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Apple Q4 Results

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Re: Apple Q4 Results

#31

Post by clairity »

jjtheblunt wrote: post #13
throwaway5752 wrote: post #6

Earlier quoted context omitted.

As the owner of a company (a shareholder) it is desirable because if your company isn't in the business of capital allocation then excess cash accumulation is reducing their ROE and your ROI. And yes, the company still has to grow. But as a company executive you are viewing existing and new business opportunities through their net present value. If you don't have business opportunities that meet the thresholds you ha…

Why do you say the company has to grow?

strictly speaking, a company doesn't have to grow (no, there's no law nor even fiduciary duty to grow), but it's certainly incentivized as such, because valuations are most sensitive to growth rate.

Re: Apple Q4 Results

#32

Post by xkjkls »

mikece wrote: post #12

Is it too early to tell how much the Apple Card contributes to Apple's revenue?

Probably negligible. I mean, the company will still have 70+% of it's revenue/income just from it's flagship product.

Re: Apple Q4 Results

#34

Post by newshorts »

tempsy wrote: post #23

Definitely my best stock pick of the year.

It was good, but everything went up this year. It was extremely easy if you bought the dip last dec.

I’m waiting for another dip... hoping to cash in. Might be waiting a while after this earnings report & fed announcement today.

Re: Apple Q4 Results

#35

Post by freehunter »

Godel_unicode wrote: post #21
gigatexal wrote: post #17

Net income was? Also this BS about stock buybacks and dividends to become cash neutral is stupid. They should be betting on moonshot things that will be the next iPhone instead of all of this financial engineering.

Giving the companies profits to the people who own the company is not "financial engineering". Apple has decided it cannot effectively use that money for R&D, so it isn't

Stock buybacks may be a way to give profits to the people who own the company, but they are also 100% financial engineering considering it has a direct impact on stock price and earnings per share.

Stock buybacks were illegal until 1982, being considered a form of stock manipulation. Even though it's legal now, it's still one of the best forms of stock manipulation.

Re: Apple Q4 Results

#36

Post by appleiigs »

zaphirplane wrote: post #24
jjtheblunt wrote: post #13

Earlier quoted context omitted.

Why do you say the company has to grow?

Perhaps it’s the P/E ratio in valuation. If a company isn’t growing the premium portion of its stock price reduces and the stock price drops. TLDR; stock price includes a portion reflecting increased future growth

This is the real reason why CEOs are on a never-ending quest to grow even if it's detrimental. They are measured and compensated on share price. And share price is mostly driven by growth prospects. This is the real reason why Apple needs things like 3 camera lenses (just like Gillette needs 3 blades) and thin isn't thin enough. If you're a private company, you can do things like Hacker News and Craigslist where you don't change for the sake of change.

EDIT: to show the impact of growth prospects: Right now, Apple's P/E ratio is 20x with share price of $243. But in 2016, P/E was 11x with share price of $100. That is a 143% increase. If you look at revenues, 2019:$259B compared to 2016:$216B - which is only a 20% increase. Look at the article[0] from 2016, it says stuff like:

Apple shares are tanking this week because of a report in Japan's Nikkei newspaper that Apple plans to slash its output of iPhone 6S and iPhone 6S Plus by 30%.

That comes on the heels of an Accenture report warning that demand for smartphones is waning. People don't believe the newer models are all that much better than what they currently have, so they don't want to pay for an upgrade.

[0] https://money.cnn.com/2016/01/08/investing/apple-stock-100/i...

Re: Apple Q4 Results

#37

Post by coldtea »

bradhe wrote: post #14

> revenue between $85.5 billion and $89.5 billion A $4B margin is a pretty big margin...

Big is a relative term, and here it should relative to the middle of those estimations.

In which case, it's small (around 2.5% up or down way).

Re: Apple Q4 Results

#38

Post by VRay »

ogre_codes wrote: post #27
gigatexal wrote: post #17

Net income was? Also this BS about stock buybacks and dividends to become cash neutral is stupid. They should be betting on moonshot things that will be the next iPhone instead of all of this financial engineering.

If finding "the next iPhone" just required spending large enough sums of money, then Microsoft would have beat them to the punch before the iPhone came out. In all of history there have only been a few iPhone class disruptors. They are rare, and they come based more on timing and the presence of enabling technologies than any particular company simply investing billions in R&D.

yeah, these tech giants are constantly hiring tons of people and snapping up every interesting startup that rolls along in a desperate bid to turn money into more profitable products

Although I do wish Apple would buy some AAA game studios and make some AAA-quality games for their platforms..

Re: Apple Q4 Results

#39

Post by microtherion »

privateSFacct wrote: post #9
breatheoften wrote: post #2

What exactly is the advantage of reaching a cash neutral position? If you are a company that can reliably do that does that mean you no longer have to grow — since your investors are primarily attracted to a reliably stable ability to generate dividends?

The history is that apple had a crazy cash position partly because of the need to keep cash overseas to avoid tax on repatriation. What they did was borrow against that overseas cash to get US based on dollars. Cash neutral doesn't relate to growth, if you grew you'd need to increase cash to cover working capital needs generally (ie, Apple first has to pay for parts, inventory, factories, staff for them etc before it…

Not only is excess cash not very useful, I'd argue that it can be actively harmful, as it makes the company a target for a leveraged buyout.

Though maybe this does not apply to Apple, as a potential buyout would have to be about 30x as large as the largest leveraged buyout in history.

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