Buffett's investment firm buys $1B of Apple shares
By no means do I ever appear to side with Apple. I simply don't like their products. I like even less how they have transformed into a more monolithic version of the company they once claimed to despise. And yes, they had their first bad quarter for iPhone sales. But that doesn't mean that I think Apple is going anywhere any time soon. In fact, I think the purchase of Apple stock is a timely one.
Just because I dislike Apple, doesn't mean others do as well. And a majority of people probably disagree with me (about disliking them). And that is exactly what this is about.
People who look at numbers like YoY sales get lost in the metrics. And what they are missing I think is a transformation which may in the long run rot out Apple's bottom line. But in the short to mid term is probably going to result in a fairly decent bounce back. Put another way, Apple has made some preparations for this. And I think the idiotic devaluation of Apple's stock combined with how obvious it is that Apple was aware of, and planning for this, explains Berkshire Hathaway's investment.
I talked about Apple's most recent mass press shindig and commented how there was no innovation to be seen, but there were price cuts and new lower priced models pretty much across the board. Apple has lowered the barrier for entry far enough to pick up a few new customers. I don't expect the SE to save much. Even with most carriers abandoning the traditional subsidies they haven't really gotten rid of built-in financing programs. So, most people will still just buy whatever phone they like and eat 2 years of increased payments. The iPhone SE targets a device size most people have moved on from.
The drop in prices on tablets and elsewhere on the other hand is likely to be positive for them.
The other miss there was that the latest revisions of the iPhone 6's was lackluster. But the iPhone 7 is more likely to sport a new design and drive sales than this refresh was. In fact, you can basically look at the drop in sales as being exclusively driven by a lack of interest in updates. Many people can hold onto a flagship phone for over a year without feeling too outdated these days. But I don't think many Apple fans will resist the iPhone 7.
So, basically, all of this will probably culminate around iPhone 7 launch time. Idiots just artificially devalued Apple's stock. At the very least it almost guaranteed to rebound around the iPhone 7 launch putting anyone with decent holdings in a position to make a lot of profit.
I wouldn't expect Berkshire Hathaway to hold onto those stocks long term. A good time to sell would probably be before Apple reports earning after the iPhone 7 launch. Or, if it seems guaranteed that the news will be great, midway to the next earnings meeting after that.
Apple isn't dead. They aren't even dying yet. Apple is like a person in their 30's. Their prime growth years may be behind them, but their best years professionally are probably still ahead. Their worst medical prognosis would be being overweight. By the time they hit the equivalent of being a 40 or 50 year old, things may change.
The best thing Apple can do it probably to shed weight (down size). They can't push the volume they used to be able too and unless they create the next big market there is no reason to believe they ever will. Simply put, their prior growth was unsustainable. They've simply hit the end of that and if they can react accordingly they probably have a number of healthy years ahead. The price cuts signal a departure from Apple's youthful exuberance (and detachment from reality). They show a conversion to a more consumer friendly manufacturer. And it is hard to say that, financially, this is the wrong route to take. And frankly, the iPad Mini will forever in my mind be the point at which this day became pre-destined.
We can't know the future. But, if history tells us anything, it is that Apple can ride the massive they created for some time.
Do I think Apple will weather the long term storm? Just my opinion. But no. The moves Apple is making now are text book. They are as unoriginal in their strategy as they are in their products. By lowering their prices they will over time tarnish their luxury product image. A luxury brand can withstand being unoriginal. The name is what matters. By making their products more affordable they lose the endorsement of the elite and gain the scorn of the petty.
They also jeopardize one of their greatest metrics... per user sales in the app store. Apple users, historically were more affluent than Android users leading to much better revenue in the App Store despite lower user counts. By making the platform more affordable, they bring in more "dead weight". If no one usurps Apple or Google, then I expect app revenue to shift more and more towards an even slate for the two platforms over time.
But again, for the short term, the affluent aren't likely to jump ship too quickly. Apple products are still less affordable than Android ones. Even some quality ones. The lower price points will initially just help Apple. Which is, of course, why in the short to mid-term (especially when combined with the expected iPhone 7 release) my bet would be that now is both the wrong time to sell Apple stocks and also the right time to buy them.
Read into that how you will. I have no affiliations with any companies mentioned. I don't even own Apple stocks myself (too poor to make a reasonable sized investment). I do think that my arguments are solid though. Especially around the fact that people have dragged down Apple's stock not long before what is bound to be a meaningful product reveal.
Just because I dislike Apple, doesn't mean others do as well. And a majority of people probably disagree with me (about disliking them). And that is exactly what this is about.
People who look at numbers like YoY sales get lost in the metrics. And what they are missing I think is a transformation which may in the long run rot out Apple's bottom line. But in the short to mid term is probably going to result in a fairly decent bounce back. Put another way, Apple has made some preparations for this. And I think the idiotic devaluation of Apple's stock combined with how obvious it is that Apple was aware of, and planning for this, explains Berkshire Hathaway's investment.
I talked about Apple's most recent mass press shindig and commented how there was no innovation to be seen, but there were price cuts and new lower priced models pretty much across the board. Apple has lowered the barrier for entry far enough to pick up a few new customers. I don't expect the SE to save much. Even with most carriers abandoning the traditional subsidies they haven't really gotten rid of built-in financing programs. So, most people will still just buy whatever phone they like and eat 2 years of increased payments. The iPhone SE targets a device size most people have moved on from.
The drop in prices on tablets and elsewhere on the other hand is likely to be positive for them.
The other miss there was that the latest revisions of the iPhone 6's was lackluster. But the iPhone 7 is more likely to sport a new design and drive sales than this refresh was. In fact, you can basically look at the drop in sales as being exclusively driven by a lack of interest in updates. Many people can hold onto a flagship phone for over a year without feeling too outdated these days. But I don't think many Apple fans will resist the iPhone 7.
So, basically, all of this will probably culminate around iPhone 7 launch time. Idiots just artificially devalued Apple's stock. At the very least it almost guaranteed to rebound around the iPhone 7 launch putting anyone with decent holdings in a position to make a lot of profit.
I wouldn't expect Berkshire Hathaway to hold onto those stocks long term. A good time to sell would probably be before Apple reports earning after the iPhone 7 launch. Or, if it seems guaranteed that the news will be great, midway to the next earnings meeting after that.
Apple isn't dead. They aren't even dying yet. Apple is like a person in their 30's. Their prime growth years may be behind them, but their best years professionally are probably still ahead. Their worst medical prognosis would be being overweight. By the time they hit the equivalent of being a 40 or 50 year old, things may change.
The best thing Apple can do it probably to shed weight (down size). They can't push the volume they used to be able too and unless they create the next big market there is no reason to believe they ever will. Simply put, their prior growth was unsustainable. They've simply hit the end of that and if they can react accordingly they probably have a number of healthy years ahead. The price cuts signal a departure from Apple's youthful exuberance (and detachment from reality). They show a conversion to a more consumer friendly manufacturer. And it is hard to say that, financially, this is the wrong route to take. And frankly, the iPad Mini will forever in my mind be the point at which this day became pre-destined.
We can't know the future. But, if history tells us anything, it is that Apple can ride the massive they created for some time.
Do I think Apple will weather the long term storm? Just my opinion. But no. The moves Apple is making now are text book. They are as unoriginal in their strategy as they are in their products. By lowering their prices they will over time tarnish their luxury product image. A luxury brand can withstand being unoriginal. The name is what matters. By making their products more affordable they lose the endorsement of the elite and gain the scorn of the petty.
They also jeopardize one of their greatest metrics... per user sales in the app store. Apple users, historically were more affluent than Android users leading to much better revenue in the App Store despite lower user counts. By making the platform more affordable, they bring in more "dead weight". If no one usurps Apple or Google, then I expect app revenue to shift more and more towards an even slate for the two platforms over time.
But again, for the short term, the affluent aren't likely to jump ship too quickly. Apple products are still less affordable than Android ones. Even some quality ones. The lower price points will initially just help Apple. Which is, of course, why in the short to mid-term (especially when combined with the expected iPhone 7 release) my bet would be that now is both the wrong time to sell Apple stocks and also the right time to buy them.
Read into that how you will. I have no affiliations with any companies mentioned. I don't even own Apple stocks myself (too poor to make a reasonable sized investment). I do think that my arguments are solid though. Especially around the fact that people have dragged down Apple's stock not long before what is bound to be a meaningful product reveal.
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