The Apple/Mashable Article: Phil Schiller, John Ternus, Apple Suppliers, Apple Earnings Calls, Growth on Wall Street
Today's Above Avalon stories:
- Insights from the Phil Schiller/Mashable Interview
- Thursday Q&A (questions sent in by Above Avalon members)
We begin today's email by discussing the big Phil Schiller/Mashable interview published yesterday. There were three subtopics found in the piece that I haven't seen much focus put on but which can turn into key topics in the future. We then shift to Thursday Q&A and take a look at how Apple's earnings calls work and why some analysts aren't pleased with Apple's guidance. Next week, we will begin to go deeper into a few financial trends seen in Apple's earnings and overall business.
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Apple 4Q15 Earnings
Today's Above Avalon story:
- Apple 4Q15 Earnings
The email is broken into three sections: primary takeaways (there are five - a few good ones, a few not so good ones), an early read on 1Q16 and 2016 trends, and my complete conference call notes.
- Primary Takeaways
- iPhone Upgrade Program: A Big Deal
- Apple News: A Bellwether
- Apple Watch: Ready for a Surprise?
- iPad: Ouch
- Share Buyback: Betting Big
- An Early Read on 1Q16 and 2016 Results
- Complete Earnings Call Notes
Wall Street had two primary near-term concerns for Apple: a weakening economy in China and slowing iPhone sales growth. Apple's strong 4Q15 results likely put to rest concerns about a slowdown in China (for now). However, there will continue to be questions as to whether Apple will be able to grow iPhone unit shipments in FY2016. Management reiterated the view that the combination of new users to iPhone, along with current iPhone owners upgrading to a newer device, will contribute to growth in iPhone shipments in 1Q16. However, there is no denying that iPhone sales growth is slowing dramatically. Instead of blaming this slowdown on economic issues, competition, or a lack of customer interest in 6s and 6s Plus, the most likely culprit is difficult year-over-year comparisons as China Mobile was still beginning to sell the iPhone for most of 2014 and 2015.
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The Inside Story of the Surface Book, Steve Ballmer Thinks It's Now Just Apple vs. Microsoft, Where Is Angela Ahrendts? The NYT Wants to Know
Today's Above Avalon stories:
- The Inside Story of the Surface Book
- Steve Ballmer Thinks It's Now Just Apple vs. Microsoft
- Where Is Angela Ahrendts? The NYT Wants to Know
Tomorrow's email will be dedicated to Apple earnings. Today, we take a look at Wired's fascinating piece on the Microsoft Surface Book. Apple was a clear subject throughout the article. Next, we shift over to recent comments made by Steve Ballmer on Apple and Microsoft and why he thinks no one else matters these days. We conclude with The NYT wanting to know where Angela Ahrednts has been.
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Things to Look out for with Apple Earnings, Apple Expands Autonomous Driving Team
Today's Above Avalon stories:
- Things to Look out for with Apple Earnings
- Apple Expands Autonomous Driving Team
We kick off today's email by concluding our AAPL 4Q15 preview. The markets find themselves in a transitory phase as optimism has returned with the latest round of tech earnings. AAPL is now up 9% this past month despite continued fears around FY2016 iPhone sales. We go over what I will be looking for on the earnings call and why recent fears around iPhone have been months in the making. We then shift to news that Apple hired a deep learning expert, which I attribute to Project Titan and an autonomous driving initiative. There are a few rather obvious clues to support my thesis that Apple is actually betting big on autonomous driving.
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Complete 4Q15 AAPL Earnings Estimate, Expanded Thursday Q&A
Today's Above Avalon stories:
- Complete 4Q15 AAPL Earnings Estimate
- Thursday Q&A:
- What happens to all of these used iPhones from leasing programs? How much can the used market realistically absorb?
- Where do you think Apple will get batteries for Project Titan? Does Apple need to reach a big battery breakthrough to go forward with Project Titan?
- When and how would Carl Icahn liquidate his AAPL position?
- How do I write these daily emails?
We kick off today's email by going over my full AAPL 4Q15 estimate including unit sales, ASP, and margin expectations. I received quite a few questions this week for Thursday Q&A. We first address a few questions related specifically to how reused iPhone supply will impact the resale market. In addition, we discuss a question about electric car batteries (Where can Apple turn for batteries?), Carl Icahn (What conditions may he consider to sell his AAPL position?), and a little bit of background on how I put together this email during the week.
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Apple's Involvement with Mission Motors, Updating FY16 iPhone Sales Estimate, iPhone Leasing Is a Game Changer
Today's Above Avalon stories:
- Apple's Involvement with Mission Motors
- Updating FY16 iPhone Sales Estimate
- iPhone Leasing Is a Game Changer
We begin today's email by discussing Mission Motors and news that Apple is partly responsible for the company closing its doors early this year. Upon closer examination, we are able to reach a number of observations on how Apple is thinking about Project Titan and the automobile. We then discuss my updated FY2016 iPhone sales estimate including my revised methodology. We conclude by going over why leased iPhones are a game changer for Apple and three topics to consider when thinking about leasing and Apple's future.
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Tim Cook Gives Clues at WSJDLive, 4Q15 iPhone Sales Estimate, Estimating Historical iPhone Sales by Model (2007-Current)
Today's Above Avalon stories:
- Tim Cook Gives Clues at WSJDLive
- 4Q15 iPhone Sales Estimate
- Estimating Historical iPhone Sales by Model (2007-Current)
We kick off today's email by going over Tim Cook's talk last night at the WSJDLive conference. There were actually quite a few clues given dealing with Apple Music, Apple Watch, and the automobile. We then discuss my FY4Q15 iPhone estimate and the thought process behind my numbers. Today's final story takes a look at some work I've done on iPhone sales by model over time and a number of observations derived from the data.
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Motive Behind Apple's New RSU Program, Nissan's Mistake When Thinking About Apple Car
Today's Above Avalon stories:
- Motive Behind Apple's New RSU Program
- Nissan's Mistake When Thinking About Apple Car
Today's email kicks off by taking a deep-dive into restricted stock units (RSUs) and why Tim Cook expanded the compensation incentive to all Apple employees. I suspect there are some clear motives underpinning the move. We next shift to Nissan's recent comments about some of the hot button topics impacting the automobile industry, including Tesla, Uber, Google, and Apple. Nissan appears to be making one grave mistake when it comes to Apple and when you take a step back, it's clear most of the automobile industry is running with the same incomplete logic. By focusing on this error, some of Apple's long-term goals with Project Titan become apparent.
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Dissecting Samsung's U.S. Smartphone Stronghold, Smartphone Changes Are Afoot in China, Thursday Q&A: Is Microsoft an Apple competitor?
Today's Above Avalon stories:
- Dissecting Samsung's U.S. Smartphone Stronghold
- Smartphone Changes Are Afoot in China
- Thursday Q&A: Is Microsoft an Apple competitor?
We are quickly approaching Apple earnings (October 27th). Next week we will begin to move through Apple's product categories and my earnings model to discuss my 4Q15 estimates and outlook for 2016. Today's email takes a look at the smartphone market in the U.S. and China. Upon closer examination, they are incredibly different from each other. In the U.S., Samsung has quite the stronghold that shows few signs of falling apart. In China, there is much change taking place among the leading smartphone manufacturers. We take a look at where the easiest iPhone growth may come from in each market for 2016. We conclude with Thursday Q&A and the topic of Microsoft vs. Apple compeititon.
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Apple's New Product Theory, Good Design at Apple
Today's Above Avalon stories:
- Apple's New Product Theory
- Good Design at Apple
Apple updated its iMac line yesterday and Phil Schiller sat down with Steven Levy to discuss the new products. In addition, Schiller also revealed a completely new theory for explaining how all of Apple's products fit together. We take a deep-dive into his comments and what they mean for Apple and future products. We then talk about good design at Apple and why it is so important when discussing Apple's success at marginalizing industries.
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The Full Jony Ive Talk at Vanity Fair, Dell Wants out of the PC Business, Lyft Partners with Hertz
Today's Above Avalon stories:
- The Full Jony Ive Talk at Vanity Fair
- Dell Wants out of the PC Business
- Lyft Partners with Hertz
We kick off today's email by discussing a few additional themes of Jony Ive's talk at the Vanity Fair New Establishment Summit. The full video of his talk was recently released and his comments on Apple design are quite valuable when analyzing how Apple thinks about the world. We then shift over to one recent piece of news related to Dell and the PC business that many may have brushed over when thinking about the Dell/EMC merger. We conclude with Lyft partnering with Hertz and why such actions are worth keeping an eye on when it comes to Apple's ambitions in the auto space.
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Elon Musk Is Frustrated by Apple, Mac Expected to Hold Its Own in Declining PC Market
Today's Above Avalon stories:
- Elon Musk Is Frustrated by Apple
- Mac Expected to Hold Its Own in Declining PC Market
Today's email is focused on Elon Musk's latest public comments on Apple. When comparing his interview with German newspaper Handelsblatt to previous comments about Apple, it's clear something has changed between Tesla and Apple. I look at Musk's comments as containing frustration, indicative of how much change is about to hit the automobile industry. We conclude by briefly touching upon Gartner and IDC Mac estimates for FY4Q15 and what they may mean for actual Mac sales.
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Jony Ive Is Finding His Stride, Kantar Points to Continued iPhone Momentum in August, Thursday Q&A (Project Titan vs. GM and Uber)
Today's Above Avalon stories:
- Jony Ive Is Finding His Stride
- Kantar Points to Continued iPhone Momentum in August
- Thursday Q&A: With Project Titan, is Apple looking to disrupt GM or Uber?
We kick off today's email by looking at Jony Ive's talk at the Vanity Fair New Establishment Summit where he talked about lessons learned from Steve Jobs and his new role at Apple. We were able to get a few new ideas as to how Jony thinks about products and why his promotion may turn out to be one of the bigger improvements in his career. We then shift over to the latest Kantar smartphone report and dig through all of the numbers and percentages to see how the iPhone performed over the summer. We conclude with Thursday Q&A, which asks if Project Titan will ultimately disrupt auto manufacturers like GM or network companies like Uber.
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Microsoft's Sleight of Hand, Xiaomi Demonstrates Why a Cheap iPhone Makes Little Sense
Today's Above Avalon stories:
- Microsoft's Sleight of Hand
- Xiaomi Demonstrates Why a Cheap iPhone Makes Little Sense
We begin today's email by going over Microsoft's event in NYC yesterday. While there was a lot of new hardware announced for Windows 10, the most intriguing aspect of the keynote was what wasn't said. Microsoft's sleight of hand was on full display. We analyze the event from Apple's perspective. We then shift over to Xiaomi CEO Lei Jun who recently did an interview with WSJ China. While his goal was to diffuse concerns over Xiaomi's future, he ended up validating Apple's strategy of bypassing the low-end of the smartphone market with a cheap iPhone.
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Thoughts on Apple Watch, Apple Watch Ads Are Getting Better, Apple Campus 3?
Today's Above Avalon stories:
- Thoughts on Apple Watch (new monthly and quarterly sales projections as well as estimates on ASP and margins)
- Apple Watch Ads Are Getting Better
- Apple Campus 3 in Sunnyvale?
We begin today's email with Apple Watch, taking a deep-dive into why I think the Watch is being underestimated. We go over my new Apple Watch monthly and quarterly sales projections as well as thoughts on average selling price and margins. Sticking with Apple Watch, Apple unveiled new Apple Watch commercials last evening, and they are the best ads yet for the product. We take a closer look at why they are so good. We conclude by looking at Apple's most recent real estate transaction and a few observations I had on the deal.
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