Apple -- An Update -- November 2, 2023

Locator: 45921AAPL. 

From the archives:

• Three Bell Capital, Jon Porter, February 4, 2019:
• As Apple plunged 30% late last year against a slew of bad headlines about China and iPhone demand, some of Jon Porter’s clients had concerns. 
• Porter is the CEO of Three Bell Capital, a Los Altos, California firm that manages more than $1 billion for clients, mostly people in San Francisco, and that means people who work in technology.
  

Previously Posted

June 8, 2023: Yesterday: my first blog on Apple Silicon, arguably the biggest chip company in the world.

Today, more, from The Verge, dated June 7, 2023. Jon Porter "heard" the same thing I heard during Tim Cook's WWDC keynote speech.

Although it seems like a surefire thing in retrospect, it’s worth taking a moment to reflect on how successful Apple’s switch to Apple Silicon has been. Prior to Apple’s big announcement, Arm-based processors had only really been successful in smartphones. A couple of manufacturers had attempted to make Windows laptops work on Arm (perhaps most notably with the Surface Pro X), but none had delivered on the promises of the architecture without significant compromises.

Apple has not just successfully transitioned its entry-level MacBooks to Arm, where the architecture’s battery life benefits were the biggest appeal, but it also upended our concept of Arm performance for both laptops and desktops. Apple not only ported its own operating system and apps but also convinced major third-party developers to do the same.

The iPhone manufacturer is notorious for its love of control. It controls how people can use its smartphones and which apps they can install. It controls how the repair ecosystem around them works. And with its transition to Apple Silicon, it has an unprecedented amount of control over how it makes its Macs. It doesn’t need to wait for Intel and AMD to release new chips to upgrade its computers or rebuild a relationship with Nvidia. Now, as it starts its next journey, Apple can march to the beat of its own drum.

 
Apple suppliers:

 

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Earnings: 4Q23
Quarter Ending September 30, 2023

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Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source.

Results for Apple: beat on top and bottom.

• closed at $177.57; up $3.60; up 2%.
  
• revenues, forecast, $89.28; actual $89.50; 
• four straight quarters of revenue decline; accounts for fall in share price;
  
• EPS, forecast, $1.39 - $1.45; actual: $1.46.
  
• margins: 45.2% vs 44,5%
  
• iPhones: exactly in line
• strong demand; can't keep pace with demand
• North American: demand up y/y
• Asia; flat to slightly lower
  
• Mac business: down 30% (?) 
• but Tim Cook looks for a much better 1Q24 (December / holiday quarter) with the new M3 Macs; another reason for stock being down after hours;
  
• services: a big beat; another record; 
• a proxy for loyalty; consumers willing to buy "more" from Apple after original purchase
• for one analyst: this is what Apple is now all about
• Macs? A rounding error for Apple
• has announced a price increase in TV+ for example
  
• after-hours, ticker:
• before earnings report: up 17 cents at 4:01 p.m.; 4:26 p.m. up 43 cents;
  
• immediately after hours, a drop of $1.32 / share; then quickly, $2.96 / share drop; looks like shares will settle down $2.32 after the close. Wow, wow, wow -- looks like AAPL will finally settle down $1.23 / share.
  
• $175 still looks like the new AAPL floor; P/E: 30 based on this quarter's earnings (x4) but isn't quite accurate because first quarters should have greater earnings
• for me: continues to be a "hold and accumulate at the dips"; 
• is the new floor, $175?
• of all new money going into investing, perhaps 5% to AAPL on a monthly basis;
  
• while waiting for new AAPL floor, think Apple suppliers: SWKS, Broadcom (AVGO)
• AVGO soared today: up $18 or 2%.
  

China: 

• based on results today, starting with Starbucks, China consumer is in a much better situation than naysayers suggesting.
• this is why I quit following macro-economics: the Starbucks consumer doesn't check the country's GDP before deciding whether to have a Starbucks coffee.
  

Others (as you go through these, does this sound like the recession which Charlie Munger says we're in?), announcing before AAPL; transcribed quickly, expect typographically and content errors; for my use only:

• Paramount: beat on top and bottom; stock spiking about 8%; soared 12% today by the time it was all over;
  
• Expedia: beat on top and bottom; $5 billion buyback; record level travel bookings for any 3rd quarter;
• Skyworks: beats; $2.20 vs $2.10 EPS forecast; revenue in line; key component supplier for Apple; guidance fell short;
  
• Dropbox: beat on top and bottom lines
• Live Nation: beats; $1.78 vs. $1.27; record after record; second straight massive beat; think
• Block: beats 55 cents vs 47 cents; ticker up 15% after market close;
• Carvana: ticker moving higher; earned over $3; a loss was forecast; this was such a shock, CNBC unable to do the math (seriously)
  

Job cuts: 

• lots of talk earlier this week about Schwab's job cuts of 5%;
• in fact, lots of companies cutting, including MSFT announcement today; 

Analysts:

• almost all talking heads while these results were being reported said they expected a recession in 2024.
• have they been talking about "the" recession for the past three years?
• yes, of course, there will be a recession; that's not a hard prediction to make.