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Exchange rates are killing them. The strong USD is cutting into profits in a major way. With iPad, Mac and now iPhone showing flat (and negative) growth I wou

by nemo44x 11y ago

Exchange rates are killing them. The strong USD is cutting into profits in a major way. With iPad, Mac and now iPhone showing flat (and negative) growth I would expect a fairly flat stock price for the time being. When/If the USD begins to lose value to other currencies I'd call that a good time to consider to build a position in AAPL. I don't have a position but was hoping for a big win this quarter. AAPL exemplifies a lot of the issues many companies are having because of exchange rates and I do not expect the broader market to do much better for awhile. Especially with so much foreign debt in USD, a lot of companies are going to have a hard time paying off bonds and loans, hurting their ability to grow.

Analemma_ 11y ago
> was hoping for a big win this quarter. The largest quarterly profit ever recorded by any company wasn't enough of a big win? I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown. > Especially with so much foreign debt in USD, a lot of companies are going to have a hard time paying off bonds and loans, hurting their ability to grow. All the tech companies that have had big bond issues recently (Apple, Microsoft, etc.) are doing it because it's literally cheaper than repatriating their actual foreign earnings to the United States. As long as those foreign earnings continue to exist, borrowing money is arguably a better way to finance their day-to-day operations, especially when interest rates don't seem likely to climb much in the intermediate future.
- nemo44x 11y ago
  They aren't growing is the problem. But more importantly when you look at their numbers in China you can see the global slowdown. It's bad for all global companies. As for bonds, I meant by foreign companies. Many bonds have been written with USD which are now becoming painful to payoff as their own currencies are not valued well against the USD.
  - Analemma_ 11y ago
    > As for bonds, I meant by foreign companies. Ah, I'm sorry, I misunderstood your post. But even so I'm not clear on why the indebtedness of foreign companies affects Apple all that much, except that it's a signal of the health of the global economy.
  - Outdoorsman 11y ago
    Growth is a key word; serious investors pay particular attention to current and long-term "prospects"... Estimation of ROI potential decreases, usually dramatically, when a company is suspected of having plateaued...
- jonknee 11y ago
  > The largest quarterly profit ever recorded by any company wasn't enough of a big win? I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown. Of course it can. They didn't meet revenue estimates and advised that the current quarter is going to be much worse than expected. Wall Street [typically] values companies based on future expected earnings and there is constant pressure to increase growth. The same compound math that gives quickly growing companies lofty valuations works in reverse when your revenues are declining.
  - macintux 11y ago
    Revenues aren't declining yet, and their valuation has been significantly depressed for years during rapid growth. Apple continues to do the smart thing given the situation: buy AAPL.
    - ironsides 11y ago
      Are you suggesting that the smart move for Apple is a stock buy back? As opposed to investing in more R&D? Or, perhaps acquiring start ups with exciting new products or technologies?
      - macintux 11y ago
        When you have $200 billion dollars lying around, you can do multiple things simultaneously. When you have $200 billion dollars lying around and your business is dramatically undervalued, it would be practically criminal not to buy some of it back, to save on dividend payments if for no other reason.
        jonknee 11y ago
        > When you have $200 billion dollars lying around and your business is dramatically undervalued, it would be practically criminal not to buy some of it back, to save on dividend payments if for no other reason. Who's to say Apple is undervalued? It's one of the most widely held companies and they have been so for several years. Tim Cook doesn't know what's going to happen in China. Their US sales were down in Q4 2015 and they are forecasting global sales to be down in Q1 2016. They may have been spending billions buying back shares at an all time high.
- refurb 11y ago
  The largest quarterly profit ever recorded by any company wasn't enough of a big win? I used to think the same thing, but realized I was looking at it incorrectly. A companies stock prices has a certain level of earnings growth built in. If future sales don't hit those assumptions, then stock falls. Yes, the biggest quarterly profit is great, but that's yesterday's news. The market is always looking forward.
- forgetsusername 11y ago
  >I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown. Why is this a surprise, let alone a knock against capitalism? Share price at any given moment is based on available information, meaning the current price is based on expected phone sales, exchange rates, revenue, profits, etc. Those expectations were high going into earnings.
- stvswn 11y ago
  >there is something deeply wrong with capitalism Really? Current stock prices reflect the expected future cash flows and the cost of capital. When new information changes the expectation of future cash flows -- like, say, a quarterly report that indicates growth is slower than estimated -- you'd expect the price to drop. No one is saying that Apple didn't make a lot of money. No one said they aren't a great company. They're saying "the picture of the future just changed a bit." So, what's wrong with capitalism? What's irrational here?
hyperbovine 11y ago
The iPhone 6 lists at 459 British pounds which even with the historically low exchange rate is still $100 premium over the US version. Ditto the euro, Australian dollar, etc. It's not such a surprise that they were able to make loads of $$ in foreign markets back when the exchange rates vs USD were much less even.
- TazeTSchnitzel 11y ago
  US shelf prices don't include the sales tax, but UK prices for consumers include VAT. At the current VAT rate of 20%, that's 16⅔% of the price, or about £76.50, which in US currency is… $109. The entire price difference is VAT.
  - lostlogin 11y ago
    This is such a horror when shopping in the US. Why bother putting a price tag on things when the price you pay is different. How would a tourist know what the tax is when it changes multiple times over a car journey? It seems archaic.
    - dogma1138 11y ago
      Because it's the right thing to do you know exactly what you pay in tax which means you are more likely to hold the government accountable for that money as well as being able to actually lobby for lower taxation. Since sales tax is applied on both state and local government levels it also simplifies pricing both nation wide and even state wide. Walmart for example sets a price for product A that price is the same across all states (for this example I don't know if Walmart has regional prices to adjust for cost of living but I don't think so). 45 states have sales taxes these come at different rates, about 40 states also allow for local sale taxes meaning that local county can set up it's own additional sales tax this means that the end price is different between states and even within states with local sales tax collection. As a consumer you know exactly what you are paying if the product costs 100$ then you pay 100$ for that product and you pay additional tax for the sale when you know your state taxes you 8% and your local county taxes you additional 4% you can hold them responsible for what your taxes are being used for, you can lobby for lower sale taxes and you can always move to a jurisdiction with lower sales tax. The way the sales tax is collected also allows for more convenient exemption from sales tax especially in non B2B purchases a sales tax exemption certificate can be filled at any purchase and they will not charge you sales tax. You can literally go online print the exemption certificate for your state e.g. http://www.tax.ohio.gov/portals/0/forms/fill-in/sales_and_use/exemption_certificates/ST_STEC_B_FI.pdf http://www.tax.ohio.gov/portals/0/forms/fill-in/sales_and_us... go to a shop pay the sticker price and fill it out and the store will not collect the sales tax on that sale. Compared to how annoying it is to get VAT refunded and just how many caveats there are for getting your VAT back it's 100 times better.

by nemo44x 11y ago

Analemma_ 11y ago

> was hoping for a big win this quarter. The largest quarterly profit ever recorded by any company wasn't enough of a big win? I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown. > Especially with so much foreign debt in USD, a lot of companies are going to have a hard time paying off bonds and loans, hurting their ability to grow. All the tech companies that have had big bond issues recently (Apple, Microsoft, etc.) are doing it because it's literally cheaper than repatriating their actual foreign earnings to the United States. As long as those foreign earnings continue to exist, borrowing money is arguably a better way to finance their day-to-day operations, especially when interest rates don't seem likely to climb much in the intermediate future.

nemo44x 11y ago
They aren't growing is the problem. But more importantly when you look at their numbers in China you can see the global slowdown. It's bad for all global companies. As for bonds, I meant by foreign companies. Many bonds have been written with USD which are now becoming painful to payoff as their own currencies are not valued well against the USD.
- Analemma_ 11y ago
  > As for bonds, I meant by foreign companies. Ah, I'm sorry, I misunderstood your post. But even so I'm not clear on why the indebtedness of foreign companies affects Apple all that much, except that it's a signal of the health of the global economy.
- Outdoorsman 11y ago
  Growth is a key word; serious investors pay particular attention to current and long-term "prospects"... Estimation of ROI potential decreases, usually dramatically, when a company is suspected of having plateaued...
jonknee 11y ago
> The largest quarterly profit ever recorded by any company wasn't enough of a big win? I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown. Of course it can. They didn't meet revenue estimates and advised that the current quarter is going to be much worse than expected. Wall Street [typically] values companies based on future expected earnings and there is constant pressure to increase growth. The same compound math that gives quickly growing companies lofty valuations works in reverse when your revenues are declining.
- macintux 11y ago
  Revenues aren't declining yet, and their valuation has been significantly depressed for years during rapid growth. Apple continues to do the smart thing given the situation: buy AAPL.
  - ironsides 11y ago
    Are you suggesting that the smart move for Apple is a stock buy back? As opposed to investing in more R&D? Or, perhaps acquiring start ups with exciting new products or technologies?
    - macintux 11y ago
      When you have $200 billion dollars lying around, you can do multiple things simultaneously. When you have $200 billion dollars lying around and your business is dramatically undervalued, it would be practically criminal not to buy some of it back, to save on dividend payments if for no other reason.
      - jonknee 11y ago
        > When you have $200 billion dollars lying around and your business is dramatically undervalued, it would be practically criminal not to buy some of it back, to save on dividend payments if for no other reason. Who's to say Apple is undervalued? It's one of the most widely held companies and they have been so for several years. Tim Cook doesn't know what's going to happen in China. Their US sales were down in Q4 2015 and they are forecasting global sales to be down in Q1 2016. They may have been spending billions buying back shares at an all time high.
refurb 11y ago
The largest quarterly profit ever recorded by any company wasn't enough of a big win? I used to think the same thing, but realized I was looking at it incorrectly. A companies stock prices has a certain level of earnings growth built in. If future sales don't hit those assumptions, then stock falls. Yes, the biggest quarterly profit is great, but that's yesterday's news. The market is always looking forward.
forgetsusername 11y ago
>I don't want to soapbox too much, but there is something deeply wrong with capitalism when you can be more profitable than any corporation that has ever existed and it seems like a letdown. Why is this a surprise, let alone a knock against capitalism? Share price at any given moment is based on available information, meaning the current price is based on expected phone sales, exchange rates, revenue, profits, etc. Those expectations were high going into earnings.
stvswn 11y ago
>there is something deeply wrong with capitalism Really? Current stock prices reflect the expected future cash flows and the cost of capital. When new information changes the expectation of future cash flows -- like, say, a quarterly report that indicates growth is slower than estimated -- you'd expect the price to drop. No one is saying that Apple didn't make a lot of money. No one said they aren't a great company. They're saying "the picture of the future just changed a bit." So, what's wrong with capitalism? What's irrational here?

hyperbovine 11y ago

The iPhone 6 lists at 459 British pounds which even with the historically low exchange rate is still $100 premium over the US version. Ditto the euro, Australian dollar, etc. It's not such a surprise that they were able to make loads of $$ in foreign markets back when the exchange rates vs USD were much less even.

TazeTSchnitzel 11y ago
US shelf prices don't include the sales tax, but UK prices for consumers include VAT. At the current VAT rate of 20%, that's 16⅔% of the price, or about £76.50, which in US currency is… $109. The entire price difference is VAT.
- lostlogin 11y ago
  This is such a horror when shopping in the US. Why bother putting a price tag on things when the price you pay is different. How would a tourist know what the tax is when it changes multiple times over a car journey? It seems archaic.
  - dogma1138 11y ago
    Because it's the right thing to do you know exactly what you pay in tax which means you are more likely to hold the government accountable for that money as well as being able to actually lobby for lower taxation. Since sales tax is applied on both state and local government levels it also simplifies pricing both nation wide and even state wide. Walmart for example sets a price for product A that price is the same across all states (for this example I don't know if Walmart has regional prices to adjust for cost of living but I don't think so). 45 states have sales taxes these come at different rates, about 40 states also allow for local sale taxes meaning that local county can set up it's own additional sales tax this means that the end price is different between states and even within states with local sales tax collection. As a consumer you know exactly what you are paying if the product costs 100$ then you pay 100$ for that product and you pay additional tax for the sale when you know your state taxes you 8% and your local county taxes you additional 4% you can hold them responsible for what your taxes are being used for, you can lobby for lower sale taxes and you can always move to a jurisdiction with lower sales tax. The way the sales tax is collected also allows for more convenient exemption from sales tax especially in non B2B purchases a sales tax exemption certificate can be filled at any purchase and they will not charge you sales tax. You can literally go online print the exemption certificate for your state e.g. http://www.tax.ohio.gov/portals/0/forms/fill-in/sales_and_use/exemption_certificates/ST_STEC_B_FI.pdf http://www.tax.ohio.gov/portals/0/forms/fill-in/sales_and_us... go to a shop pay the sticker price and fill it out and the store will not collect the sales tax on that sale. Compared to how annoying it is to get VAT refunded and just how many caveats there are for getting your VAT back it's 100 times better.