What To Watch In The Apple Release

Ahh, the good old days of trading billions of dollars in Apple stock.

Apple Getting Too Big

The company has almost become a utility due to its sheer size.

Apple’s relatively small recurring revenue stream (some argue iPhone upgrades are – Uncle Carl)  forces Tim Cook to wake on the first day of every year and begin to generate annual revenues larger than the GDPs of 75 percent of the counties in the world (see table below).

God Bless Tim Cook, he is really trying to turn Apple into a services company, which really turned around Microsoft, when they moved their software to the cloud.

Nevertheless, imagine the pressure on senior management.   Growing gadget sales and revenues every year to a level larger than the size of Peru or Greece’s GDP.   That is one big nut, comrades.

Last Quarter’s Release

Clearly the release of the iPhone 10 was a flop, and we suspect due to its $1,000 price tag.  That is a lot of scratch for a phone even for the 5 percenters.   iPhone unit sales were down 1.2 percent y/y last quarter.

 

Monitor These Two Items

1. Q2 iPhone unit sales to see if they can bounce back.  The last two Q2s have seen negative y/y growth, however.
2. Q2 China revenues, which may be more important.  Lots of noise in last week about Apple losing market share to local firms.   We also hear of boycotts of Apple products by the Chinese as they are upset at the U.S. bullying their country on the trade issue.  Maybe that it why Tim Cook was in the Oval Office last week.  Greater China revenues average around 20-25 percent of total revenues and have grown y/y for the past two quarters over 10 percent.  It is critical that y/y growth quarterly remains above or around 10 percent.

Where Is The Stock Headed Tomorrow?

As they say at the tables,  “Place your bets.”