4 ms·

> 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 wi

by 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.
      - macintux 11y ago
        It's hard to imagine a scenario where Apple has peaked. Even replacement sales would sustain a healthy business, and they have extremely high satisfaction and retention rates. People value what Apple offers. A global depression could hurt the company badly. Anything short of that should allow them to keep making money. A bad Apple quarter is still lots and lots of money.
        jonknee 11y ago
        > It's hard to imagine a scenario where Apple has peaked. Even replacement sales would sustain a healthy business, and they have extremely high satisfaction and retention rates. It's not that hard, their largest growth market (by far) is a huge question mark. It's tough to rely on a single product that is expected to be replaced every year. There will be a ton of pressure on the iPhone 7.
        scarface74 11y ago
        Apple's services revenue is growing every year. As long as their installed base keeps growing or even remains stable they can make money off of their existing customers. They aren't in the position of other phone manufacturers or computer manufacturers - with decreasing margins and only being able to make money at the point of sale. It was reported that the average selling price of iPhones was up by $3 and would have been up by $80 if it weren't for currency fluctuations.
      - 9935c101ab17a66 11y ago
        If you google "is apple undervalued," you'll find a litany of articles arguing that very point. One of the clearest indicators is the P to E ratio. Alphabet PE: 35, Apple: 11 (currently)
    - forgetsusername 11y ago
      >your business is dramatically undervalued You must know something that millions of other sophisticated people don't.
      - macintux 11y ago
        2008, Apple was trading at $12 (split-adjusted) and nearly every careful observer of the company knew that was stupidly low based on the trajectory of the iPhone. Relying on the stock price as a valid indicator of the value of a company is a fool's errand, regardless of the "sophisticated people" trading it.
    - ksec 11y ago
      Well Apple dont need to pay dividends, it never was a dividends stock until recently. The whole notion of buying back stock just to save a few dividends sounds silly to me. I really wish someone enlighten me why, why spend 183 billion on share buyback and dividends when it has nearly no use for the stock price, and no real use for the company long term etc.
      - jbverschoor 11y ago
        For employees and to take the company private again
  - scarface74 11y ago
    Apple bought 10 companies last year mostly small companies. The age of spending money buying large companies and creating non focused conglomerates is dead. GE, for example, has been busy making itself smaller over the past couple of years. Google split itself up to become more focused and Sony just announced the creation of a separate PlayStation division.
    - lostlogin 11y ago
      GE is imploding from what I can tell. Their medical imaging and drug systems are an absolute shambles. Staff are walking out and not coming back. They aren't controlling what's happening, they are in some sort of death spiral as far as I can tell. Australasian former GE customer here.
- jonknee 11y ago
  They said today that revenues are going to be down in Q1 2016 and they haven't done that since 2003. Buybacks may or may not be smart. They bought a ton of stock last year when the shares were 20% higher than today. That's a rather expensive way to make your EPS.
zepto 11y ago
Revenue estimates are made by people who don't actually know how the business works or what the facts are. Why do you put such faith in their meaning?
- jonknee 11y ago
  For not knowing how Apple's business works they sure got close! It was on the low-end of Apple's guidance as well, are you sure Apple knows how Apple works? What about the downgraded estimates for Q1? I put faith in their meaning because Apple is valued based on them.
  - zepto 11y ago
    Apple's value is not based on them. Apple's short term stock price is affected by them, but you only have to look back over the past couple of years to see that the price doesn't reflect the value.
konradb 11y ago
> They didn't meet revenue estimates and advised that the current quarter is going to be much worse than expected. I do find it fascinating how the market works to adjust to new knowledge. The expectation or estimates of someone may not even have a bearing on what actually will happen. You could almost see it as a delusion suffered by someone to have an estimate/expectation - as it will never be exactly reality - but it turns into an actual market event.

by jonknee 11y ago

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.
    - macintux 11y ago
      It's hard to imagine a scenario where Apple has peaked. Even replacement sales would sustain a healthy business, and they have extremely high satisfaction and retention rates. People value what Apple offers. A global depression could hurt the company badly. Anything short of that should allow them to keep making money. A bad Apple quarter is still lots and lots of money.
      - jonknee 11y ago
        > It's hard to imagine a scenario where Apple has peaked. Even replacement sales would sustain a healthy business, and they have extremely high satisfaction and retention rates. It's not that hard, their largest growth market (by far) is a huge question mark. It's tough to rely on a single product that is expected to be replaced every year. There will be a ton of pressure on the iPhone 7.
        scarface74 11y ago
        Apple's services revenue is growing every year. As long as their installed base keeps growing or even remains stable they can make money off of their existing customers. They aren't in the position of other phone manufacturers or computer manufacturers - with decreasing margins and only being able to make money at the point of sale. It was reported that the average selling price of iPhones was up by $3 and would have been up by $80 if it weren't for currency fluctuations.
    - 9935c101ab17a66 11y ago
      If you google "is apple undervalued," you'll find a litany of articles arguing that very point. One of the clearest indicators is the P to E ratio. Alphabet PE: 35, Apple: 11 (currently)
  - forgetsusername 11y ago
    >your business is dramatically undervalued You must know something that millions of other sophisticated people don't.
    - macintux 11y ago
      2008, Apple was trading at $12 (split-adjusted) and nearly every careful observer of the company knew that was stupidly low based on the trajectory of the iPhone. Relying on the stock price as a valid indicator of the value of a company is a fool's errand, regardless of the "sophisticated people" trading it.
  - ksec 11y ago
    Well Apple dont need to pay dividends, it never was a dividends stock until recently. The whole notion of buying back stock just to save a few dividends sounds silly to me. I really wish someone enlighten me why, why spend 183 billion on share buyback and dividends when it has nearly no use for the stock price, and no real use for the company long term etc.
    - jbverschoor 11y ago
      For employees and to take the company private again
- scarface74 11y ago
  Apple bought 10 companies last year mostly small companies. The age of spending money buying large companies and creating non focused conglomerates is dead. GE, for example, has been busy making itself smaller over the past couple of years. Google split itself up to become more focused and Sony just announced the creation of a separate PlayStation division.
  - lostlogin 11y ago
    GE is imploding from what I can tell. Their medical imaging and drug systems are an absolute shambles. Staff are walking out and not coming back. They aren't controlling what's happening, they are in some sort of death spiral as far as I can tell. Australasian former GE customer here.
jonknee 11y ago
They said today that revenues are going to be down in Q1 2016 and they haven't done that since 2003. Buybacks may or may not be smart. They bought a ton of stock last year when the shares were 20% higher than today. That's a rather expensive way to make your EPS.

zepto 11y ago

Revenue estimates are made by people who don't actually know how the business works or what the facts are. Why do you put such faith in their meaning?

jonknee 11y ago
For not knowing how Apple's business works they sure got close! It was on the low-end of Apple's guidance as well, are you sure Apple knows how Apple works? What about the downgraded estimates for Q1? I put faith in their meaning because Apple is valued based on them.
- zepto 11y ago
  Apple's value is not based on them. Apple's short term stock price is affected by them, but you only have to look back over the past couple of years to see that the price doesn't reflect the value.

konradb 11y ago

> They didn't meet revenue estimates and advised that the current quarter is going to be much worse than expected. I do find it fascinating how the market works to adjust to new knowledge. The expectation or estimates of someone may not even have a bearing on what actually will happen. You could almost see it as a delusion suffered by someone to have an estimate/expectation - as it will never be exactly reality - but it turns into an actual market event.