Live data from Hacker News

Apple Reports Declining Profits and Slowing Growth Again

nytimes.com

351–360 of 527 posts

Re: Apple Reports Declining Profits and Slowing Growth Again

#351

Earlier quoted context omitted.

I'm not suggesting those were good ideas, only that they were rumors about innovative products that got a lot of attention, in part because everyone thought Apple must be up to something, because they hadn't made a big splash in a long time. Maybe the problem isn't that Apple's isn't innovating anymore, but that so many others now are as well, so innovation gets lost in the crowd. Companies like Tesla, Amazon, and Go…

Tesla - losing money Google - the only thing they are doing profitability is selling ads. Just look at Apple’s revenue split (second graph). How do you think that compares to Google? https://sixcolors.com/post/2019/07/apple-third-quarter-2019-... A “successful” product is one that you can sell for more than it costs to make. Anyone can sell dollar bills for 0.95 cents. Amazon? Yes AWS is definitely successful and inn…

What does any of this have to do with innovation, the topic of the thread? There are lots of very successful companies that don't release innovative consumer products. My point isn't that Apple is a bad company, it's not that other companies are 'better' companies. It's simply that the kind of 'home run' innovation for which Apple is famous has been missing for the last decade. The Apple Watch is a great product, it's very successful. I just don't think it was innovative the same way other Apple products have been.

But let's say it is. Going back to my original question (which I've been roundly downvoted for having the temerity to even ask): if Apple stopped innovating, would they still be the same company we love? Would fans still be so emotionally invested that they reflexively attack anyone who publicly criticizes the company, however obliquely?

Re: Apple Reports Declining Profits and Slowing Growth Again

#353

Earlier quoted context omitted.

I'm not saying Apple isn't successful. In fact, that's my point: they're clearly releasing solid products. But they aren't the category-killers that the company's reputation for innovation is built on. There have been rumors of new innovations (reinventing TV, an Apple Car, augmented reality) but none have materialized. Regardless of whether you agree they haven't been innovating, my question stands: if they stop inn…

Apple now is the world’s largest watch maker both by units sold and by revenue. In fact Apple Watch’s revenue is projected to surpass that of the entire Swiss watch industry this year. Even if it doesn’t “kill” the existing category, I’ll say they did a fantastic job carving out the smartwatch category.

Again, I'm not saying the Watch hasn't been successful, or that it's a bad product. I'm saying it wasn't as innovative as many of Apple's other successful products were. It's much more an extension of the iPhone than a standalone innovation.

Re: Apple Reports Declining Profits and Slowing Growth Again

#354

Earlier quoted context omitted.

I don't think you can plausibly argue that the Echo is not a success for Amazon, I'm sorry. Apple would've loved to be in that market first, they just missed it.

You think Apple would have loved to sell a low margin $50-$150 product? Have you been following Apple for the last 40 years? The only time Apple sold inexpensive electronics that I can remember were the iPod Shuffles and they were more expensive than other low end MP3 products.

But Apple wouldn't have needed to sell them at $50-150. They're Apple. They could've sold them for $399. They couldn't make the Echo because they lacked either the market insight to see the opportunity, or the technology to pull it off.

Re: Apple Reports Declining Profits and Slowing Growth Again

#355
post #325

Earlier quoted context omitted.

We have stopped expecting exponential growth, that's what the linked article is about. "Slowing Growth" is literally in the title! And that means things, like for example the stock has to decline and/or dividends increase because it becomes more productive to put that money into companies that are growing. Investors care about news like this. It seems like a lot (a lot ) of readers here are looking at the article as…

Yes but many people fail to realize that the company's stock price is future valuation and growth.

A company's stock price is based in part on the expectation of future results, not future growth.

The extent to which that expectation tilts toward wanting/demanding growth, varies from one stock to the next. Some companies do not trade with a heavy tilt toward the requirement for growth. Others do, and if a company misses on that growth expectation, the stock will plunge. Whereas other companies go without growth for years and maintain a relatively high PE ratio.

If this were not the case, any company with zero growth or a contracting business would be treated as worthless - or otherwise granted an extreme discount - by the market.

McDonald's saw contraction in its business for years, the market still saw fit to routinely grant it a 20+ PE ratio while they shrank. Coca Cola has been in a similar scenario, they've had horrible business performance for years, yet they have a 30+ multiple. Boeing is getting its corporate brains pounded in right now, in every possible regard financially, and yet the stock is very high (and their multiple is about to be astronomical). There is zero expectation for growth in the near future for Boeing.

So what's the basis of Coca Cola's valuation if it isn't growth year to year? Well, all sorts of things enter the picture depending on the stock. KO pays a dividend. KO has an extremely valuable and enduring brand. KO appeals to conservative investors who feel safe owning it (in a world in which ~$13 trillion in debt is trading at negative yields). KO gets put into all sorts of conservative investment vehicles, that helps prop up the stock. KO has a very large international business, so it gets an investor exposure outside of the US; some investors like that (even if doesn't make a lot of sense as a good investment argument in this case; investors are often not rational). KO buys back their own stock, which props things up a bit. KO has maintained fat margins even as their top line has contracted, investors surely like the overall profitability. KO has large, long-term owners, such as Buffett / Berkshire Hathaway, which lends confidence. And no doubt there is also a segment of investors that think KO may one day return to growth again (even if there hasn't been evidence to support that premise for many years), or otherwise make moves to expand the business (eg by acquiring Monster). Most of the arguments and cause for KO at a 30+ PE ratio, have nothing to do with expectations for growth, however.

Apple could go years without growth, and still maintain a surprisingly high PE ratio, a 15-20 multiple for example. You could see them go without growth for many years and the stock merely goes sideways, while the expectation for growth entirely disappears (if stocks were all heavily priced based on future expectations for growth, Apple would have already fallen off a cliff, as nobody expects much growth for AAPL going forward; investors are at best hoping they can replace falling iPhone revenue with service revenue over time). Or maybe the market sours on their performance, they fall out of favor, and they go back to having a ~10 PE ratio as they did in the not so distant past. Plenty of this stuff is emotional (a stock getting tagged in the financial & business press with a negative growth story that dogs it for years) or momentum-based, it often makes no logical sense.

Not that long ago Facebook had a 20 PE, while actually still producing healthy growth. Meanwhile over there is Coca Cola with zero growth for years, zero expectation for growth, and getting granted a higher PE ratio (KO also arguably has an even worse negative story re sugar). That's an example of comical irrationality in charge and FB getting tagged with a negative, emotion-heavy story in all the business press. Then 'magically' it fades, the extreme negative emotionalism fades from the business press, and FB's multiple expands. This is the aspect of human nature that in part led Ben Graham to his statement about the market being a voting machine short-term (emotional heavy; reactionary; did the quarterly results surprise, miss, beat, et al.), and a weighing machine long-term (what is the enduring value of the Coca Cola company, what are its assets, how much is their business really worth, will that persist for many years to come, what will their cash flow look like over the next five or ten years, etc).

Re: Apple Reports Declining Profits and Slowing Growth Again

#356
post #345
post #325

Earlier quoted context omitted.

We have stopped expecting exponential growth, that's what the linked article is about. "Slowing Growth" is literally in the title! And that means things, like for example the stock has to decline and/or dividends increase because it becomes more productive to put that money into companies that are growing. Investors care about news like this. It seems like a lot (a lot ) of readers here are looking at the article as…

I was commenting on the idea that "for Apple, [these numbers] are sort of a disaster". I agree that Apple changing from a growth company to a static company is interesting to investors.

Disaster is certainly hyperbole. It would imply their business is in jeopardy or something. All this means is a lower P/E ratio in the future. Apple has an absurd amount of cash on hand, and are still earning huge profit.

Re: Apple Reports Declining Profits and Slowing Growth Again

#358
post #52

Earlier quoted context omitted.

I’m even older than you apparently, but I just don’t see the attraction of the bezel-less design. I like bezels, they: - let me hold the phone without blocking the screen - act as a buffer for cracks: a smaller crack in the corner (the most common kind in my experience) won’t affect your experience. - mean I don’t have to deal with notches or curved displays Privilege check: I have large hands, I can single-handedly…

Have you actually used a bezel-less device? They’ve sold hundreds of millions of them. I think it would be a scandal much like the laptop keyboards if their software for ignoring accidental input at the screen edge wasn’t essentially flawless.

what gives you the impression that I believe their software for ignoring accidental input is flawed?

Re: Apple Reports Declining Profits and Slowing Growth Again

#359

Earlier quoted context omitted.

If one of these major launches is a MacBook Pro with the same (or better) specs (esp video graphics) as their latest MacBook Pro, but without a TouchBar, they will get at least $2,500 from me. If one of these major launches is an iPhone X-like phone with a thumbprint reader (home button or otherwise), they will get at least another $1,000 from me.

I also loved home button finger print reader - why can’t they have at least one model w it and let market vote

They do it's called the iPhone 8, it was introduced alongside the FaceID iPhone X.

Re: Apple Reports Declining Profits and Slowing Growth Again

#360

Earlier quoted context omitted.

Apple TV (and accompanying remote) is by far one of the worst UI/UX experiences I've seen.

Try Carplay, it's an absolute fucking disaster to use compared to Android Auto.

CarPlay is getting way better in iOS 13. E.g. you can finally run different apps on the car screen and the phone! It also has a nice "home screen" with useful widgets instead of just a grid of icons.
Post reply on HN