
How Things Likely Unfolded
The Vogue Business Interview
Playing Devil’s Advocate
Deirdre O’Brien
Ahrendts's Legacy
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Spotify In Talks to Buy Gimlet Media, 4Q18 Microsoft Surface Sales, Updated Apple Earnings Model
Today's Above Avalon daily update includes the following topics:
Spotify In Talks to Buy Gimlet Media
4Q18 Microsoft Surface Sales
Updated Apple Earnings Model
We kick off today’s email with my thoughts on Spotify being in talks to buy the podcast network Gimlet Media. The discussion then turns to Microsoft earnings and we take a deep dive into Surface results. The email concludes with a look at my updated Apple earnings model following Apple’s 1Q19 results. Above Avalon members have access to my working Apple earnings model.
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Notes from Apple’s 1Q19 10-Q, Rationale Behind Apple Halting Buyback in 1Q19, Early Look at Apple’s 2Q19 Buyback Pace
Today's Above Avalon daily update includes the following topics:
Notes from Apple’s 1Q19 10-Q
Rationale Behind Apple Halting Buyback in 1Q19
Early Look at Apple’s 2Q19 Buyback Pace
We kick off today’s email with my key takeaways from Apple's 10-Q filing for 1Q19. We cover 10 financial topics. The discussion then turns to Apple’s share buyback program. We tackle a few questions regarding the rationale behind Apple not buying back shares during the second half of November into December 2018. Was Apple in some way banned or barred from buying back shares once it knew it was going to miss its initial 1Q19 guidance? We also use a few financial clues to take a look at Apple’s share buyback activity in 2019.
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