I’ve more or less moved to Apple News

(And here’s where you can go to visit the channel (requires iOS device in or set to US, UK or Australia for now), and hopefully add the ‘Tree to your roster of favorite channels: https://t.co/IWseKSCmDV )

The transition’s more or less complete, and I’m now able to post in “native” News format. I certainly wouldn’t have minded updating both this blog and the Apple News channel at the same time, but that apparently is impossible in the WordPress Free context – and I don’t have any current plans to “hire” a web host + get WordPress Regular + Apple News plug-in.

Well, not yet anyway. One thing at a time for this humble blogger.

For those dozen or so loyal readers, some of whom may not have an iOS device or be in an area where it’s practical to access Apple News, I apologize, but it’s difficult for me to “port” my Apple News posts back to WordPress. Basically it only kinda works on text. Hyperlinks and images have to be imported manually. The TL;DR blog syndrome I suffer from 😰 doesn’t help any.

And, believe it or not, when the post content or gravitational pull of the moon or the day is right, I bring in way more Apple News readers than I ever did WordPress readers.

So even though I feel WordPress is a better blogging platform overall, it’s really a no-brainer for me, in terms of getting readership anyway, to continue focusing on the News channel for the time being. No seriously, if you only knew how many daily visitors I can now get on a good day, you might straight-up laugh in disbelief. Granted, it’s still not much, but it’s better than the 100-ish visitors I used to get on a very good day in WordPress-land, and that’s when I was posting more regularly.

Hey, if it makes you feel better, I’m getting just about zero “advertising revenue” from this “iOS-only” experiment. Yeah, I kinda wish Apple News was compatible with the desktop Web too. Alas.

The blog isn’t going anywhere, but, just wanted to let you know where the new stuff’s moved to. As always, thanks for reading.

 

_____ Than Feared: iPhone 6s/Plus Are Mostly on Their Own for $AAPL’s Transitional FQ2 2016 (+FQ3 Quick Look)

(REMINDER: Please refer to the About + Disclaimer section. You won’t ever find actionable investing/trading advice here, just a humble home gamer in his corner of the Web trying to understand Apple and tech a bit better. As you know, no one has any clue what AAPL stock will do from day to day, quarter to quarter, year to year, even if earnings “seem good enough”.)

Also – TL;DR warning, more than usual. Don’t try reading this in one sitting. I know, the late posting doesn’t make things any easier.

A Relatively Glum Apple Quarter, Which, Like Many Before It, is Already in Wall Street’s Rear-View Mirror

As it so happens, the AAPL bears and skeptics were most correct about Apple’s FQ1 and its FQ2 guidance (yup, I’m more than fine admitting when I’m wrong) – though the stock itself had already bottomed out by that time of the late January earnings release.

Apple’s resistant, but not immune, to intense ForEx pressures and global macroeconomic uncertainty. Apple bulls (myself included) have had to recalibrate quite a bit, given the twin outliers of

(1) an incredible demand for iPhone 6/Plus (Apple’s very first BigPhone/HugePhone lineup), which may bear a passing resemblance to my “sales nova” hypothesis, and

(2) broad-based economic “nervousness” (since I don’t see any “world is in recession!” headlines in the news) putting a damper on global spending.

The question now is, has Wall Street crossed the line of overcorrection, or is the current consensus of around -3% revenue growth for the entire fiscal year actually giving Apple the benefit of the doubt? Continue reading

Part 2/2: With iPad Pro 9.7 and iPhone SE, Apple Gets “9-10% of the Way There”*

*(For the year; in annual revenue terms; maybe. More on this later.)

Part 2 of 2 covers iPhone SE, and “adds it all up.”

Part 1 of 2, in all its TL;DR “glory”, is here.

How Apple Got to 900+ Million Sold: iPhone, 7 B.I.P. (Before iPhone Phablet) – Present

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Prior to Apple’s September 2014, “extremely late” move to up-size iPhone (for the second time), it sold quite a few smartphones that were (1) iPod nanos by comparison and (2) really quite popular, despite blogger/pundit complaints spanning no 3G, no LTE, accursed sealed-in battery, insufficient SoC RAM and no expandable memory, to say nothing of the closed OS.

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Ye Olde AAPL Tree Blog is Moving, Sorta!

You may have noticed me kvetching (am I using that right?) about the conversion from Apple News RSS (which…took a while to get on in the first place, because I’m a nobody) to the new-to-most Apple News Format (which…hopefully takes less than a month since I’m already on RSS, but then again, I remain a nobody).

I’m a bit excited to get started blogging on Apple News, given the newness of the platform and the small chance my posts find a broader audience. (As for the prospects of me making back any significant portion of my $99, um, “news developer fee”/earmarked tax write-off😛 in iAd revenue…well, I should probably cut back on the coffee budget, anyway.)

For those few but much-appreciated regular readers of mine, a quick Q&A on the changes.

Are you “going premium”?

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

let me catch my breath

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

[POST-WWDC 2016 UPDATE – Well, Apple News now has subscription options added in as of iOS 10. So, leave me to my momentary delusions of getting even $20 in subscription revenue per year, TOTAL, for the moment.]

You’re telling me you might post more than once or twice a quarter? YOU.

Quite possibly. Maybe once a month!😉 Actually got inspired to write up 2-3 posts in the span of about a week. So, depends on how things go.

Where will I be able to find your newest blog stuff?

On the “AAPL Tree” channel, same as currently, except it’ll be hosted directly from Apple as I understand it vs. the current RSS approach (unless I find my own Apple News-compatible host as a mirror).

Here’s the direct iOS-only link to my channel:

https://apple.news/TuY-CX_-jRziryK895rDu6g

What if I’m not in the US, UK or Australia? 

I have readers outside the US, UK and Australia? Kidding, I know I have a few, to add to that other few in the Apple News-supported regions, all of two countries. And I appreciate you all.

I’ll probably re-post most articles to WordPress within a few days after publication to Apple News (which, according to Apple, is a matter of seconds once you’re cleared to post in Apple News Format without restriction, vs. the 30-60 minutes or sometimes never via RSS). For stuff like Apple earnings, I’ll try to post to WordPress with a shorter delay. Apple News Format, unfortunately, is not nearly as “copypasta-friendly” as WordPress, though as you’ll see from my Hyper Light Drifter review (should it ever appear), Apple News Format does help make blog posts look better on a basic level without much effort.

If I feel so inclined, how might I support your work, should you be cleared to post in Apple News Format?

Well, shares, recommendations, and retweets are the lifeblood of my ego – er, this blog – it’s all related, isn’t it?😉

If you’d be so kind to support me, indirectly, financially, well, I know I don’t have a fraction of the necessary audience for, say, Patreon, but rumor (read: Apple’s own public-facing stuff) has it Apple parcels out ad revenue to news content creators…and I have yet to see a single ad on the News app. But if you DO happen to see one near a post of mine – and you have the bandwidth/time to spare – I dunno, try clicking it now and then to see what happens.

Closing in on three years and a bit over 250 posts, I’m interested in seeing how my next “phase” in blogging goes. Thanks for reading, and I hope you can catch my newest posts on the News app in “native” format soon!

 

Part 1/2: With iPad Pro 9.7 and iPhone SE, Apple Gets “9-10% of the Way There”*

Part 1 of 2 covers iPad Pro 9.7.

* (For the year; in annual revenue terms; maybe. More on this later.)

To radically oversimplify what happened during Apple’s March 21 event,

• Apple brought the prior “full-size” iPad “upmarket” with iPad Pro 9.7,

• while bringing an impressive swath of upmarket features to the iPhone 5S “shell” in the form of iPhone SE, while also lowering the “most affordable iPhone” price floor to $399 (US) from the prior $449 that’s been in place since…probably the days of iPhone 3GS becoming Apple’s first “free on 2-year contract” phone (remember those?) circa October 2011, nearly 4.5 years ago.

But what do iPad Pro 9.7 and iPhone SE mean in terms of impacting Apple’s revenues? Do these products even make much of a difference?

After all, Apple’s FQ1 (FQ = Fiscal Quarter) 2016 results and conference call (citing, among other factors, strong global macroeconomic headwinds) have a lot of people – including your humble correspondent – wondering if Apple can grow revenues at all from FY (Fiscal Year) 2015. (Case in point: All those analyst revisions seeing Apple annual revenues down about 2.7% YOY on Yahoo! Finance as of March 29, 2016 – it wasn’t always that way.)

I’ve been thinking about the revenue impact question here and there since the March event rumors started popping up, and while this blog never does treatises, I do have something of an outline, home-game-humble like always, for your “consideration”. So let’s look at how iPad and iPhone SE might, within a year of launch, get Apple around 1/10th of the way to its current, $230B-ish level of annual revenues. Continue reading

A Lousy First Half, Eh? $AAPL FQ1 2016 Earnings “Estimate” + FQ2 Quick Look

Today, I’m takin’ it to 11.

Eleven consecutive home game AAPL quarterly earnings previews/estimates/whatevers, that is. Why? There must be some reason I keep this up. Clearly it’s not the fame.😛

Anyway, for those of you who suffered through the “background” $77B revenue mix post (a thought exercise, but which included some genuine “estimates” on the non-iPhone revenue lines), this will (should) be shorter, and will include my for-entertainment-purposes only horseshoe toss (read: “estimate”) on FQ1 2016 results, plus a dash of comment on the upcoming Impossible Compare FQ2 2016. For both fiscal quarters, it’s still all about iPhone, with a side of Apple Watch and iPad Pro, until we see otherwise. So let’s get right to it.

(REMINDER: Please refer to the About + Disclaimer section. You won’t ever find actionable investing/trading advice here, just a humble home gamer in his corner of the Web trying to understand Apple and tech a bit better. As you know, no one has any clue what AAPL stock will do from day to day, quarter to quarter, year to year, even if earnings “seem good enough”.)

Continue reading

Post Digest: Why Analysts Are Bearish on iPhone in FQ1 2016, NOT Just FQ2 2016, and Why Unit Growth Concerns May (Again) Be Overblown

The iPhone section of my FQ1 2016 Apple earnings preview may be of greatest interest to those interested in AAPL earnings season. So I’m posting it separately, since it essentially stands alone, plus is a much shorter read.


iPhoneThe Worst Best Thing to Ever Happen to Apple (No Seriously, Check the Stock Quote)

Last 8 quarters of unit growth:

7%, 17%, 13%, 16%, 46%, 40%, 35%, 22%***

***Remember, FQ4 2015’s numbers were heavily skewed by the “Missing iPhones” phenomenon, where perhaps 6M iPhones (maybe more, maybe less) were counted towards FQ1 2016, for a total of perhaps $4B in “deferred revenue” (maybe more, maybe less) on account of Apple selling iPhone with only two days to go in FQ4 2015, versus the “usual” nine days in the prior three FQ4s. I mentioned this near the end of my FQ4 2015 AAPL home game earnings preview, if you want more detail on how I arrived at those assumptions (link is here – it’s towards the end of the linked post). If you added 5 million iPhones back to FQ4, the YOY unit growth rate would’ve been closer to 35%.

It’s true that gloomy/skeptical/bearish/whatever analysts/pundits/blogger/whoevers😀 are already looking towards FQ2 2016. And you know what, I can’t blame them. FQ2 2015 saw (1) the first full quarter of iPhone 6/Plus availability (2) in China (3) on a modest-sized China celco with about 800 million subscribers (4) amidst a mega-gigantic connection shift from 3G to 4G smartphones (5) during a time interval spanning Chinese New Year. So, insofar as FQ2 2016 represents a “tough compare” to the extent that China had a truly outlier iPhone quarter, I understand. It is a tough compare.

But, um, last I checked, there’s still a lot of the following type of sentiment out there, which seems a little too dour:

And if Wall Street thinks iPhone units might grow 1-2% or so from FY 2015 to FY 2016, they’re really thinking all of fiscal 2015 was a “tough compare” (which they do). And, by necessary implication, the growth floor completely falls out from under the Greater China revenue geography:

Despite China Mobile having some…fairly decent 4G adds for the holiday quarter (spoiler alert: December 2015 4G adds set an all-time record):

“Well, you see, it’s all gonna come crashing down soon enough. Besides, iPhone 6S, 6S Plus, and cheaper iPhone 6 and 6 Plus are passé in China. Because…it’s just this feeling I have.

Did I mention iPhone is so very expensive in China?”

All right, enough “trolling”. We can address the Samsung/Xiaomi Theory of Smartphone Momentum later.

Here’s what you get when you force-fit iPhone with a fairly reasonable, ForEx-affected ASP guess to a $77B revenue mix. You may disagree strongly, and that’s fine. (YOY iPhone/iPad/Mac growth percentages in terms of units):

REVENUES revs units “ASP”
iPhone $50.872B 76.5M 665
iPad $8.669B 18.25M 475
Mac $6.952B 5.675M 1225
Services $5.28B
Other Products ~$5.23B (Watch rev horseshoe toss: $2.78B, 5.05M units) Watch ASP Wild Guess: 550
YOY iPhone 2.73%
YOY iPad -14.8%
Total revs $77.00B YOY Mac 2.83%
YOY Services 10.02%
YOY Other Products 94.4%

(-8.89% ex-Watch)

Might ASP be higher than $665? Sure, but Tim Cook also mentioned a 700 basis point revenue headwind on a constant currency basis when comparing to FQ1 2015. That’s powerfully negative. I’m not sure how much of that 700 points could be mitigated by Apple’s ongoing, industrial-strength currency hedging program (it does appear currency hedging is “considered” in the guidance), but it’s probably not most of it. There’s also the very distinct possibility that iPhone 6 and 6 Plus remain vibrant and popular as they become the n-1 and n-2 (i.e., one-year-old/two-year-old) iPhones. They’re far superior mid-premium tier offerings compared to the iPhone 5S. Higher “mid-range” iPhone mix could mean a second dampening effect on ASP.

Might ASP be considerably lower than $665? Well…who here thought iPhone ASP would be $670 for FQ4 2015, a quarter that had exactly two days of iPhone 6S/Plus sales? An ASP that was higher than FQ2 (~$659) and FQ3 2015 (~$660) amidst horrific ForEx headwinds? I rest my case. Also, lower ASP means a likelihood of higher iPhone units. Additionally, consider Apple’s September 2015 accounting change, which removes between $5-10 of revenue deferral for each iPhone (read: increases ASP).

Now that ASP’s been addressed, let’s look at the concept of around 2.7% holiday quarter iPhone unit growth.

I have to admit, management did a convincing job of moderating iPhone expectations. Or…did certain analysts overindex on a single sentence? Let’s begin with this understatement-of-the-century line from Tim Cook (hat tip TheStreet’s free!, no-signup! earnings transcript service):

“We believe that iPhone will grow in [FQ1 2016]…”

I should hope so, Tim. And as for China:

Also, if I zoom out and look at China, as I’ve said before, and just to make the point once again, is we see an enormous change in China over the next several years. The latest study I’ve seen from McKenzie indicates if you look back five years, China’s middle class had about 50 million people and it, if you look ahead five years, it will have 10 times that number in it. And I feel like we are reasonably well positioned in China, I’m sure we can do better, but I think we are doing fairly well there.

(Emphases mine.) Do CEOs of companies this large…troll? Is that a thing? Now, to be fair, Tim did drop what I interpret to be a fairly bullish hint (at least as to FY 2016 overall), when responding to the eternally dour Toni Sacconaghi of Sanford C. Bernstein (something having to do with China being a first-stage launch country for iPhone 6S/Plus vs. having to wait until mid-October 2014 for iPhone 6/Plus, advantaging FQ1 2016 at the expense of FQ2 2016):

And where I think we will do quite good in iPhone, I do believe we will grow this quarter as we put in our guidance, that when you start with the number in the low 30s in terms of the percentage of the install base that’s upgraded, that had a phone pre the iPhone 6 and 6 plus, that number is still likely to leave a lot of headroom beyond December.

(Emphasis mine.) That’s a “macro” upbeat signal if I ever saw one, and it’s a clear signal about the install base unit sales opportunity (later in the call, Tim Cook would actually say the percentage of install base yet to upgrade was 69%, to make his point that much clearer).

Since Greater China is Apple’s fastest growing revenue geography, to the point of surpassing Europe for the first and likely final time, here’s Tim Cook answering a China economy/iPhone question from Shannon Cross of Cross Research:

Yes, if you look at China, we grew from an iPhone point of view, Greater China we grew 87%, the market grew 4%. If you take iPhone out of the market number so the market ex- iPhone actually contracted slightly. So we have been able to grow without the market growing. iPhone 6 was the number one selling smartphone in mainland China last quarter and iPhone 6 plus was number three. So, we did fairly well.

The economic question, which I know there’s been a lots of attention on, frankly, if I were to shut off my web and shut off the TV and just look at how many customers are coming in our stores regardless of whether they are buying, how many people are coming online and in addition to looking at our sales trends, I would not know there was — there was any economic issue at all in China.

(Emphases mine.) Sustainable megatrend or nitrous oxide boost from Fast and Furious. Within a country vitally important to Apple’s continued growth. Which do you believe? Or…should you believe?

As it so happens, 76.5M iPhones sold in FQ1 2016 – a number I independently mental-blended – exactly matches the Wall Street analyst consensus collected by Philip Elmer-Dewitt of Fortune Magazine. Two possible explanations spring to mind:

(1) You’d…think the pros accounted for the “Missing iPhones”, right? And that assuming channel inventory remains steady, they’re actually projecting an apples-to-apples iPhone unit decline in the neighborhood of 5% if those 6 or so million iPhones weren’t included?

(2) Or…maybe they’re assuming a major channel inventory drawdown? 13 weeks, 74.5M iPhones sold in FQ1 2015, adjust for possibly non-linear relationship of channel inventory to units sold per week…say, 1.5 weeks worth of drawdown vs. the year-ago quarter?

Well…according to Luca Maestri back in FQ1 2015, there was a YOY unit decline in iPhone channel inventory from FQ1 2014 to FQ1 2015 (-200,000 units), supply/demand balance wasn’t achieved until January 2015, and Apple ended up below the 5-7 week channel inventory target range on a look-forward basis (do note, Maestri does switch between look-forward and look-back from time to time if I remember correctly).

Huh…well, the channel was already starved as it was, I guess. And being conservative on channel inventory doesn’t mean you drain channel inventory to the point of straining your ability to supply product to the over-200,000 iPhone points of sale.

It’s safe to hold pros to a higher standard, so if I may be so bold – choose one concern, not both.

Wrapping up, iPhone estimates for FQ1, to my eyes, don’t reflect a fear-shift or anxiety-shift to FQ2 2016. Quite the contrary – the degree may be a tad lower vs. the upcoming March quarter, but Peak iPhone “concerns” are very much present in the December quarter Wall Street consensus.

Being as objective as I possibly can – I can’t help but think these iPhone concerns are overblown for the to-be-reported quarter, and a bit beyond.

 

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The Great 2016 iPhone Crisis (of Confidence) + $AAPL FQ1 2016 Revenue Mix “First Look”

If you prefer to only focus on iPhone, I’ve re-posted that one section here as a separate post for additional clarity and brevity.

Everyone knows that it’s out there, so I’ll spare you all the novella…on this particular sub-topic. (New Readers/New Readers from Apple News: Big-time TL;DR warning. Sorry, earnings doesn’t lend itself well to bite-sized analysis.)

All that “iPhone unease” on Wall Street (or piling on by various other journos, bloggers, etc.) that’s out there? An apparent excuse for AAPL trading at such a…appreciable discount to…a few indexes you might know? That’s why I made the (unspeakably “gorgeous”) iPhone Wall of Worry some months back. And generally speaking I think it’s still holding up quite well.

It’s probably not too far off the mark to say the “over/under” on iPhone is quite literally…whether iPhone unit sales are over or under the FY2015 total of about 231.1 million.

There are many guesses, all of them…well, no more than guesses, even the most educated ones. Whether iPhone unit sales will grow for all of fiscal year/calendar 2016 isn’t something anyone can know, and it’s hardly something Apple of all companies will ever give insight into…except, indirectly, by necessity, in the context of FQ4 2016 guidance.😀

Base speculation on “Peak Apple” has failed, badly, since the last time Apple actually posted a true decline in YOY revenues. Which was…well…probably a few years before the iPhone Era. The point is, just arguing about it really doesn’t advance understanding. Apple looks about 90 days ahead, when Tim and Co. aren’t talking megatrends or very broad topics on conference calls, and that’s that.

So, as is the wont of your humble correspondent, let’s start with the most knowable known out there – Apple’s own revenue guidance for the biggest, iPhone-heaviest fiscal quarter it will have in FY 2016 – and see if a little home gamer guesswork, involving actual dartboard-toss “educated guesses” typed in an actual blog post, can’t compare numbers to narratives.

…I know, an actual revenue mix preview. Last seen in February 2015? Well, since I’m newly on the Apple News RSS list (please do subscribe to the channel, I promise to update…quarterly?😉 ), and since iPhone Worry is such a hot topic, and since I haven’t updated the blog in a while, why not.

(FIRST, A REMINDER: Please refer to the About + Disclaimer section. You won’t ever find actionable investing/trading advice here, just a humble home gamer in his little corner of the Web trying to understand Apple and tech a bit better. As you know, no one has any clue what AAPL stock will do from day to day, quarter to quarter, year to year, even if earnings “seem good enough”.)

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Apple’s $2B, “Two-Dime” Accounting Change: Home-Gamer “Quantifying” Apple’s September 2015 ESP Deferral Adjustment

ONLY if you dare to get some “background”: I’ve gone down the unknowable rabbit hole of ESP (estimated selling price, software upgrade rights) deferrals twice, before.

As you know, we here at The AAPL Tree I often like to cover those topics a bit lesser known about everyone’s favorite continually-pressured-in-some-way smartphone and a few other things company. And this looks to be another such topic.

Luca Maestri, about 20:45 into Apple’s FQ4 2015 earnings conference call (podcast link available here for another few days or so)

“Second, in September, based on an analysis of market offerings, we reduced the estimated selling price of future software upgrade rights and non-software services that we defer for each iOS device and Mac sold. The reduction is between 5 and 10 dollars per unit.”

(Luca also announced that Apple would be extending iPad deferral revenue recognition period from 2 years to 3 years, which is an interesting “statement of opinion” from Apple on iPad lifecycle.)

Note also Page 45 of the FY15 10-K (Apple 10-K, linked at Investor Relations site.):

“Beginning in September 2015, the Company reduced the combined ESPs for iOS devices and Mac between $5 and $10 to reflect the increase in competitive offers for similar products at little to no cost for users, which reduces the amount the Company could reasonably charge for these deliverables on a standalone basis.”

(Also note: iOS devices are specifically defined as iPhone, iPad and iPod touch – we’ll assume pretty much 100% of GAAP-reported unit sales are “qualifying sales” – to the ostensible exclusion of Apple TV and Apple Watch, although the latter two device classes do have ESP deferrals.)

What could this reduction in deferrals amount to across Apple’s balance sheet in the Fallow Harvest of Fiscal 2016?😀

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$AAPL FQ4 2015 Earnings Preview + FQ1 Quick Look: Trajectory and Trust

Welcome to the AAPL Tree’s tenth (!) consecutive home game quarterly earnings preview. I know, I didn’t think I’d ever get here either. OK, milestone marked.

Yep, the key storylines are the same as ever. “iPhone and Apple Watch”. Of course, there’s more to it than four words.😉 But those are, for now, the only topics that make much of a difference at this point. So we’ll cut to the chase, relatively speaking. (UPDATE: OK, I “lied” – 2600+ words.)

(REMINDER: Please refer to the About + Disclaimer section. You won’t ever find actionable investing/trading advice here, just a humble home gamer in his corner of the Web trying to understand Apple and tech a bit better. As you know, no one has any clue what AAPL stock will do from day to day, quarter to quarter, year to year, even if earnings “seem good enough”.)

Continue reading