
Apple Reports Fourth Quarter Results - yoda_sl
http://www.apple.com/pr/library/2014/10/20Apple-Reports-Fourth-Quarter-Results.html
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jusben1369
It's fascinating to me that the iPad is flat and being effectively
cannibalized by the iPhone. Can anyone think of a similar example where a
newer form factor gets re-absorbed or passed by the previous form factor? (I
probably need a more elegant way to say this)

~~~
dntrkv
I don't see any reason to believe that is the case. I think a more logical
explanation would be that consumers aren't gonna buy a new iPad every year. I
bought an iPad 2 for my parents and they're still using it to this day and
have no issues with it. Maybe next year I will get them an updated version.
But if you look at the iPhone, most people are on a 2 year upgrade schedule.

~~~
Kylekramer
Upgrade cycles shouldn't affect sales growth unless the upgrade cycle has
gotten longer since the iPad's introduction.

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MBCook
It's only been four years since the iPad was introduced, we may have only been
through one full upgrade cycle if that. Lot of people are still using iPad 2s
and Apple is still selling them (in the form of the non-Retina Mini) so that's
something of a vote of confidence for them.

I know many developers wish the thing would die since it's the only A5 and
non-Retina iPad.

~~~
pjc50
My wife is still using my iPad 1, although rather lightly. Upgrading is
finally being forced on us as it's obsolete and has become rather crash-prone.

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MCRed
The interesting conundrum here, as I see it, is that the iPad is losing its
purpose.

Before, it was between phones- which were small-- and laptops-- which were
big. But the Air is becoming a lot more mainstream, laptops overall are
becoming knife thin, and phones are getting bigger.

I think the iPad was meant to replace the PC for most use cases-- e.g. the
email, web surfing etc.

and I think it's been somewhat successful at that. But like pcs people don't
replace them every year (wheras phones seem to be replaced every 2-2.5 years).

Now with the Apple Watch, the phone has moved up to be more tablet sized, and
the new smallest form factor is the watch.

Will the iPad move up and become more like a PC?

~~~
MBCook
There was a nice article on an Apple blog the other day (don't remember where)
that suggested the problem with the iPad is the lack of purpose built
software.

I own an iPad 4 and it's pretty rare that I buy iPad only software. Developers
just don't seem to make that much even though the markets a pretty decent
size. Mostly it's just simple iPhone apps or games that have been scaled up.

The article was suggesting that because theres no trials or demos in the app
store, as well as the inability to return things, people are very hesitant to
buy at any reasonable price point and those developers are unwilling to put
the time and effort in making it that should cost $20 or $30. Since consumers
won't pay more than a few dollars high-quality in-depth apps are in short
supply.

In the end it means the iPad feels like nothing more than a giant iPhone, and
that's basically been my experience. I really would like to see more large
fancy apps that would give the iPad its own strong purpose but for whatever
reason that's not happening.

~~~
baddox
The interesting thing is that I have very little need for purpose built
software on my iPad. I get by with Mail (or GMail), Twitter, YouTube, and
Twitch, and of course most of my usage is Safari, which really could
substitute adequately for all of those except Twitch.

Games are really nice on the iPad, but I only play those the few times a year
I fly.

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rtpg
Apple is holding onto $200 billion dollars in cash. I do like Bill Gate's
whole "Let's be able to survive at least a year even if we have no revenue"
but companies holding onto this much cash seems like a social ill (and a
pretty good counterargument to the whole trickle-down effect)

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onlyfortoday
social ill? why? what would you rather them do with the cash?

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MAGZine
pay their taxes, for one.

~~~
icelancer
They pay 100% of their tax liability as set forth by the US Tax Code, I have
no doubt. Take it up with the elected officials.

~~~
rtpg
legal and ethical are two different things.

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stephen-mw
I'm long in apple for several reasons:

1\. Apple's P/E is way to low for a company that literally sells the best and
highest rated products on the market. Historically you pay a P/E _premium_ for
these types of stocks, not a discount. The company is downright cheap.

2\. ApplePay has a ton of potential. Just in the other news thread others were
complaining that moving to chip & pin cards is basically just changing the
fraud, not fixing it. ApplePay's tech passes the smell test, and the people
who will be using it have expendable money.

3\. The Apple Watch. Who knows how it will sell? I will say I am always
impressed with Apple's design and polish and it's hard to picture a crappy
product. Maybe it's a hit or maybe it just raises their bottom line, either
way it's unlikely to drag on profits.

We'll see how it works out. These earnings include only 6 days of iPhone 6
sales... I worry about Apple in my portfolio probably the least compared to
other stocks in the S&P 500. It pays a dividend for crying out loud! I have to
remind myself not go over diversification rules...

~~~
MCRed
I've always found the idea of diversification as a rule, or for its own sake
to be troubling.

Say you have 100k. You could put it all in Apple, or put 99k in Apple and then
buy puts to protect against a sudden decline in Apple with the remaining 1k.
(might cost more, not sure.)

Or you could split it up into 6 companies. Are any of the other 5 going to be
as high quality as apple?

I think diversification comes from the belief that you can't pick stocks so
you might as well pick several and hope they work out on average.

I think that this is not so much the case when you spend a bit of time
investigating. I've not found it to be the case, at least. (What I can't do is
pick timing, but I can pick stocks, pretty reliably for 20 years or so.)

Right now Apple is at $100ish, and a Jan 2016 $90 put would cost $8ish.

This means that the most you could lose in that time period is %18 of your
money... and that's assuming the company completely craters.... if it just
drops to $90 because they multiply the dividend by a lot, you don't really
care.

If, however, a nuke hits cupertino, you're covered.

I like that a lot better than guessing what Tesla will be at in the future. (I
think Tesla is a good company, for instance, but the risk is orders of
magnitude higher.)

~~~
discardorama
> I've always found the idea of diversification as a rule, or for its own sake
> to be troubling.

I agree with you in general, but sometimes you get bit there too.

Back in 2007, I felt that the US economy was in trouble. So I thought I'd be
smart and went the full diversification route in my Fidelity retirement
portfolio: split it among market funds for different economies around the
world. Eastern Europe seemed to be poised for growth, so some $$ there; China
was ticking up, so that got some; same for Latin America, Canada and Asia.

But then guess what happened? US got jolted and recovered. But my diversified
funds? Most of them are still below what I bought them for in 2007. Especially
that f*cker "Mathews China Fund" ($MCHFX). FML.

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ChuckMcM
Nicely done. The market seems enamoured with larger phones. And it is good
validation for Tim Cook given their sales rate.

~~~
arrrg
iPads aren’t doing so well, worse than analysts expected (but we have known
this now for quite some time so it isn’t exactly a surprise). Everything else
is pretty much above analyst expectations, weirdly enough, even the iPod (who
still buys that?).

To be honest, as a consumer I would be ok with this, if not for the software
ecosystem. (I like the iPad and it’s useful to me personally. What do I care
whether it sets the world on fire.)

Devs jumping ship is something I do worry about, but it seems with size
classes Apple is working towards making changing the UI depending on device
size easier – and if devs have to change their UI anyway for the larger phones
the extra work of making that UI viable on an iPad is hopefully still worth it
in the future. (Or maybe Apple could do something cool with iPads. The
hardware is already pretty mature, but on the software side there is lots of
room for making it a more powerful device. Maybe that will help sell more in
the future. Or maybe not.)

~~~
IBM
iPad is much bigger than Mac ever was and it's had great developer support.

~~~
arrrg
Well, I think it’s more complicated than that.

What I do enjoy about the Mac are these small indie devs, selling their
software at relatively high prices (read: $50 instead of $3). The Mac doesn’t
have all the software, but it has some really cool, high-quality software that
shares my values when it comes to design and UI.

The App Store (to some extent even the App Store on the Mac) was never really
like that and always a more toxic place with cutthroat pricing. You can’t sell
$50 software on the iPad (even $10 software is hard to sell), so the situation
is just a different one on that device.

I mean, devs are frustrated with their inability to make money on the iPhone
by just charging for software – and that device is way, way, way bigger than
the Mac ever was.

Selling software on iOS has its own quirks that makes it different from the
Mac.

That said, it has always been harder to find devs that share my values on iOS,
so maybe that's a general problem of the platform (maybe it’s just a problem
with discoverability and there are in fact more devs that share my values on
iOS than on the Mac!) and has not a lot to do with how well these devices
sell.

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eropple
You can sell $50 software on the iPad if you've got a real need. Lemur was $50
when I bought it, though it's $25 now.

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downandout
_" Apple is providing the following guidance for its fiscal 2015 first
quarter: revenue between $63.5 billion and $66.5 billion"_

That's ~$5 billion per week. iPhone 6/6+ must be doing amazingly well
internationally.

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liquidise
In the keynote they touched on iPhone 6 China release in the coming weeks. I
have to assume opening those products up to a market of that size will have a
large impact

~~~
baudehlo
That plus Christmas.

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gxs
Every two weeks when you receive your paycheck, apple receives one as well.

Only difference is that at $8Bn/quarter, their biweekly paychecks are for
$1Bn. Not too shabby.

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MaysonL
SEC 8-K filing here:
[http://files.shareholder.com/downloads/AAPL/3346552619x0xS11...](http://files.shareholder.com/downloads/AAPL/3346552619x0xS1193125%2D14%2D376361/320193/filing.pdf)

Macs up to 5.5 million.

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aaronbrethorst
Earnings call is live now:
[http://events.apple.com.edgesuite.net/14lkjbsdpihjbfvpihbasd...](http://events.apple.com.edgesuite.net/14lkjbsdpihjbfvpihbasdfvpijbadsfvpijbadfvpijbvkjhbe10/event)

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liaboc
Based on the press sentiment analysis here
[http://financeai.com/stock/nasdaq/aapl](http://financeai.com/stock/nasdaq/aapl)
It is looking pretty good for Apple as well!

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IBM
Apple at $400 will likely be the best value investment of my career.

~~~
wiredfool
Apple at $12 (pre split, ca 1996) is the whale that got away of my investment
career.

~~~
idlewords
My (non-tech) friend was sighing about this too, until he thought some more
and realized he would have certainly sold it at $20. Which would possibly be
an even worse feeling.

~~~
enraged_camel
This happened to me with Tesla. I bought a hundred shares at $35, and had a
sell order that said, "sell if it drops more than 10%." Two months later,
around $80, it fell to $70 or something like that, and mine automatically got
sold. Then it jumped to $250.

But I was gambling with it (it's the only time in my life I've bought a single
company's stock like that), and I think in retrospect the result is quite
good. I just can't shake away the "if only..." feeling. :-)

~~~
andykellr
When I got my car in March 2013, I decided it was so amazing that I should buy
some stock. I don't really invest in individual stocks so I bought 100 shares
at $20. A few weeks later I sold 50 for $35 (an amazing % return). Then I
watched it climb to $280, wishing I bought 1,000 instead and hung on.

Despite my missed opportunity, I think the car is far better than any other
vehicle on the road. There really is no comparison. 8-speed double-clutch
automatic with paddle shifters? I prefer no transmission. I could go on and
on.

Hopefully, someday in the distant future, all of our cars will be non-smoking.

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smackfu
Wonder why China is so flat year-over-year. I thought that was where the next
growth was coming from. Last quarter China was up 28% year-over-year.

~~~
tinkerrr
Probably because the iPhone 6 and 6+ weren't released in Q4, so you'll see the
China growth effect in 2015 Q1 instead (and hence the optimistic guidance for
Q1 2015).

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higherpurpose
Is it me or is profit not as big of a percentage of revenue as it once was?
Wasn't it like 25-30 percent before for Apple?

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autism_hurts
Simply staggering.

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jcavin
No surprise here. Anyone I know under the age of 32 uses a mac. All the
microsoft stores are ghost towns in So Cal.

~~~
mkr-hn
I only know a few people who use a Mac. Most people I know use Windows (and
Android). As always, anecdotes are not the same as data.

~~~
liquidise
Under the age of 32? 100% of windows users i know of in that demographic do so
exclusively for PC gaming. Anecdotes will always be less useful, but this
strikes me as a repeatable trend among college campuses and young
professionals... to say nothing of a generation of children growing up with
iPads.

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mkr-hn
I'm not really interested in dueling anecdotes. Do you have something
concrete?

~~~
adevine
This is 4 years old, and I suspect Apple's position has only improved since
then, but see [http://fortune.com/2010/08/07/big-macs-on-
campus/](http://fortune.com/2010/08/07/big-macs-on-campus/) . To your "dueling
anecdotes" point, it's also clear from this article that some universities are
much more Mac-centric than others, given that one survey of 5 universities
showed 70% of incoming freshmen came with Macs.

