Tesla Earnings, Tesla Lessons for Apple (Daily Update)
Hello everyone. Earnings season is upon us.
The plan for this earnings cycle is to focus in particular on larger themes and base our discussions around any changes or developments to those themes. We will kick things off with Tesla and the auto space. After going over the main takeaways from Tesla’s earnings, we look at some lessons that Apple can learn from regarding how best to navigate the EV space.
Tesla Earnings
“Tesla Inc. felt the pain of a recent wave of price cuts, as a reduction in the average price of its cars contributed to a 24% decline in first-quarter profit.
Elon Musk’s electric-vehicle maker has lowered prices for models in the U.S. by between 14% and 25% this year as it contends with weaker demand, higher interest rates and burgeoning competition. The latest round of reductions came on the eve of earnings.
‘We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,’ Mr. Musk, Tesla’s chief executive, said Wednesday on an earnings call, adding that he expects to be able to harvest additional software revenue down the line.
Teslas sold for an average of around $46,000 in the first quarter, less than the company had forecast and down from some $52,200 in the first three months of 2022.”
Tesla's core automative gross margins – excluding ZEV credits – declined to 16% from 26% the previous year. While those are good margins for an automaker, many have spent years saying Tesla wasn't a regular automaker. Vehicle deliveries were
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Apple’s Fintech Play Outside the U.S., Apple Ecosystem Strength by Country, Google to Unveil Foldable Pixel (Daily Update)
Hello everyone. We will continue the discussion found in yesterday’s update regarding Apple’s fintech strategy. There was a consistent theme to incoming member questions regarding Apple’s fintech strategy. After answering that topic, Neil looks at one way to measure Apple’s ecosystem strength by country. The update concludes with news of Google getting ready to unveil a foldable smartphone. Let’s jump right in.
Apple’s Fintech Play Outside the U.S.
There was one consistent theme to incoming member questions and comments regarding yesterday’s discussion about Apple’s fintech strategy: When will Apple bring these features to other countries?
Here is the current availability for Apple’s fintech portfolio:
Apple Pay: 71 countries and regions
Apple Card: U.S. only
Apple Cash: U.S. only
Apple Savings: U.S. only
Apple Pay Later: U.S. only
For a global company, the following list is far from ideal. While Apple users in the U.S. are seeing the latest and greatest from Apple in terms of the company’s fintech play, outside the U.S., it has been slim pickings. And more worrying for non-U.S. Apple customers, it’s not clear when these fintech features will become available in other countries. Apple has not given any indication of rollout timelines or even the feasibility of global rollouts. For example, the Apple Savings account launched on Monday is only available to U.S. residents with a social security number of individual taxpayer identification number. There are no announced plans for additional country support, partially because Apple Savings requires an Apple Card which is only available in the U.S.
We can say with confidence that Apple would want to bring these fintech features to more countries. The ideals underpinning these features are universal (financial well-being and data privacy), even though they may not necessarily match all government allowances and goals.
As for why these features have limited distribution, my suspicion is
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Apple Launches High-Yield Savings Account, Apple’s Great Timing, Apple’s Expanding Fintech Play (Daily Update)
Happy Tuesday. We begin today’s update with an examination of Apple’s new savings account (in partnership with Goldman Sachs). The discussion goes over three things about the account that jumped out at Neil. We then go over how Apple has great timing with this savings account and how the new product fits within Apple’s broader fintech play.
Apple Launches High-Yield Savings Account
In a press release issued yesterday, here’s Apple:
“Starting today, Apple Card users can choose to grow their Daily Cash rewards with a Savings account from Goldman Sachs, which offers a high-yield APY of 4.15 percent — a rate that’s more than 10 times the national average. With no fees, no minimum deposits, and no minimum balance requirements, users can easily set up and manage their Savings account directly from Apple Card in Wallet.
‘Savings helps our users get even more value out of their favorite Apple Card benefit — Daily Cash — while providing them with an easy way to save money every day,’ said Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet. ‘Our goal is to build tools that help users lead healthier financial lives, and building Savings into Apple Card in Wallet enables them to spend, send, and save Daily Cash directly and seamlessly — all from one place.’
Once a Savings account is set up, all future Daily Cash earned by the user will be automatically deposited into the account. The Daily Cash destination can also be changed at any time, and there’s no limit on how much Daily Cash users can earn. To build on their savings even further, users can deposit additional funds into their Savings account through a linked bank account, or from their Apple Cash balance.”
Like Apple Card, this savings account is run through Goldman Sachs. This means Apple doesn’t need to have a banking charter and get bogged down by regulatory items. More on this shortly.
It’s not fair to say this is just a Goldman Sachs savings account wrapped in an Apple shell or covering.
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Apple Opens First Store in India, Cook to Meet Modi, Samsung Reportedly Contemplating Bing Search Deal (Daily Update)
We kick things off with Neil’s thoughts on Apple opening its first retail store in India. The discussion goes over how Indian officials have a lot riding on the development as well. The update concludes with Samsung reportedly contemplating switching default search providers. We go over why the odds continue to favor a Samsung + Google search contract renewal.
Hello everyone. Welcome to a new week. We are fully back into the swing of things. Let's jump into today's update.
Apple Opens First Store in India
Apple has been operating its own retail stores for more than two decades. Most of its peers have tried to copy the initiative but have seen little to no success. Along with Apple’s design-led culture and vertical integration strategy, the company’s direct retail operations have played a vital role in its expanding ecosystem.
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More on Apple Reality, Why the Apple Reality Name?, Luxshare Reportedly Gains Apple Reality Contract (Daily Update)
Hello everyone.
The latest Above Avalon Report, "Apple's Reality (Headset) Plans," was sent via email to all members last Wednesday (11:30 pm ET). Even though the report is only a day old, there are already a few updates worth pursuing. In addition, incoming member questions pointed to interest in one part of the report in particular (what Apple may call its first headset). We will cover that in today’s update.
The podcast version of the report was published earlier today. It came out to 31 minutes of audio. As a reminder, the Above Avalon Reports podcast is available to everyone who has the podcast add-on attached to their membership. If you have the add-on, you previously received an email (from “Neil Cybart via Transistor”) with instructions on getting the podcast up and running in various podcast players. The process takes literally five seconds. Any questions or issues, let me know. If you don’t have the podcast add-on and want access to the two private podcasts, fill out this form.
More on Apple Reality
The latest Above Avalon Report has been in the making for a few months. For much of 2023, June had been penciled in my calendar as a possible unveiling point for a MR (mixed reality) Apple headset. In recent weeks, as the news cycle regarding this product turned silly, that WWDC unveiling timeline solidified.
Originally, the plan was to keep the report focused primarily on the product itself (the why behind the initiative, use cases, challenges). However, while putting together the finishing touches, a product strategy discussion needed to be included. There is a lot to discuss regarding how a headset fits within the Grand Unified Theory of Apple Products and the Apple Innovation Feedback Loop – both theories are still very much alive even though we haven’t talked about them much over the past year or so. If there are questions about the strategy section of the report, please send them my way. They can be used to guide additional discussion in the coming weeks.
Two new items worth discussing today:
New artist renderings for what Apple Reality may look like.
Why would Apple call the device Apple Reality in the first place?
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Apple’s Reality (Headset) Plans (Above Avalon Report)
An examination of Apple’s upcoming entry into AR/VR headsets.
Written by Neil Cybart – April 12th, 2023
In the coming months, Apple is expected to unveil its next wearables chapter with an AR/VR headset. Having already launched wearable devices designed for the wrist (Apple Watch) and ears (AirPods), Apple will soon expand its focus to the eyes (Apple Reality). This report serves as a primer for Apple’s play for the “eyes” - a headset delivering AR/VR experiences.
Note: This report references terms including AR, VR, MR, eye wearables, and Apple Reality. Here is a short explanation of the key differences:
AR (augmented reality): Overlays digital objects/context on top of one’s visual and auditory surroundings.
VR (virtual reality): Offers a digital alternative to one’s visual and auditory surroundings.
MR (mixed reality): A combination of AR/VR, and the goal is to enhance the wearer’s presence.
Face / eye wearables: Devices that include headsets/visors/goggles/glasses.
Apple Reality: The name Apple may give to its MR headset.
Background
The discussion surrounding AR and VR has been noisy and unnecessarily complicated because four devices have been talked about in the press seemingly interchangeably:
Smart Glasses. Lightweight and thin glasses that display small snippets of text, information, and symbols in the wearer’s peripheral vision. This device is, in theory, closest in utilization to that of Apple Watch.
AR Glasses. Lightweight and thin glasses that enhance one's surroundings by adding a contextual layer on top of reality. This device is a more enhanced and capable version of smart glasses.
VR Headsets. A historically bulky contraption worn on the face that removes the wearer from their surroundings. Meta Quest is an example of a VR headset.
MR (AR/VR) Headsets. A historically bulky contraption worn on the face combining VR and AR. Microsoft HoloLens is an example of a mixed reality headset, but some will say the device is closer to a bulky AR headset.
Apple is believed to be working on two distinct products:
MR headset “Apple Reality” (to be unveiled soon).
Pair of AR glasses (to be unveiled in a few years when the technology is ready).
As a sign of how ambitious Apple’s goals are in the AR/VR space, the company
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Why Publish a Tim Cook Profile Now?, The Evolution in Cook’s AR/VR Comments (Daily Update)
Today’s discussion will continue our look at GQ’s Tim Cook profile. We begin with examining why such a profile was published in April 2023. What does it tell us about Apple? The update then looks at how Cook’s comments about AR/VR have evolved over the years and what his most recent comments suggest about upcoming products.
Why Publish a Tim Cook Profile Now?
Following Monday's update, there were a few incoming questions from members regarding why Apple would agree to such a large Tim Cook profile in April 2023.
Was the profile a result of Cook reaching an unsaid milestone as CEO?
Is there some connection to upcoming succession planning?
Is Apple preparing the PR runway for a big product-related announcement at WWDC?
There is some background related to the profile worth discussing.
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The Tim Cook Profile in GQ, Cook and China, Cook Provides More Mixed Reality Headset Clues (Daily Update)
Hello everyone. Welcome to Monday. Today’s discussion will be dedicated to discussing GQ's Tim Cook profile. Let’s jump right in.
(Go UConn as they play for their fifth national basketball championship tonight.)
The Tim Cook Profile in GQ
As we head deeper into spring, and soon developer conference season, this is a good time for companies to draw attention to topics that either have been under attack in the press or which can be leveraged to support upcoming product unveilings.
With that in mind, GQ is out with quite the Tim Cook profile. Not only did Zach Baron sit down (and walk around) with Cook at Apple Park, but there were also interviews with Eddy Cue (SVP services) and Lisa Jackson (VP environment, policy, and social initiatives).
With "Tim Cook on Shaping the Future of Apple," here’s Baron:
“In his tenure as CEO, Cook has rarely missed an opportunity to decry, usually with a fair amount of heat in his voice, what he describes as the 'data-industrial complex'—a complex built of companies (and Apple competitors) who profit from the use and sale of their consumer’s personal information and data. This practice, Cook said in another public moment, 'degrades our fundamental right to privacy first, and our social fabric by consequence,' and helps build an ecosystem full of 'rampant disinformation and conspiracy theories juiced by algorithms.'
If you ask Cook, a notoriously private person himself, why this subject is so important to him, he will pivot the conversation back to Apple. 'It’s personal for Apple in that we’ve been focused on it from the start of the company,' he told me the first time we met, for an interview in 2021. In Cook’s tenure, Apple has adopted a set of public values and practices that are particularly rigorous around privacy. 'We feel privacy is a basic human right,' Cook says. 'And so we try to design our products to where we collect the minimum kind of data, and as important, that we put the user in the control chair, where it’s the user’s data and they’re deciding what they want to do with it.'"
GQ’s 6,600-word profile was among one of the better ones that have been published about Cook. Instead of picking the profile apart and including large sections of it in this update, it is best to find some time and read the profile in its entirety.
It’s not easy to summarize a 6,600-word profile. GQ covered a long list of topics, although a few subjects weren’t discussed (which we will talk about in greater detail shortly).
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Apple Announces WWDC 2023, WWDC 2023 Artwork Clues, Early Expectations for WWDC 2023 (Daily Update)
Today’'s update (March 30th) is dedicated to discussing Apple’s WWDC 2023. After going over the WWDC 2023 format, we look at this year’s WWDC artwork for some clues as to what may be discussed during the keynote. This brings us to a broader discussion involving Neil’s expectations for WWDC 2023 regarding a mixed reality headset.
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The Amazon/AMC Rumor, Amazon Sidewalk Opens to Developers, Revisiting Amazon’s Play for Neighborhoods (Daily Update)
Hello everyone. We will begin today’s update with a follow-up to our theatrical release discussion from earlier in the week. The discussion then turns to Amazon. Amazon Sidewalk is up there as one of the more interesting initiatives within Amazon. It’s multiple times more interesting to Neil than what is found with Alexa.
The Amazon/AMC Rumor
Over at The Intersect, here’s Joe Bel Bruno:
“Amazon founder Jeff Bezos has dispatched his investment advisors and top entertainment chiefs to explore acquisition plans for embattled theater chain AMC Entertainment, according to multiple senior sources familiar with the discussions.
The thinking is that Amazon can use AMC’s nearly 600 theaters across North America, Europe and the Middle East as ‘marketing weigh stations,’ said one Amazon insider. This would be used for promoting Amazon Prime movies for awards contention, cross-selling services such as grocery delivery, serving as local distribution hubs, and collecting crucial data from AMC’s annual 200 million moviegoing customers.
It would also throw a lifeline to AMC, the world’s largest theater chain whose financials were torpedoed by the COVID pandemic chased by Hollywood’s cut-throat pivot to their own streaming services. The cinema chain – whose stock traded a year ago at $34 and now languishes at about $4 – can be scooped up cheaply (and without a major premium) for just a few billion dollars."
One wonders if those “senior sources familiar with the discussions” happen to be investment bankers itching for a deal. Also, it seems like Bel Bruno refers to AMC as “cheap” merely because the stock price is down. That is not how that works.
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Apple Announces Friday Night Baseball Changes, Apple Acquires WaveOne, Tim Cook Visits China (Daily Update)
We kick things off by going over all of the changes found in the second season of Apple’s Friday Night Baseball. The update then goes over Apple’s WaveOne acquisition which flew under the radar. We conclude with Neil’s thoughts on Tim Cook visiting China and meeting with Chinese government officials.
Hello everyone.
The Apple Music Classical app is now available.
One of the first things I noticed is that my classical music collection successfully made the jump from Apple Music to Apple Music Classical. The pieces are displayed in a more listener-friendly manner. They also remain available in the Apple Music app. There were some fears that Apple would somehow remove classical music from the primary Apple Music app and instead require subscribers to use the Apple Music Classical app. That is not the case.
When searching for classical music within the Apple Music app, Apple highlights the Apple Music Classical app (shown below) in addition to continuing to give classical music playlists and selections.
We will now jump into today's update.
Apple Announces Friday Night Baseball Changes
“Today Apple and Major League Baseball (MLB) announced that ‘Friday Night Baseball,’ a weekly doubleheader, will be available to all Apple TV+ subscribers on Fridays throughout the regular season. Fans in 60 countries and regions can enjoy two marquee matchups over 25 weeks with no local broadcast restrictions. “Friday Night Baseball” will begin the 2023 season on Friday, April 7, with the Texas Rangers at the Chicago Cubs for the inaugural “Friday Night Baseball” daytime game at Chicago’s Wrigley Field, and the San Diego Padres at the Atlanta Braves. Apple and MLB also announced the 'Friday Night Baseball' schedule for the first half of the season, through June 30.
‘We can’t wait for ‘Friday Night Baseball’ to start up again, and we’re excited for fans to experience everything new we’re bringing this season,’ said Eddy Cue, Apple’s senior vice president of Services. ‘Apple TV+ truly has something for everyone, from two live baseball games every Friday night, to an incredible slate of award-winning original films and series — there’s never been a better time to sign up.’”
With the first season of Fright Night Baseball, Apple began its journey into live sports programming. Instead of just being a distributor of sports content from other companies, Apple had the ability to change / impact how sports (baseball in this case) is consumed.
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Apple Reportedly Pursuing Movie Theater Releases, Streamers Embracing Movie Theaters, TVOD vs. Theatrical Releases (Daily Update)
We kick things off with Neil’s thoughts on Apple reportedly thinking of putting blockbuster movies through theatrical releases. The discussion includes a broader look at how streamers have embraced movie theaters. We then examine the argument that theatrical releases remain a viable way to bring in extra revenue, and how those prospects compare to the TVOD (transactional video on demand) route in streaming.
Hello everyone. Welcome to Monday.
Let's jump right in.
Apple Reportedly Pursuing Movie Theater Releases
“Apple Inc. plans to spend $1 billion a year to produce movies that will be released in theaters, according to people familiar with the company’s plans, part of an ambitious effort to raise its profile in Hollywood and lure subscribers to its streaming service.
Apple has approached movie studios about partnering to release a few titles in theaters this year and a slate of more films in the future, said the people, who asked not to be identified because the plans are private. The list of potential releases includes Martin Scorsese’s Killers of the Flower Moon, which stars Leonardo DiCaprio; the spy thriller Argylle, from director Matthew Vaughn; and Napoleon, Ridley Scott’s drama about the French conqueror. A spokesperson for Apple declined to comment.
The investment is a significant increase from years past. Most of Apple’s previous original movies have either been exclusive to the streaming service or released in a limited number of theaters. The company has pledged to put movies in thousands of theaters for at least a month, said the people, though it hasn’t finalized any plans.”
One may read Bloomberg's article and conclude Apple is looking to place a big bet on movie theaters. That does not look to be the case.
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Should Microsoft Go After Google and Try to Win Apple’s iPhone Search Deal? (Daily Update)
We are going to do something different today.
A few days ago, a Business Insider article about Microsoft Bing caught my attention. A former Google executive who used to run the company’s advertising business thinks now is the time for Microsoft to wage war against Google search. We are going to take a closer look at the topic and address the question: Should Microsoft go after Google and try to win Apple’s iPhone search deal?
(Not to give spoilers, but for those of you who are long-time members, you may know that I am quite familiar with Betteridge’s law of headlines which states any headline that ends in a question mark can be answered by “no.” I like to prove his theory wrong from time to time.)
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Google Releases Bard, Apple and Chatbots, DPReview to Shut Down (Daily Update)
Hello everyone.
We will kick off today's update with some chatbot discussion. Neil’s stance continues to be to approach chatbots with caution. We will talk more about that today. The discussion concludes with some additional comments about Amazon shutting down DPReview. There is more to that story than what we briefly alluded to yesterday.
Let's jump right in.
Google Releases Bard
“Google just announced that the company is releasing its ChatGPT competitor Bard. But chances are you won’t be able to access the product right away as the company is starting with a limited public rollout.
Users in the U.K. and the U.S. can head over to bard. google .com and join a waitlist. The company calls Bard an ‘early experiment that lets you collaborate with generative AI.’
Like OpenAI’s ChatGPT and Microsoft’s Bing chatbot, Bard is a chatbot based on a large language model. You can interact with Bard to ask questions and refine the answer with follow-up queries.
‘You can use Bard to boost your productivity, accelerate your ideas and fuel your curiosity. You might ask Bard to give you tips to reach your goal of reading more books this year, explain quantum physics in simple terms or spark your creativity by outlining a blog post,’ Google VP of Product Sissie Hsiao and Google VP of Research Eli Collins wrote in a blog post.
When Google first unveiled Bard last month, there wasn’t much to see other than a lengthy blog post written by Google CEO Sundar Pichai. The model used in Bard is based on Google’s own LaMDA (Language Model for Dialogue Applications) — the company is using a lightweight and optimized version of LaMDA.”
Google went with a “lightweight and optimized version of LaMDA” in order to get it out in the wild without facing a financial strain in terms of computing power needs. One benefit in doing so is being able to build buzz on social media.
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Slim Cable Bundle Illusions, Live Sports Stickiness, Amazon Announces More Layoffs (Daily Update)
Hello everyone.
Yesterday, we discussed how YouTube is increasing TV pricing by $8/month (to $73/month). In today’s update, we will continue the discussion by going over a few things that have been on Neil’s mind. The update then turns to Amazon announcing another 9,000 layoffs. The company’s explanation for why it didn’t announce all of the layoffs at the same time raises more questions than answers.
Slim Cable Bundle Illusions
For much of the 2010s, the tech industry dedicated resources and attention to rethinking the TV experience. Frustrations with the big cable bundle had reached unsustainable levels.
Some people thought Netflix, HBO, and Hulu would cause the cable bundle to implode. Others expected sports leagues to go direct to fans, removing oxygen from cable bundles. À la carte became a popular phrase for describing how the cable bundle could potentially be unbundled into individual channels or even shows. In addition to positioning apps as the future of TV, Apple looked at a few ideas such as offering a bundle consisting of a few dozen existing cable channels.
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YouTube TV's Price Hike, FTC Finalizes Epic Games Fine, Foxconn's 2023 Outlook (Daily Update)
Hello everyone. Happy Monday. Let's jump into a new week of updates.
We begin with Neil’s thoughts on YouTube announcing another price hike for YouTube TV. There are two broader debates surrounding the price increase. The discussion then turns to the FTC finalizing its (second) fine against Epic Games for deceptive business practices. We conclude with Foxconn’s latest comments on 1Q23 and 2023 business trends.
YouTube TV's Price Hike
In a series of tweets published last Thursday, here’s YouTube TV:
“An update for our members. As content costs have risen and we continue to invest in our quality of service, we’ll be adjusting our monthly cost, after 3 years, from $64.99/mo to $72.99/mo, in order to bring you the best possible TV service.
New members will see this new price today, while existing members will see this pricing change beginning 4/18. Additionally, we are lowering the price of our 4K Plus add-on from $19.99/mo to $9.99/mo.
We are committed to offering a premium way for you to stream TV, but understand this new price may not work for you. We do hope YouTube TV continues to be your service of choice, but we want to give you the flexibility to cancel at any time.”
The $8/month hike is the latest price change in what has been a somewhat consistent trend of periodic increases.
2017: $35 launch
2018: $40 (+14%)
2019: $50 (+25%)
2020: $65 (+30%)
2023: $73 (+12%)
13% CAGR (compound annual growth rate) from 2017 to 2023)
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Q&A About Apple’s Investment Portfolio, Apple Unveils Apple Music Classical, Apple’s Music Focus
In Monday’s update, we talked about Apple’s fixed income investment portfolio. The discussion led to a few incoming questions from members, which we will address in today’s update. We then turn to Neil’s thought on Apple Music Classical and Apple’s broader strategy for Apple Music. There are key differences between how Apple is approaching music streaming and the strategy at play with iTunes. We also compare the strategies of Apple Music and Spotify.
Hello everyone.
One clarification regarding Meta’s new round of layoffs. The 10,000 layoffs that Zuckerberg just announced don’t include 5,000 open positions that will be left open. Accordingly, Zuckerberg is on track to cut 25% of Meta’s workforce. In yesterday’s update, a 20% percentage was referenced. It’s an even more startling figure that reflects Meta has become bloated and is now trying to resize itself to respond more quickly to market developments. My expectation is that once Zuckerberg has concluded his efficiently reset, Meta will again look to add to its ranks.
Let’s jump into today’s update.
Q&A About Apple’s Investment Portfolio
In Monday’s update, we talked about Apple’s fixed income investment portfolio. The discussion led to a few incoming questions from members, which we will address below.
Given how rates have risen over the past year or so, do you see Apple returning to the bond market to raise funds to pay off maturing bonds or do you think they would use cash for these payouts? or a mix of both?
My expectation is for Apple to slow the pace of debt issuance. As existing debt rolls off – Apple has about $11B that comes due in FY2023 – management won’t look to replenish the debt with new debt 1 for 1. With that being said,
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Meta Announces Another Massive Round of Layoffs, Zuckerberg Discovers Efficiency, How Apple Avoided Significant Layoffs
We kick things off with Neil’s thoughts on Mark Zuckerberg announcing another massive round of Meta layoffs. The discussion goes over Zuckerberg’s efficiency plans. We conclude with an examination of how Apple has been able to avoid significant layoffs.
Happy Wednesday.
One quick follow-up to yesterday’s discussion about Tim Cook and mixed reality headsets. The expectation that Cook will say yes to a product that goes against Apple’s user-first ideals is misplaced. Recall comments that Cook made last year about the importance of keeping humanity at the center of AR headsets. Cook was answering a question about AR headsets succeeding in the consumer market. Here's Cook:
"I am incredibly excited about AR as you may know. And the critical thing in any technology, including AR, is putting humanity at the center of it. And that is what we focus on every day."
The "humanity at the center" wording was a subtle reference to Apple addressing long-held concerns found with a face headset.
Let's jump into today's update.
Meta Announces Another Massive Round of Layoffs
“Meta Platforms Inc. said it would cut roughly 10,000 over the coming months, the Facebook parent’s second wave of mass layoffs in what it says is an effort to be more efficient in a difficult economy.
Meta Chief Executive Mark Zuckerberg said in an email to staff on Tuesday that the company would in the coming months conduct multiple rounds of job cuts, as well as cancel some projects and reduce hiring rates as part of what he has dubbed the ‘year of efficiency.’
Company recruitment teams will be cut first, followed by restructuring and layoffs in its technology groups in late April, Mr. Zuckerberg said. Business teams will face layoffs in May, he added. The company will also stop hiring for about 5,000 open positions.
Mr. Zuckerberg said his company must cope with a longer term change in the economy, marked by the end of low interest rates, growing geopolitical tensions and costly new regulations.
‘At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,’ Mr. Zuckerberg wrote. ‘Given this outlook, we’ll need to operate more efficiently than our previous headcount reduction to ensure success.’
Meta said in a securities filing Tuesday that it expects to lower its annual expenses by roughly $3 billion from an estimated range it gave on Feb. 1. It now expects to spend a total of $86 billion to $92 billion this year, including the costs of its layoffs and restructuring, which it said could total $3 billion to $5 billion.”
The 10,000 layoffs are in addition to the 11,000 layoffs that Meta announced in late 2022. This would mean Zuckerberg will have cut Meta’s workforce by 20% within just a few months (the job postings being kept open are excluded from the 20%). While it is true that Meta added significantly to its ranks from 2020 to 2022, to cut 20% of staff is a staggering percentage that should draw into question a number of key assumptions that have been found with Meta and Big Tech.
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The Financial Times on Tim Cook's Mixed Reality Bet, My Issues With FT’s Report (Daily Update)
Hello everyone. There were a few incoming questions about Apple’s investment portfolio objectives and actions. If there are any additional questions regarding yesterday’s update, send them my way, and all will be addressed at the same time.
For today’s update (Tuesday, March 14th), we will focus on a Financial Times article published on Sunday about Tim Cook and Apple’s upcoming mixed realty headset. As we approach WWDC, the chatter and rumors regarding Apple's headset will grow. We will soon take a much more in-depth look at Apple’s upcoming headset.
The Financial Times on Tim Cook's Mixed Reality Bet
Over at the Financial Times, here are Patrick McGee and Tim Bradshaw:
“When Tim Cook unveils Apple’s new ‘mixed-reality’ headset later this year, he won’t just be showing off the tech giant’s latest shiny gadget.
The Apple chief will also be guaranteeing his legacy includes the launch of a next-generation hardware product that some inside the company believe might one day rival the iPhone.
After seven years in development — twice as long as the iPhone — the tech giant is widely expected to unveil a headset featuring both virtual and augmented reality as soon as June.
The stakes are high for Cook. The headset will be Apple’s first new computing platform to have been developed entirely under his leadership. The iPhone, iPad and even Watch were all originally conceived under Apple’s co-founder Steve Jobs, who died in 2011.”
This isn’t the first time that the FT has published an article looking at Tim Cook’s legacy. Back in January, the FT ran two articles about Apple and China, a relationship that Cook played a very big role in creating. The thinking put forth by the FT was that Apple finds itself “beholden” to China with Cook having no good alternative.
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Silicon Valley Bank Collapses, Apple and the Big Banks, Apple’s Interest Rate Risk (Daily Update)
Hello everyone. Welcome to a new week.
The Silicon Valley Bank saga deserves its own daily update. Accordingly, we will dedicate today’s discussion to the topic. While we will quickly go over what happened, the broader points will deal with Apple.
Silicon Valley Bank Collapses
Last week, Silicon Valley Bank (SVB), known for its long-term relationships with tech VCs and start-ups, imploded. The FDIC (Federal Deposit Insurance Corporation) took over the bank on Friday.
Yesterday, the Treasury, Federal Reserve, and FDIC announced various actions to avoid financial contagion.
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors."
Unfortunately, the term “bailout” has become a subjective one. What the U.S. government is doing with SVB, Signature, and the entire banking sector for that matter, is a far cry from the drastic steps taken during the subprime mortgage crisis of the late 2000s. With that said, there are questions that politicians
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