Tuesday, May 31, 2016

Apple Execs would like to say: Stop with the Speculation

Subtitle:  Expectation Setting and Apple

Although Marcus is often hyper critical of Apple, especially its increasingly planned obsolescent Engineering, I'm still frequently asked about my take on the Company with respect to its products and Share Price.

Indeed today I am wading thru over 70 Apple Articles on Finance, products, software and futures.  That's a typical daily load.  Many of the articles are contradictory, so what do I think?

Product Set
Apple has previously had an excellent track of innovation, particularly reinventing new markets notably the Ipod portable music player, iPad tablet computers, iPhone Smartphone, and lastly Apple Watch, its Smartwatch.

It was all going so well until the Apple Watch,  (lets call it iWatch) that just didn't become an essential go to commodity like the predecessor lines I mentioned.

This is a major issue because new markets bring on a whole new Customer base who then can also be attracted to your other product lines.   The Apple Watch is a medium size failure in this respect.   It's sold respectably, which for Apple is just not good enough

Expectation Setting
Main main critique would be something else though.

It is a Dickensian old but true and now recurring story:

Promise X,  Deliver X+1.  Result == Happiness

Promise X, Deliver X-1.  Result == Unhapiness

Apple is now most definitely a failure of its own prior success. Essentially Fanboys and Tech journalists have now formed an unholy alliance. Despite more cautious Apple statements, they are doing the promising, suggesting more and more, when Apple can surely only deliver a mere fraction of the spotty kit basement fantasy that is being reported

Bucks Fizz: The Land of Make Believe

Case Study:
The Headphone Jack

This is already one company retailing a Smartphone sans headphone jack.  But it is LeEco and not Apple.  I personally think that this is a great leap forward.  As Engineers Marcus and Agata's take is that  this would

- To Reduce overall phone complexity
- Less case perforations >> more rigidity and better waterproofing
- Don't include a pointless set of cheap crappy headphones
- Use Bluetooth Low Energy i.e. Bluetooth 4.x for audio output and microphone input
- Smaller simpler overall phone packaging and lower costs

The headphone jack removal is one of a number of rumours.  But it and other genuinely innovative ideas are the result of endless speculation, supposed leaks, phone renders, mockup, and a totally disproportionate level or reporting compared to future phone functionality

More iPhone Rumours

- Headphone Jack Deletion
- Thinner profile
- 2 rear cameras
- Flush camera
- Internal non removable SIM card
- OLED display
- Thin or zero bezel display
- No Antenna Lines  (who cares?)
- Water resistance

Yes, I can promise you, Apple will not deliver all of the above. Come on!

iPhone Futures
- A predicted launch date of Sept 2016, not WWDC
- But this could be pulled forward if the share price begins to tank prior
- iPhone to become increasingly noncompetitive in its price to function rating against Android Competition.

(2015 company filing)

- Therefore I see iPhone sales to decline and continue to reduce the income stream. But still remember that current iPhone sales alone bring in more revenue than some tech companies entirety.  e.g. IBM.  In other words these are still astonishing sales figures and yet the share price is still /only what it is/

What I predict for the Share Price

- AAPL will at best track the NASDAQ index
- So before iPhone 7 launch in say September 2016, if you believe NASDAQ will crash, or significantly decline then AAPL will with it

- On iPhone 7 announce the stock will decline, pretty sharply, because expectations won't match reality, and within 2 months the stock should recover
- AAPL will no longer be the safe better than the index or inflation or easy money stock that many investors have relied on to sure up and give them hopes of an easy retirement

-  In other words if you have no clue what other stock to buy, or if you believe the NASDAQ will rise at or above inflation or to another chosen metric you rate  (like a Retail Price Index), then BUY

- else If you bought AAPL, and its currently in profit, and you think the general market will tank or decline, then SELL

- else if you are currently negative equity wrt AAPL then HOLD and hope

- if you currently hold AAPL and don't know what to do then HOLD

Financial Sample Links