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If what you stated holds into tomorrow's open I'll be a buyer. Nothing in the earnings report looks all that tragic and the p/e is ridiculous for this company. Add in growth from new markets in China and India and I'll take that bet.
This is one of the more frustrating things about owning individual stocks.
Scott...I am seeing that the revenue and profit for the quarter just ended beat expectations by a bunch, but forecasts for the NEXT quarter were less than expected.
Headlines this morning were that Apple shares 'plunged' 5%. OMG, 5 freaking percent. Did anyone bother to look at 2012 when shares dropped almost 40% during the year? Don't you just love the folks who write these stories and headlines? So I should sell APPL and buy INTC or ? LOL
Actually, what is driving down Apple is their sales in China. While retail sales from the previous quarter were down in all global regions, revenues in Greater China were down $3.6B. China's growth is slowing. From what I am reading their are a lot of good and cheaper phones that are being sold there.
But per The Financial Times quoting Tim Cook: "Revenues from Greater China more than doubled to $13.2bn thanks to an 87 per cent jump in iPhone sales . . . ."
Do note however that my thinking may be clouded by 1) my own thought process and feelings that Apple is a good stock to own and 2) I own some shares. On the second page of the article is a link from the same source re: the China sales situation.
@Mark- thanks for that. From a strictly numbers standpoint, the article makes a good case for purchase at this price and time. The great unknown, of course, is whether the good numbers could be undercut by a sudden change in market enthusiasm, warranted by facts or not.
I find it strange in the discussions/articles of Apple being a value at this price that rarely is it mentioned that Apple has a market cap of $721 billion, bigger than the GDPs of many nations. When a company has a market cap that high and profit margins as wide as Apple currently does it becomes difficult to repeat its previous performance. As some observers have pointed out about U.S. stock profits in general when they are at historical peaks, p-e ratios seem artificially lower than they do when times are rough. So Apple may seem cheap based on its astonishing performance, but why should we assume that astonishing performance can be replicated for a company this astronomical size? Can Apple maintain this level of growth and margins in perpetuity? Can it become a trillion dollar company? Perhaps. But it is not as easy as it seems.
I'm curious about the 90% figure as well. Apple only reports sales, not shipments and hasn't broken out Apple Watch sales. It's very early days for the Apple Watch but it's a familiar trajectory for Apple: Familiar Path
@MaRuffles - the info in the article is similar to what an Apple Dark Op employee told me. Apple had so many pre-sale online orders for the watch that supplies to retail outlets were extremely limited. It's no wonder to me why Mr. Cook didn't spend much time discussing sales figures.
As for that Apple employee, I asked him what he liked and didn't like about the watch. FWIW, this is from an avid tech user who is pretty much connected 24/7. While one needs to own an iPhone to make the watch work it just needs to be near, not on you. Likes: - Apple Pay - One doesn't need to take the phone out of their pocket to see and respond to text messages or to see who is calling. Also because he is wearing the watch he doesn't miss any texts or calls either. Very handy when driving, especially a motorcycle. - the Map function is worth the price alone. Imagine your driving along and the watch buzzes you that a turn is coming up shortly. - Reminders. If you have to do something in 10 min or an hour or whatever just tell the watch to remind you. - The weather and calendar tools are pretty cool. - Although he doesn't use the Health tool he was quite impressed by it's depth and functionality.
Dislikes: - short battery life, 2 days max but if you use or rely on the watch a lot plan on one day. - the watch band that comes with the entry model is pretty sweaty. Owner says he would pay the $100 upgrade fee on a future purchase.
It's not for everyone and certainly not me. As I get older the Reminders function might come in handy but I have a pretty good supply of Post-It pads and pencils. Also while I'm out tooling around on Miss Daisy the last thing I care about is phone calls or text messages.
With the watch, if you made it its own entity and not requiring being tethered to an iPhone, I think you'd get more interest. As I noted when it came out, I don't know why I'm paying a few hundred to have something that is largely reliant and complimentary to my phone. Taking out my phone is not difficult and it's not worth paying a few hundred. Oh good, I have something else I need to plug in and charge. Nothing against Apple at all, nothing against the watch, I just am not the slightest bit convinced of its usefulness.
I find it strange in the discussions/articles of Apple being a value at this price that rarely is it mentioned that Apple has a market cap of $721 billion, bigger than the GDPs of many nations. When a company has a market cap that high and profit margins as wide as Apple currently does it becomes difficult to repeat its previous performance. As some observers have pointed out about U.S. stock profits in general when they are at historical peaks, p-e ratios seem artificially lower than they do when times are rough. So Apple may seem cheap based on its astonishing performance, but why should we assume that astonishing performance can be replicated for a company this astronomical size? Can Apple maintain this level of growth and margins in perpetuity? Can it become a trillion dollar company? Perhaps. But it is not as easy as it seems.
The thing really becomes - I think - you have this Apple "formula" that can be applied to things. Music. The mobile phone. The watch (and yeah, that last one might not be so successful, but I think it's not because Apple made a bad product - although I do wish it was more its own thing rather than being reliant on the phone - it's more I just don't think people are convinced they need a smartwatch.). Can you apply it to other things - mobile healthcare? The car? If yes, then Apple can continue doing well. If no, then Apple has more cash than a small country and I suppose either they will figure something to purchase or they will be pushed to return ever more money to shareholders.
I mean, it's sort of similar to Gilead. Gilead trades at a 13 p/e, yet had 12.4B in free cash flow in 2014. They have a couple of major product categories and do exceedingly well, but the market is valuing the company in a manner that suggests considerable worry over what's next. As a result, it's considerably undervalued. Will Gilead buy something or creat eanother hit? Their purchase of Pharmasset a few years ago for $11B was widely ridiculed, but the Hep-C drugs that came from it are generating more than that in sales yearly. If they don't find something in the near/mid-term, more than likely they will return more money to shareholders via either increasing the new dividend or adding to buybacks, of which their is a considerable program in place (it was $15B, not sure how much of that remains, probably most.) Gilead's undervaluation has often been compared to Apple.
@Scott, agree with you on Gilead. It is due to report earning on July 28th. On the longer term, Gilead is truly undervalued with respect to the biotech sector.
Comments
Scott...I am seeing that the revenue and profit for the quarter just ended beat expectations by a bunch, but forecasts for the NEXT quarter were less than expected.
Oh well.
Apple's weird, one-sided relationship with Australia
afr.com/technology/apples-weird-onesided-relationship-with-australia-20150722-gihc76
Apple disappoints despite China surge
http://www.marketwatch.com/story/heres-your-golden-opportunity-to-buy-apples-stock-2015-07-22?siteid=yhoof2
Do note however that my thinking may be clouded by 1) my own thought process and feelings that Apple is a good stock to own and 2) I own some shares. On the second page of the article is a link from the same source re: the China sales situation.
As for that Apple employee, I asked him what he liked and didn't like about the watch. FWIW, this is from an avid tech user who is pretty much connected 24/7. While one needs to own an iPhone to make the watch work it just needs to be near, not on you.
Likes:
- Apple Pay
- One doesn't need to take the phone out of their pocket to see and respond to text messages or to see who is calling. Also because he is wearing the watch he doesn't miss any texts or calls either. Very handy when driving, especially a motorcycle.
- the Map function is worth the price alone. Imagine your driving along and the watch buzzes you that a turn is coming up shortly.
- Reminders. If you have to do something in 10 min or an hour or whatever just tell the watch to remind you.
- The weather and calendar tools are pretty cool.
- Although he doesn't use the Health tool he was quite impressed by it's depth and functionality.
Dislikes:
- short battery life, 2 days max but if you use or rely on the watch a lot plan on one day.
- the watch band that comes with the entry model is pretty sweaty. Owner says he would pay the $100 upgrade fee on a future purchase.
It's not for everyone and certainly not me. As I get older the Reminders function might come in handy but I have a pretty good supply of Post-It pads and pencils. Also while I'm out tooling around on Miss Daisy the last thing I care about is phone calls or text messages.
I mean, it's sort of similar to Gilead. Gilead trades at a 13 p/e, yet had 12.4B in free cash flow in 2014. They have a couple of major product categories and do exceedingly well, but the market is valuing the company in a manner that suggests considerable worry over what's next. As a result, it's considerably undervalued. Will Gilead buy something or creat eanother hit? Their purchase of Pharmasset a few years ago for $11B was widely ridiculed, but the Hep-C drugs that came from it are generating more than that in sales yearly. If they don't find something in the near/mid-term, more than likely they will return more money to shareholders via either increasing the new dividend or adding to buybacks, of which their is a considerable program in place (it was $15B, not sure how much of that remains, probably most.) Gilead's undervaluation has often been compared to Apple.
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