
Apple is going to have a tough year - prostoalex
http://www.businessinsider.com/apple-is-going-to-have-a-tough-year-2015-12?op=1
======
rasputhin
'Smart, rational people in the media, like Nilay Patel of The Verge' ahh
yeah.. Ok

Apple is going to be fine.. They carry very little /no debt and make the best
phone in the world that magically becomes obsolete in 14 months..

I can't imagine a better business to be in and dominate.

~~~
sauronlord
Apple will have an alright year. Speculators in Apple common stock will have a
tougher year.

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UnoriginalGuy
I'm no Apple fan or user, but these reasons are vapid:

\- iPhone in the "negative" which sounds, well, negative but actually means
that GROWTH has stopped. However it remains one of the most profitable
smartphones with a giant market share, so shareholders may wish to change
their medium term valuations, but frankly any valuation which ignores market
saturation isn't worth considering anyway.

\- Apple Watch isn't a hit... Alright, but Apple Watch 1.0 was NEVER going to
be a hit. A lot of people skip the first gen because they look at history
(iPhone 1, iPad 1, etc) and with a smartwatch in particular there's a lot of
reason to think the technology can move forward (12 hours battery life?!).
Apple Watch 2 is due out this year, and while I have no idea if that will be a
hit, it COULD be.

\- "Apple's software and services — Apple Music, Maps, Health, Photos — are
just OK." Maps, Health, and Photos were never profit makers. Everything I've
read about Apple Music has been quite positive and they've already grabbed a
large amount of market for being a relatively new player. Why is the article
bundling profitable business avenues with unprofitable freebies? Why is it
just "ok?"

I agree with the article that 2015 was a boring year for Apple, but I think
they're jumping to a lot of conclusions about 2016, and if half the rumours
about the next iPhone turn out to be true then it could be popular. With the
2016 Apple Watch, it needs at minimum to have better battery life, maybe
round, maybe new functionality/sensors.

This entire article only exists because the market has a fetish for growth.
Even if Apple becomes completely stagnant, it is stagnant for a HUGELY
successful company that competes in multiple sectors. And it isn't like
they're getting eaten by things like inflation (prices have risen) or actual
decline (in real terms or not), so I think rumours of Apple's demise or even
having a bad 2016 are greatly exaggerated.

PS - And don't get me started on how massively successful Apple has been with
vertical integration as a growth vector.

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melted
One thing about Apple is this: they _always_ have a plan. Count on it. It's
not like Business Insider is uncovering something they don't know here. All
this doomsaying is due to the fact that Apple does not pre-announce anything.
This, understandably, drives mass media nuts, so they just make things up. But
that doesn't change the basic truth of the issue: Apple always has a plan.

------
epistasis
Apple: always so beleaguered.

I do agree that their software has taken a huge nosedive. Their major attempts
at initiatives have been poorly executed.

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wvenable
The iPhone 6S is truly an amazing piece of hardware; there is so much internal
enhancement over the iPhone 6. Yet Apple hardly hyped it in that way. I got my
wife a 6S for Christmas and what convinced me was what I know about it _that
didn 't come from Apple_.

~~~
derefr
My impression of the iPhone's tick-tock release cycle is that the number-
increment releases are actually intentional efforts of product design... while
the "S" releases are actually _forced_ on Apple by the extremely tight supply
chain they've set up for themselves.

The moment it becomes more cost-efficient to buy a bunch of some new
components early, Apple does so—but then the cost of having them sitting
around doing nothing when they could be put to use steadily rises. Meanwhile,
it can also become increasingly expensive to keep ordering "old" components
for your existing design, because the rest of the industry has moved on from
using that component and you're the only one the suppliers are still producing
it for, and they really want you off it too so they can shut that line down.
Together, these effects imply that it actually becomes cost-effective from an
operational logistics perspective to refresh the iPhone's hardware each year,
even if the "design plan" is written in terms of two-year milestone releases.
Whatever ends up being cost-effective to put into the interim refresh gets
advertised on stage, but—unlike the actual "planned" releases—it's effectively
random, rather than a "curated" list of features that go together to form a
whole.

Or, to put it another way—Apple likely went to the drawing board and designed
the iPhone 7 right after the release of the iPhone 6. Some random subset of
the components of the iPhone 7 ended up "resolving" early enough that they got
"binned" together as the iPhone 6S. Whatever components _didn 't_ become
available in time for the 6S release, are now waiting until the 7.

When you see a number-increment release like the 6 or the soon-to-be 7,
imagine that all the features that went into the previous "S" release were
also announced on stage at the same time that they announced whatever _did_ go
into it. Because that's what Apple _intends_ to happen; together, the 6S's
features and the 7's features (or the 5S's features and the 6's features,
etc.) add up to a coherent and compelling product vision. The "S" release just
takes a random bite out of that vision and sputters it out early, leaving the
actual numbered release to say whatever's left over.

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cloudwalking
Strange he quotes Ben Thompson as bearish on Apple. Ben says _exactly the
opposite_ in his podcast. He has a very favorable outlook on Apple.

~~~
tujv
Yes, I was confused by this as well. I think this author was looking for
something bearish, and went with Ben anyway.

------
hackaflocka
"iPhone sales could go negative for the first time in history."

Growth. You mean sales growth. So call it that. There's enough innumeracy and
economic illiteracy out there -- let's not add to it, eh.

------
_ph_
It is obvious that eventually the sales of any product, even the iPhone would
eventually plateau. This means of course, the stock value would be no longer
determined by some fancy dreams of growth but the actual financials of the
company. With the share price going down, the resulting hit might have already
happened. But this still would mean that the most profitable company plateaus,
not a bad place to be.

Also the outlook isn't so bad either. The iPhone 6 sold much better than all
analysts predicted and I wouldn't be surprised if the 6s might not even beat
it - a lot of the iPhone users who did not have a 6 were upgrading this year
(including myself). And with the 7 we might get the 6 owners renew after 2
years.

The iPad sales have been slow - I myself haven't upgraded my iPad 3 yet - but
if the Pencil technology comes to the full line up, it could drive a lot of
interest into renewing.

And while the Apple Watch might not large by business volume yet, it owns the
large part of the smartwatch market. There will be huge improvements with the
next generations, so a lot of growth there. Also you cannot use the Apple
Watch without a modern iPhone, so with the iPhone renewals there are more
potential customers.

~~~
nardi
> It is obvious that eventually the sales of any product, even the iPhone
> would eventually plateau.

Eventually, probably, if by "plateau" you mean "decelerate."

> This means of course, the stock value would be no longer determined by some
> fancy dreams of growth but the actual financials of the company.

LOL. Apple's P/E is 11.45. Google's is 35.69. Microsoft's is 37.28. Facebook's
is 105.14. Amazon's is 980.46. The S&P 500 average is 21.54.

Which of these has "fancy dreams of growth" again?

~~~
MaysonL
Not to speak of the fact that if you take out the cash, the p/e is
8.something.

------
Aloha
am I the only one who considers the markets obsession of endless growth as
absurd?

Both sides in the smart phone market have been growing thru beating down the
weaker competitors then just by market growth, the smart phone market in
developed countries is largely reaching saturation - where is the place to
grow now?

I work in a market where volume matters little - margin is the key - my
division for example produces a product with a gross margin of ~50%

~~~
BinaryIdiot
> am I the only one who considers the markets obsession of endless growth as
> absurd?

Likely not however we're only talking stock price here and the only thing that
matters in investing in stocks in finding your way back to a return which
typically happens when stock prices go up and you can sell higher or you get a
dividend. Since Apple doesn't do the latter it has to do the former which
means requires constantly growing the company.

So while in logic the endless growth is a bit absurd in the stock market it's
either that or dividends (and even dividends may not keep it raising; all
depends on how they're structured).

~~~
toephu2
Actually AAPL starting issuing dividends in 2012 giving in to pressure from
shareholders.

~~~
BinaryIdiot
Oh look at that you're right. Damn.

------
Steko
Maybe iPhone growth stalls this year sure but I wouldn't bet a single dollar
based just on "supply chain reports" which have turned out to be
nothingburgers as often as not.

My own prediction for Apple in 2016 is that the iPad returns to growth this
(calendar) year.

------
macavity23
Utter nonsense, pure clickbait froth. The watch is a great v1 product (read
some iPhone v1 reviews and compare) and the new model should be announced
soon. The new atv is FANTASTIC, and at $149 they will sell a ton of them. And
the iPad Pro is getting rave reviews, though the price point means I think
it'll be another generation before the new stuff makes it into the cheaper
models and makes a big bump in the iPad numbers.

I'd say apple is poised for a great year, unless the world economy goes pop,
which might well happen but can't be helped.

------
arcticbull
Ah it's that time of year again; it's all over guys, time to go home.

------
aaronbrethorst
This is Business Insider. It's like the TMZ of tech news. Flagged.

~~~
erikpukinskis
Is "this publication reminds me of another publication I don't like" really a
valid use of flagging an article?

~~~
aaronbrethorst
no, you misunderstand:
[https://www.google.com/search?client=safari&rls=en&q=analogy...](https://www.google.com/search?client=safari&rls=en&q=analogy+definition&ie=UTF-8&oe=UTF-8)

    
    
        a·nal·o·gy
        noun: analogy; plural noun: analogies
        a comparison between two things, typically
        on the basis of their structure and for
        the purpose of explanation or clarification.
    

p.s. you should pay Heroku the $7/month so that your business website doesn't
sleep after _n_ minutes.

------
xbmcuser
The headline should be Apple stock will have a tough year not Apple. Although
the future growth decline has already been priced into Apple stock onea of the
reasons it P/E ratio is so low compared to many like Google.

------
mrmondo
I've heard this almost every year, and almost every year it turns out to be an
incorrect assumption and as Aloha pointed out here - what is the obsession
with growth?

Growth does not equal stability.

~~~
BinaryIdiot
> what is the obsession with growth

Growth means return on investment. You gotta go in the public markets if you
want to make a good return. That or dividends or a company being sold (which
is obviously not going to happen to Apple).

~~~
morgante
Apple doesn't necessarily need to grow its revenue in order to provide ROI.

They could merely decline/plateau at a slower rate than the market has priced
it at. Or they could use their gobs of cash to continue the buyback program.

In fact, Apple's buyback program is expected to reach $200 billion by 2017.
Even if Apple's revenue stopped growing tomorrow, they would throw off enough
money to run a huge buyback program for years to come.

------
enos_feedler
apple stock will hit a high of $144.42 USD per share this year. You heard it
here first.

 _EDIT_ add "this year"

~~~
UnoriginalGuy
A 40% increase over today's closing price? And a 10% increase over Apple's
highest on record? There's no market reason to believe that.

Even if I had insider information that Apple had a "game changing" product or
device, I still think $144.42 is unlikely, and there are no rumours to suggest
that.

~~~
0xCMP
I have no reasons to believe I know anything about the
markets/apple/stocks/investing, but who would have thought the market would
actually value essentially iPhones more than oil (and this was before this
whole oil-supply-crisis we're in)? If sales turn out to be growth (which, as
other commenters have pointed out it probably will since it's doom/gloom every
year and every time) then the market will rejoice and probably drive it up to
that height. Some big-investors thought it'd get to $250(!) a share. I think
they were full-of-it, but the market responds in strange ways and 144 isn't
too far from their height to reach if there isn't a major economic event that
changes things in the meantime.

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jen729w
Again.

------
DGAP
Two points:

One, it's pretty absurd to say that the IPhone is the "best" smartphone on the
market. It did a lot well as far as marketing and design, but the rest of the
market has caught up and now surpassed Apple.

Two, it's well documented that Apple can't even execute on their strengths
anymore. They've made a series of poor design choices, and they've been
largely unable to create new markets with items like the Apple Watch.

Bubble or not, the economy as a whole is certainly up. There is plenty of room
for it to go crashing down, and with it things like emerging markets and
discretionary income to be spent on iphones. Despite the surprisingly
reasonable P/E, I'm bearish on Apple on a timeframe of more than a year or
two.

