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Long Apple


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2013 Sep 6, 3:24pm   26,922 views  68 comments

by SFace   ➕follow (7)   💰tip   ignore  

Apple has been strangely quiet since iPhone 5. Everyone knows Sep-Dec is Apple domination quarter and for end of 2013 it will be especially plentiful.

Here is what a lot of people expect:

Iphone 5s with IoS 7. More to follow on the Cupertino event in details. There is no shortage on news anyway. over the course of 2013, HTC one, Moto X, BBRY, Galaxy 4S came out and none were blocckbuster hits, people will buy the 5S.

Iphone 5C. The midmarket smartphone. Apple lost market share due to ignoring the non-premium market. Well this should turn the tide. It will canabalize the 5S but getting back some lost market share is extremely important to Apple. My feeling is they want to be in 30% market share range and this had to be made to get those customers. Will it be a China/India/Indonesia phone? I don't see the C in North America.

Ipad 5: Still the king of Pad's for good reasons. While everyone has different taste for phones, everyone has the same taste for Ipads. Natural upgrade cycle is coming.

Ipad Mini with Retina: The perfect kids machine and the newly developing school market.

Phone deal with China mobile and other carriers. LG, Samsung, Huwei, etc, have benefitted from a lack of lower-priced product. Well, it should be the end of that. The 5C is built for the Asia market that the majoroty of customers favor.

Apple had an "off" year with no new product in 2013 so far and stil made 50B pre-tax. Well, you know Apple have Sep circled and will have a huge season. At least history has proven itself and brand equity is still strong.

Technically, Apple is poised to enter what is a known as a golden cross, a surefile accumulation signal. Last Nov, it was the death cross and predicablt went down another 25% upon hitting the cross. I expect 25% upside @500 and target $625 in 3 months. Apple doesn't follow market trends anyway so even if you are worry about Syria, Apple is still a great long. Call activities have significant premiums for those looking for Dec/Jan calls and not worth it.

If you have extra investable cash, I will just buy shares straight up for a fantastic risk/reward proposition.

Good luck.

disclosure:

55 shares long at $498.

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1   AverageBear   2013 Sep 7, 12:09am  

I think Apple underestimated the growth of the cheap/medium smartphone segment, like Intel underestimated the growth of the mobile/tablet market shift away from PCs (or the transformation of the form factor).

Did each company 'miss the boat', or just 'late to the party'?.... We shall see.

Am I oversimplifying things? Absolutely.

2   anotheraccount   2013 Sep 7, 2:09am  

HP had a 3% margin on hardware in the last quarter. Apple margins will come down long term from strong completion and cannibalization of their own higher priced products (ipad mini vs ipad).

You might be right short term, but I would not be in the stock for the next couple years until you see what happens to regular iPhones sales if there is a cheaper iPhone.

3   Vicente   2013 Sep 7, 4:58pm  

treatmentreport says

cannibalization of their own higher priced products

I never understood that terminology amongst marketing people.

Better for Apple to "cannibalize" it's higher-end products, than to let Samsung do it.

4   swebb   2013 Sep 7, 5:42pm  

Thanks for the analysis SFace. I'm about break even on my Apple stock right now and have been waiting for it to rebound. I hope you are right about the next 3 months -- I will continue to hold and see what happens.

Not sure if I'm going in for any more. Will have to think about it.

5   AverageBear   2013 Sep 7, 11:53pm  

Vicente says

treatmentreport says

cannibalization of their own higher priced products

I never understood that terminology amongst marketing people.

Better for Apple to "cannibalize" it's higher-end products, than to let Samsung do it.

Vic, it's still better for apple to cannibalize its own products for two reasons: 1) it still maintains market share 2) more importantly, it keeps the consumers within apple ecosystem, by continuing to ring the cash register at the iTunes and app stores.

I'll never own shares of apple, because I'm more of a long-term, buy/hold investor. I feel the only way to make $$ on apple is if you trade in and out of apple. I'm not a technical investor/trader, and don't have time to waste to bother with technical trading. To me, apple doesn't have the moat to make me feel comfortable in holding the stock for 5+ years... Even intel is pushing my limits as a buy/hold investment...

6   Eman   2013 Sep 9, 3:18pm  

swebb says

Thanks for the analysis SFace. I'm about break even on my Apple stock right now and have been waiting for it to rebound. I hope you are right about the next 3 months -- I will continue to hold and see what happens.

Not sure if I'm going in for any more. Will have to think about it.

I agree with SFace's analysis. However, I believe AAPL will retest $700 within the next 12 months.

7   B.A.C.A.H.   2013 Sep 9, 11:23pm  

You Gotta Believe!

8   anotheraccount   2013 Sep 10, 4:01am  

Looks like nothing really exciting coming out of Apple today. Margin compression from iPhone 5c. $100 less profit.

9   EBGuy   2013 Sep 10, 4:54am  

Vicente said: I never understood that terminology amongst marketing people.

Better for Apple to "cannibalize" it's higher-end products, than to let Samsung do it.
Not just marketing folks; that's the Innovators Dilemma (although in this case, it's not clear if anything is disruptive. It may be more of a case of cheaper sustaining technology and technological overshoot.)
Bean counters, management and shareholders don't like to see their margins go poof, so they tend to circle the wagons instead of doing the right thing.

10   mell   2013 Sep 10, 4:58am  

Call it Crazy says

SFace says

Iphone 5s with IoS 7

...."CUPERTINO, CALIF. — Apple’s latest iPhones will come in a bevy of colors and two distinct designs, one made of plastic and the other that aims to be “the gold standard of smartphones” and reads your fingerprint."

The 5S also includes “Touch ID,” which reads fingerprints at a “detailed level,” Schiller said. He said it is “fun and easy” to teach the 5S about your fingerprint and once you do, you can just touch the home button to unlock the phone. The company said fingerprints will not be stored on its servers.

...and sends those fingerprints directly to the NSA.... what a country!!

Just think of all the extra time the police dept will have by not having to fingerprint all suspects.... Just pull them up from the national database!!

Thanks Apple!!

Yep, or for somebody hacking or stealing your phone and getting access to your fingerprints - good times! ;)

11   Vicente   2013 Sep 10, 4:31pm  

Meh, I was underwhelmed. I mean, these look like good products and all but.... I don't know I would have liked ONE little surprise. Apple is too closely watched and leaked about now, it makes the product announcements something of a letdown. I was really hoping for induction charging myself, that would be a cool feature!

12   SFace   2013 Sep 11, 2:47am  

yes, the Iphone 5C is too expensive. Can't crack the asian market with that price tag.

Well, the good news is everyone should download the new Ios7 update on Sep 18th. It would be a good chance to see what improvements are made to the software side of it.

13   anotheraccount   2013 Sep 11, 4:52am  

SFace says

yes, the Iphone 5C is too expensive. Can't crack the asian market with that price tag.

To compete in Asian markets with volumes means no margin. What's HTC's market cap? 4B Yet they make very competitive phones.

14   Heraclitusstudent   2013 Sep 11, 5:42am  

SFace says

Well, the good news is everyone should download the new Ios7 update on Sep 18th. It would be a good chance to see what improvements are made to the software side of it.

IOS7 looks ugly.
These candy colors seem made to please 12yrs old girls.

15   varmint   2013 Sep 11, 6:32am  

SFace says

yes, the Iphone 5C is too expensive. Can't crack the asian market with that price tag.

Well, the good news is everyone should download the new Ios7 update on Sep 18th. It would be a good chance to see what improvements are made to the software side of it.

It was never going to be that cheap and would be a bad move for apple if it were. Apple is selling it's name and has to remain above the fray. If they try to compete in the trenches on specs and price point with samsung they will lose. Samsung's business model is built on lower manufacturing costs and smaller margins.

16   Y   2013 Sep 11, 6:36am  

no competition when it's worn on your hip...
the widescreens are too big for pockets anyways.

egads101 says

looks like a pretty damn good phone to me... with most others going the "bigger is better" route... apple seems the only one keeping premium phone that fits in your pocket...

i guess samsung guyes have less junk competing for space in their pockets...so phone size doesn't matter as much?

17   RWSGFY   2013 Sep 11, 6:47am  

egads101 says

i guess samsung guyes have less junk competing for space in their pockets...so phone size doesn't matter as much?

https://www.youtube.com/watch?feature=player_detailpage&v=WJokXzlQDzE

18   Vicente   2013 Sep 11, 7:07am  

SFace says

yes, the Iphone 5C is too expensive. Can't crack the asian market with that price tag.

What if they offer the 5c at a lower price point in China? Do they really have to be that strict about uniform global pricing you think?

19   hanera   2013 Sep 11, 10:46am  

Vicente says

... I would have liked ONE little surprise ...

Pricing? M7? Free iWork and iLife? 64 bit OS? True flash?

20   hanera   2013 Sep 11, 10:50am  

SFace says

yes, the Iphone 5C is too expensive. Can't crack the asian market with that price tag.

It is WallStreet that keep doling out those disinformation that Apple plans to compete aggressively in the Asian market with a cheap iPhone. After awhile, we start to believe them. To WS's disappointment, Apple is going about its business as usual. Having said that, Apple drops price of iPhone 4 by US$122 in China.

21   Vicente   2013 Sep 11, 11:44am  

hanera says

Pricing? M7? Free iWork and iLife? 64 bit OS? True flash?

Yeah, none of that just made me go COOL, I have to buy one.

I have a 4S right now. I may just sit until next generation.

22   hanera   2013 Sep 11, 11:52am  

Vicente says

hanera says

Pricing? M7? Free iWork and iLife? 64 bit OS? True flash?

Yeah, none of that just made me go COOL, I have to buy one.

I have a 4S right now. I may just sit until next generation.

If you're in USA, it makes sense to sell your 4S and use the proceeds to get into another contract with the iPhone 5S. Net cost = 0. Not upgrading would be paying the carrier extra premium without enjoying the benefits.

23   Eman   2013 Sep 11, 1:36pm  

SFace says

yes, the Iphone 5C is too expensive. Can't crack the asian market with that price tag.

Well, the good news is everyone should download the new Ios7 update on Sep 18th. It would be a good chance to see what improvements are made to the software side of it.

I see it differently. This is an opportunity to buy AAPL stocks before it resumes its uptrend. I was hoping for a pullback to $485, but here it is sitting near its 200 DMA. Back up the truck & load it up.

24   SFace   2013 Sep 12, 4:10am  

Vicente says

SFace says



yes, the Iphone 5C is too expensive. Can't crack the asian market with that price tag.


What if they offer the 5c at a lower price point in China? Do they really have to be that strict about uniform global pricing you think?

I don't think phone manufacturer's have a full say in price. The telecom company determines the end price.

Vicente says

Yeah, none of that just made me go COOL, I have to buy one.


I have a 4S right now. I may just sit until next generation.

You should upgrade anyway. Your bill has anywhere between $15-$20 a month to pay for the $400 subsidy over two years whether you upgrade or not. Get the 5S and sell it for $700 and continue to use the 4S

25   Vicente   2013 Sep 13, 4:01am  

SFace says

You should upgrade anyway. Your bill has anywhere between $15-$20 a month to pay for the $400 subsidy over two years whether you upgrade or not. Get the 5S and sell it for $700 and continue to use the 4S

I don't follow that at all. I'm not liking my AT&T 2-year contract and subsidies any more. Paying subsidized rate for a phone but being locked in just rankles me.

Been using MobileShare 2Gig plan but at $185/month for 3 lines it's just too much. Now that my phones are off-contract thinking to move to T-Mobile which claims could handle them for $90/month. We'll see.

If I buy any new phones in future I think I'll just pay up front, and buy unlocked straight from Apple.

26   zzyzzx   2013 Sep 13, 4:21am  

E-man says

I was hoping for a pullback to $485

Did you buy any lately when it was less than that?

27   smaulgld   2013 Sep 13, 7:29am  

Does the tesla come with an iphone 5

28   RWSGFY   2013 Sep 18, 7:20am  

smaulgld says

Does the tesla come with an iphone 5

No, but some San Jose shacks come with Tesla.

29   FortWayne   2013 Oct 15, 11:54am  

RentingForHalfTheCost says

The next great gadget hasn't even been thought of yet

It has been thought of, I've seen back to the future plenty of time.

Reminds me how the first computer was in a movie Metropolis in 1927... took a few decades to actually make one.

30   SFace   2013 Oct 17, 2:45am  

Still long and strong Apple.

Apple 5S should lead 15%- YOY profits for FY14. Then they absolutely need a 4.8 inch Iphone 6 for next year. Heading into the next 6 months, Apple has little competition now that the S4, HTC one, Nokia are nothing spectacular.

The real excitement will be the Ipad. a 64 bit Ipad that is thinner, lighter with a longer battery life will absolutely be a huge seller. The A7 chip combined with Iworks will make this an enterprise favorite and ruin Microsoft again. The retina mini is too obvious and will be coveted by the parents for their kids. It's going to be a huge seller this christmas as the consumers are desparate for an upgrade and should make up for Macs and Ipods in FY14.

31   Vicente   2013 Oct 17, 4:30am  

egads101 says

thinking of selling it and getting the ipad mini if it is cool.

I have a mini and love the weight, great to travel with! When I picked up a standard iPad after using a mini for a while it felt HEAVY.

But...and there's always a but.... my eyesight is not what it once was and the smaller screen makes me reach for reading glasses where the standard did not. I am thinking about picking up a full size 16G WiFI at next refresh so I have something as a hangar queen for "around the house" usage that is easier on my eyes. Keep the mini for travelling and family use.

Long AAPL as well, had added to my position a little during dip.

32   EBGuy   2013 Oct 22, 9:19am  

Vicente said: When I picked up a standard iPad after using a mini for a while it felt HEAVY.
I guess they're listening. Less is more.

33   Vicente   2013 Oct 23, 9:40am  

RentingForHalfTheCost says

You never, I repeat never, build your business model around competing against the likes of Samsung.

They used to say things like that about IBM.

We shall see.

34   hanera   2013 Oct 23, 12:47pm  

An American cursing an American business? God helps America!

35   clambo   2013 Oct 23, 2:44pm  

Yeah, Samsung.
I have a nice wireless laser printer for $57 made by them.
They must have made $10 profit.

36   mell   2013 Oct 23, 3:07pm  

clambo says

Yeah, Samsung.

I have a nice wireless laser printer for $57 made by them.

They must have made $10 profit.

Yeah, but they commoditize every market eventually, and their products are usually decent. Samsung is a beast.

37   SFace   2013 Oct 24, 9:44am  

clambo says

Yeah, Samsung.
I have a nice wireless laser printer for $57 made by them.
They must have made $10 profit.

Have you checked out the price of the toners? I dunnno $69 - 99$ or so. That is $40-$60 profits and recurring. lol

Having said that, Samsung lost some mojo this year on the galaxy line. S4 was a dud. Apple will enjoy record profits in FY14.

38   anotheraccount   2013 Oct 24, 10:07am  

SFace says

Having said that, Samsung lost some mojo this year on the galaxy line. S4 was a dud. Apple will enjoy record profits in FY14.

Margin compression. Look iPad mini is now is below $300 in order to fight competition. It would be interesting to see on Monday the breakdown of 5c vs. 5s sales. If 5c sales are even in 30% range, I believe we already had peak Apple profits.

39   SFace   2013 Oct 24, 10:08am  

treatmentreport says

SFace says



Having said that, Samsung lost some mojo this year on the galaxy line. S4 was a dud. Apple will enjoy record profits in FY14.


Margin compression. Look iPad mini is now is below $300 in order to fight competition. It would be interesting to see on Monday the breakdown of 5c vs. 5s sales. If 5c sales are even in 30% range, I believe we already had peak Apple profits.

The stock action in the last 3 weeks (quiet period) tells you they had a fantastic quarter and will have a fantastic christmas. It has broken out of $510 with conviction. The trend is up and institutions are loading.

everyone I know is buying the 5S, it is only limited by what is available. I just sold my Ipad and Ipad mini to upgade to the Ipad Air and Ipad mini retina next month. Will have to make do with the nexus 7 for now. They fixed the two major complaints I had with Apple

Ipad is too heavy, bulky
Ipad mini resulution sucks.

bingo and bingo and that is why people will upgrade.

40   anotheraccount   2013 Oct 25, 12:50am  

SFace says

It has broken out of $510 with conviction. The trend is up and institutions are loading.

It probably has to do something with iCahn blabbing about borrowing 150B to buy back shares which I think is stupid. Apple should keep its cash just in case. Their cash will allow them to survive for 50 years even if they hit hard times again.

I think they will sell a lot of iPhones in Q3, but I want to see the breakdown. I know that in bay area almost everyone will buy 5s, but what happens outside matters more. Also, I think that in Q4 they will miss iPad sales, as completion is getting crazy in tablet market.

Long term, profits will be down. I don't think they can make it up on volume.

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