Applesauce: All Things Apple – April 28, 2013
This has been one of those perfect weeks where the duality of Apple is seen as brilliantly as a picture of running zebras across a marsh on a Retina MacBook Pro.
This week began with a crazy-ass rumor about some executives at Apple calling for their CEOâs resignation in the wake of stock that has been in a âfree fallâ for the past few months.
This story was rich.
This being the end of the week, we already know how it endsâŠApple holds their earnings call, report yet another stellar quarter (this time they beat expectations!) and now someone is paying half a million dollars just to sip some coffee with Mr. Cook.
Not long after the Wall Street Analysts were calling for Cookâs job, Apple finally broke their silence about this yearâs WWDC, iOS 7 and OS 10.9. Two minutes after the $1,599 tickets went on sale, they were completely sold out to eager developers who apparently still see Apple platforms as profitable ones.
These are the two sides of Apple; Apple as a publicly held company and Apple as a truly great devices and services company, one for which the excitement has yet to die.
After that lengthy preamble, I sure could go for some âsauce.
Everyoneâs Looking for a New Cook
Every now and again a rumor is started which is so ludicrous, so asinine, so completely and utterly vacuous, vapid, idiotic and wooden-headed (guess who has his Apple dictionary open?) that it doesnât even warrant a conversation. The rumor is dumb, you hear it, laugh, and move on.
Remember that nonsense about the âiPhone Math?â
Yeah, weâre talking THAT dumb.
Last weekend, just days before Apple was expected to announce their quarterly earnings, some writers such as Forbes contributor Gene Marcial began writing some nonsense about that Apple executives were calling for Cook to step down.
Olâ Marcial claimed that these executives were calling for Cookâs ouster, but readily admitted that he hadnât heard that board was looking for the same thing.
Letâs call this red flag number two.
Red flag number one should have been seeing the words âApple,â âReplacement,â and âCookâ together in the same sentence, but weâll get to that in a moment.
Things did not look good for Apple early this week. The company had, in fact, seen some of their lowest stock prices in 52 weeks. Much of that drop occurred since the fall, and the price seems to have been in a steady slide since. This, by itself, is a scary statistic, no doubt. Yet when considered with some other important information, like the fact that many analysts believed Apple stock had been priced too high to begin with and that many believed they were simply riding a wave of hype, this slow slip could be seen as nothing more than a return to normalcy.
Ah, but this is Wall Street weâre talking about. Thereâs no such thing as sane here. No, on Wall Street youâre either growing or you’re dying.
The past six months or so have been a relative drought for Apple. For more than 185 days there has been nary a word about any new Apple product, save their brief mention earlier this week about iOS 7 and OS X. They werenât cranking out any news and the rumor mill has been, lets say âlackingâ ever since.
I mean, seriouslyâŠan iWatch and cheap iPhone. Iâd sell my stock, too.
Whatâs interesting is even though people like Marcial tried to get a few clicks and links and make some extra lies based on bad information, some investors were willing to stand up for the House that Steve Built, saying that despite all these insane rumors about Cook stepping down, the company was still a strong one.
Even Marcial admitted that these investors were still bullish on Apple.
âThe Streetâs bullish stance is astonishing considering that some $290 billion of Appleâs market value has been wiped out in just six months,â writes Marcial in his Sunday article in Forbes.
âOf the 37 analysts from major securities firms who follow Apple, none has downgraded the stock to a sell, according to available data from MSN.com. But 25 of them still recommend the stock as a âstrong buyâ and six others rate it as a âmoderate buy.â Another six Apple watchers rate the stock as a hold.â
Hardly seems like the company is looking for a new CEO, Marcial.
Ah, before I forget, letâs get back to red flag number two.
Tim Cook was asked to take the reins at Apple just days before their iconic co-founder Steve Jobs passed on. During Jobsâ medical leaves, he put Tim Cook in charge. When Jobs finally stepped down, he suggested the board go ahead with their plan of moving Cook in place and letting him run the company.
Clearly someone believes in him, and nothing says âWe trust you to run this enormous companyâ like 1 million shares of APPL. Heâll get 50 percent of these shares in 2016 and the rest ten years after they were awarded to him in 2021.
Just doesnât seem prudent to offer a man a million of ANYTHING to stick around for ten years and then a little more than one year later decide that things just arenât working out, no?
As it turned out, Apple posted some pretty great numbers this last quarter, so maybe those âexecutivesâ who wanted Cookâs head on a silver platter have calmed down a bit?
The news wasnât filled with Marcials, however. Apple guru Phillip Elmer-Dewitt spoke against these egregious claims straight away, saying anyone who was starting these rumors was ânot a friend of Apple,â later adding:
âAs far as I know, he still has the deep respect of the analysts who know the company best and â most important â the confidence of the board of directors who granted a million restricted shares of Apple as an incentive for him to stick around for at least a decade.â
So thereâs that. Letâs hope we never have to address such idiocracy again.
Who am I kiddingâŠweâll probably have to do it next week.
The Road to Profitability is Paved with iPads
Appleâs earnings call wasnât all Peaches and Gravy, mind you. They did see a slip in profits, something the company has always fought vigorously to defend and earn. Their gross margin was also down year-over-year by nearly 10 percent. The company also failed to show any growth during the past quarter, though itâs also worth noting the company announced nary a product or service the entire time.
Iâve mentioned this before, havenât I?
The Cupertino Kid did see a rise in revenue, recording $43.6 billon with a net profit of $9.5. To put this into perspective, the company reported $39.2 billion in revenue and $11.6 billion in profit during last yearâs Q2.
Apple, it seems, has hit the point where theyâre no longer growing like a weed and making a little less profit. Yet they still have plenty of good things going for them, not to mention a few products and services that have yet to be announced.
Iâve mentioned this already, no?
Remember all those nonsensical rumors that demand for the iPhone 5 had suddenly flatlinedâŠthat everyone who wanted one already bought one and now no one in the world wants an iPhone 5?
(I may be exaggerating it a bitâŠ)
Apple sold some 37.4 million iPhones during the last quarter, a number that represents a seven percent year-over-year increase. The board even pointed to comScore numbers that found the iPhone to lead the US market share at 39 percent. All these iPhones were also helping to drive iTunes numbers, which contributed $4 billion to their total revenue. Ainât that a nice little tenth birthday present?
And of course, the board couldnât resist patting themselves on the back with that JD Power and Associates award they went on and on about just before Samsung announced the Galaxy S4. Did you hear that it was their ninth award for highest smartphone customer satisfaction? Did you?!
The company is clearly quite aware of the competition. Ah, who am I kiddingâŠ
They know Samsung is breathing down their neck, but they arenât TOO worried yet.
âThe smartphone market has always been competitive,â said Cook in his bravest-sounding voice.
âThe names of competitors have changed. In the beginning, RIM was the, sort of, the very strongest player because the smartphone as you know really got going in the enterprise area. And of course, today, our top competitor from a hardware point of view would be Samsung, married to Google on the operating system side.â
Cook made several comments about the iPhone and its place in the smartphone market. For instance, about Samsungâs fascination with Size, he claimed Apple could have a big-ass phone too, if they could only find a way to build a good one.
âOur competitors have made some significant trade-offs in many of these areas in order to ship a larger display. We would not ship a larger-display iPhone while these tradeoffs exist.â
Cook also said size alone isnât what makes the smartphoneâŠyou have to know how to work it to really please the public.
âSome customers value large screen size, others value also other factors, such as resolution, color quality, white balance, brightness, reflectivity, screen longevity, power consumption, portability, compatibility apps, many things.â
(A brief aside, Cook also seemed to shoot down those cheap iPhone rumors, saying theyâre working to price the iPhone 4 so that it will be âmore affordable in âcertain countriesâ around the world.â Letâs keep our fingers crossed. )
The iPhone showed some growth, but the real numbers were with the iPad. Apple sold (not shipped) 19.5 million of their best selling tablets in the second quarter of 2013, and increase of 65 percent over last yearâs 11.8 million. This is even more significant when you consider that Apple has usually announced a new iPad by this point in the year.
Rumors of a new iPad have so far been few and far between, of course, but the typical cycle didnât seem to bother too many people.
According to Cook, the iPad performed exceptionally well in China. Sales in the country which canât decide if they love or hate Apple was up by 138 percent over last year. All told, China was responsible for $8.8 billion of Appleâs total revenue. Looks like theyâll continue pushing their products in the East.
âGoing forward, we still see a significant opportunity in China. Itâs a great market, we have 11 stores there; we expect to double those in less than two years. We have added about 8000 iPhone point-of-sales in the indirect channel to about 19,000 a day, and we obviously have a plan to add more, and further grow our distribution,â said Cook of China.
Get Ye to WWDC
Have I mentioned that Apple has yet to make any product announcements in the past six months?
Thereâs some rumblings that there could be a deluge of new stuff come June at the World Wide Developers Conference.
Stop me if youâve heard this one before.
Last year, some sites claimed Apple would release brand new EVERYTHINGS during WWDC; New MacBook Pros, new iPhones and iPod Touches, New iPads, New Apple TV, New iMacs. You name it, theyâve got a new one.
Apple has already been fairly generous with their information this year, however. When they announced WWDC ticket sales, they also claimed they were primed and ready to show off iOS 7 and Mac OS X. This isnât a surprise, of courseâŠAppleâs been showing off these two platforms in the summer for the past two years. Yet, itâs not everyday Apple comes right out and ships a press release saying, âHey, hereâs what weâll be talking about. Get ready.â
Just as itâs been in previous years, WWDC will take place in early June (June 10-14) in San Franciscoâs Moscone West building. Five thousand developers from across the globe will descend upon the West Coast to talk all things Apple, drink lots of local craft beer (or organic fruit juices for the teetotalers) and hang out with the only people who understand them.
We probably wonât know what the âthemeâ of this yearâs WWDC will be until Apple begins to decorate the facilities at Moscone West (Iâve got my money on âNight on the Townâ), but Cook has already bragged on their pipeline, saying his company plans to unveil âamazing new hardware, software and services.â
Sounds to me like a new iPhone, iOS 7 and (please dear Christ) that Pandora killing iRadio.
This is pure speculation, of course. Iâve no inside knowledge.
But a man can dream, can he not?
Image Credit: Photos.com