Reading Between the Lines of Apple’s 1Q23 Earnings Q&A With Analysts (Daily Update)
Hello everyone. Welcome to a new week.
Last Friday, we went over the numbers from Apple’s 1Q23 earnings release. We also looked at two of the major themes from earnings: the significant FX impact on Apple’s results and changing device upgrading trends.
In today’s update, we will focus on Apple’s 1Q23 earnings Q&A session with analysts. Instead of just recapping the question and answer exchanges that occurred on Apple’s call, we will go over Neil’s thoughts / response to each exchange. This will allow Neil to go beyond what was talked about on the call. Let’s jump right in.
Reading Between the Lines of Apple’s 1Q23 Earnings Q&A With Analysts
NOTE: The following earnings call questions (“Q”) and answers (“Cook” or “Luca”) have been cut, summarized, paraphrased, and rearranged for clarity. To read the full question and answer exchanges, The Motley Fool offers a written transcript here.
Supply Chain
Q: What is the state of Apple’s supply chain? Do you expect to increase inventory levels to insulate from supply disruptions?
Cook: Production is now back to “what we need it to be.” We continue to optimize our supply chain. We now have final assembly for iPhone in three countries. Given all that has happened over the past three years, our supply chain has proven to be resilient.
My response: Apple received a variation
An Above Avalon membership is required to continue reading this update. Members can read the full update here. An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.
(Members: Daily Updates are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)
Above Avalon Membership
Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.
More information about Above Avalon membership, including the full list of benefits and privileges, is available here.
Apple’s Share Buyback: What Comes Next? (Above Avalon Report)
An examination of Apple’s buyback strategy in relation to its net cash neutral goal.
Written by Neil Cybart
Apple has the largest share buyback program in the world. With $90 billion put into buyback in just the past 12 months, the company’s buyback strategy continues to draw questions.
What is Apple’s ultimate objective in repurchasing shares?
What will happen to Apple’s buyback program once the company reaches its net cash neutral goal?
This report examines Apple’s share repurchase program, including the technical details and mechanisms behind buyback, the motivating factors for continued share repurchases, and the most likely path forward from a capital management perspective once Apple reaches its net cash neutral goal.
What Are Share Repurchases?
Share repurchases are the reverse mechanism of a company issuing stock. A company’s board of directors authorizes the use of cash on the balance sheet to buy back shares from existing shareholders. In most cases, repurchased shares are retired and taken out of circulation, thereby reducing a company’s share count.
Technical Details
There are three ways for a company to buy back shares:
An Above Avalon membership is required to continue reading this report. Members can read the full report here. An audio version of this report is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.
(Members: Reports are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)
Above Avalon Membership
Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.
Member Privileges and Benefits
Receive Exclusive Daily Updates. The cornerstone of Above Avalon membership is access to Neil’s exclusive daily updates about Apple. Updates are sent via email and go over current news and developments impacting Apple, its competitors, and the industries Apple plays in (or will play in). Approximately 200 daily updates are published throughout the year. Sample daily updates can be viewed here, here, and here.
Receive Exclusive Reports. Members have access to Neil’s reports, which are in-depth examinations of Apple's business, product, and financial strategy.
Access Private Podcasts. Members have the option of attaching a podcast add-on to their membership in order to receive the daily updates and reports in audio form.
Access Neil’s Earnings Model. Members have access to Neil’s working Apple earnings model (an Excel file that also works in Numbers). The model is fully functional and adjustable and provides the ability to alter earnings drivers.
Email Priority. Receive priority when it comes to having email questions and inquiries answered. Neil personally answers all inquiries, including customer service matters related to your membership.
Archive Access. Read 1,200+ daily updates and reports that have been previously sent to members. The Above Avalon member archive is unmatched in the marketplace in terms of the sheer amount of Apple analysis found in one location. The daily updates archive can be viewed here while the reports archive is available here.
Member Forum Access. Join other Above Avalon members in an active forum containing in-depth discussion and debate. Neil moderates and participates in the forum. The forum is run through Slack and can be accessed here.
Virtual Meet-ups. Talk with Neil about Apple and other related items in virtual meet-ups held via Slack throughout the year.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent source of Apple analysis. Above Avalon is fully sustained by its members.