Hmm, What Is Apple Doing?


Asian markets are not too bad right now. Xiaomi and Samsung only down 1 to 2%. Qualcomm was down 2% in AH. The component makers traded in HK are down around 2% as well.

Are we sure the Chinese smartphone market has melted down? How come all the other manufactures seem to be pretty calm?


Was in Taiwan a few weeks back. The manufacturers I met all kind of indicated that the smartphone market has slowed down, but no one said it was at deaths door. (this was general gossiping with them as I am not in the smartphone biz but my biz gets impacted by component shortages from other industries)


Smartphone is now at the top of the S curve. Whatever phones people have now are more than good enough. I routinely see phones more than 3 or 4 gens old and people are fine with them.


This seems serious:


Look, it doesn’t take an engineer’s IQ to have seen this coming. Apple’s Iphones are good, maybe too good, hence the problem. What you and others failed to grasp was that phones are not the must have at any price item. Remember, we used to get cell phones FOR FREE by just signing a contract with the carrier. Did you forget that? But how do some luxury items manage to do it (command a high price consistently)? Well, they certainly don’t come out and make so many variations in such a short time (every year or whatever), thus diluting and flooding the market to no end that the consumer soon then tunes out.


Not really…


Are you telling about this “Tim Cook is hosting an all-hands meeting with all employees tomorrow about today’s news, taking questions etc.”?

This is very common for CEOs to discuss in all hands or individual VPs to have such meetings so that every employee is comfortable with sudden news.


That’s the mob mentality for you.


According to data from Sensor Tower cited by TechCrunch, Netflix grossed about $853 million in the iOS App Store in 2018. At today’s 15 percent platform take, that means that Apple’s subscriptions program could face a reduction of more than $120 million in revenue as a result of Netflix’s decision, should the subscriber numbers be similar in 2019. Note, though, that that estimate does not account for existing users who will enjoy legacy support for the payment method until they next interrupt their automatic payments.


It is 265 millions impact to apple as per some morning news.


265M is a lot of free money even for Apple…


Now, even a small news becoming big hit for AAPL.

I have , long back, asked hanera whether Tim Cook will revise the guidance or not. Today, Bloomberg said that they do not remember exactly the last time Apple revised guidelines, may be around year 1998-2000.

Revising guideline, esp reduction, is a big issue for any company and to apple also. Investors wants to know what is the impact for subsequent quarters, how much dip…etc.

By this time, lot of analysts, investor group would have appx calculated future dips and come up with lowest AAPL pricing.

Yesterday only I read the 10-q report and iphone china sales is appx 19-20% range, that is a big hit with Qualcomm-China legal issue.

Not only AAPL, I see AMZN, GOOGL…etc dropped after hours. Oops, it may even touch, guess work, around 120 range !

If few other companies come like this way, then market will go down another 15%-20%, scary to think.

hmmm, let us see the challenges.



Last time Apple lowered guidance outside of earnings report time was 2002:

Only 2 paragraphs from Steve Jobs:

CUPERTINO, California June 18, 2002 Apple® today announced that it expects to generate revenues of about $1.4 billion to $1.45 billion in the June quarter, down from previous guidance of about $1.6 billion. The lower than expected revenues are primarily due to soft demand in the consumer and creative markets such as advertising and publishing. Geographically, revenues in Europe and Japan have become particularly weak. The revenue shortfall is expected to be offset significantly by higher than expected gross margins primarily due to lower costs of some components. Accordingly, the Company has revised its earnings guidance to $0.08 to $0.10 per diluted share, compared to previous guidance of $0.11 or slightly higher.

“Like others in our industry, we are experiencing a slowdown in sales this quarter. As a result, we’re going to miss our revenue projections by around 10%, resulting in slightly lower profits,” said Steve Jobs, Apple’s CEO. “We’ve got some amazing new products in development, so we’re excited about the year ahead. As one of the few companies currently making a profit in the PC business, we remain very optimistic about Apple’s prospects for long-term growth.”

And look at how cocky Jobs was.


Apple lost almost 57 Billion after hours, losing permanent top position to MSFT and second to AMZN.

Apple dropped 7.55% after hours and Google appx 2%, almost Mcap matching both.

Tomorrow to see whether it dips below GOOGL !


Here’s Tim Cook’s Memo to Employees About iPhone Sales Slowdown


While we are disappointed to be falling short of our quarterly revenue goal, our fiscal first quarter was also a record setter for revenue from Services, Wearables and the Mac. iPad revenue grew double-digits over the year-ago quarter, and iPhone activations in the U.S. and Canada set new Christmas Day records. We expect to set all-time revenue records in key markets including the US, Canada and Mexico, Western European countries including Germany and Italy, and countries across the Asia-Pacific region like Korea and Vietnam. Our worldwide installed base of active devices also hit a new all-time high, reflecting the loyalty of our customers and their appreciation for the work you do.”

So record revenues everywhere and all products except iPhone in China.

Class act to have an all-hands and take questions. I worked for a company that mysteriously had the all-hands during the quiet period. There were rumors the quarter was bad. We knew orders to contract manufacturers were significantly reduced which is never good. The story was we had built ahead and were working down inventory. The quiet period let the execs dodge all questions. The quarter was horrific, massive guide down for the full year, layoffs were announced, and the stock tanked 25% the day of earnings. No one respects an exec team like that, and no one stays around after either.


@manch so what’s the price point at which you’ll be ready to catch the bounce back?


I don’t buy bounce backs. You’d have to ask @hanera and @Jil. I like to buy companies with long term growth. Without another new hit product Apple doesn’t seem to have a ton of growth at this moment.

But if it fell below $100 the temptation may be too high for me to resist… Not likely though.


not likely falling below $100 or not likely to give in to temptation!

Btw, your curse has been working on APPL so we never know!