Apple Foreshadows Correction?

The Luster is off the Apple brand.

Nobody would seriously argue that Tim Cook is anything other than a caretaker of the company. The brand that Steve Jobs built, is running out of steam. Jobs was good at looking at other people’s ideas and making refinements. Jobs then would market stuff as if Apple was the inventor of the gizmo. They have been successful in selling their products at double or triple what competitor products are sold for.

Until the bail-out by Microsoft many years ago, Apple was on the brink of collapse. Microsoft needed to prop-up Apple to defend themselves against accusations that they had a monopoly on PC operating systems. Following the cash infusion from Microsoft, Apple began marketing the iPod. Other folks sold MP3 players for a fraction of the cost but Apple created an exclusive ecosystem in conjunction with the introduction of the Apple Music Store.

This change from relying on revenue from Apple computers to other more profitable products, helped to diversify the company. The introduction of the iPhone was a game changer for Apple. Now, a decade after its introduction, the bloom is falling off the iPhone.

The smartphone market is mature, saturated, or whatever term you wish to use. Sales are declining and the phone industry is lacking innovation. Many companies are working with new technology and other form-factors but Apple, as usual, is lagging behind the competition. Five years after its introduction, Apple may finally be deploying USB-C connectors of their next generation of phones. They still don’t allow SD cards and are behind in a number of other ways in comparison to Android devices.

Android manufacturers are investing heavily in foldable smartphone screens, 5G technology, and platform independent technology but Apple’s name is not associated with any of these things which are already available for Android phones. These are among the product features that will be displayed by most phone manufacturers in the first quarter of 2019 if they haven’t already.

Strangely, Apple’s name is not associated with any patents or innovation in these areas. Apple says they would like to have a 5G phone in two years but again they appear to be lagging behind everyone else in these areas. Heck, Microsoft’s Andromeda device has a better paper trail than anything Apple may be tinkering with.

In conjunction with their earnings report a week ago, Apple declared that they will stop publishing any sales numbers on their iPhones.

Investors sold off Apple stock on Friday after the company gave weaker-than-expected holiday sales guidance and said it would no longer disclose unit sales of iPhones and other products.

Apple (AAPL) fell 6.6% to 207.48 on the stock market today. It was the steepest single-day drop for Apple stock in nearly three years.

Late Thursday, Apple reported fiscal fourth-quarter results that topped analyst estimates. The Cupertino, Calif.-based company earned $2.91 a share on sales of $62.9 billion in the quarter ended Sept. 29. Analysts expected it to earn $2.78 a share on sales of $61.57 billion. On a year-over-year basis, earnings per share rose 41% while sales climbed 20%.

But Apple predicted sales of $91 billion in the December quarter. That is short of Wall Street’s estimate of $92.91 billion.

But the news gets worse as you continue reading this article:

On a conference call with analysts, the consumer electronics giant announced it would stop providing unit sales figures for iPhones, iPads and Mac computers starting with its current fiscal first quarter.

Apple Chief Financial Officer Luca Maestri said hardware unit sales figures are no longer a good measure of the health of Apple’s business. This is largely because of the growth of Apple’s services business, he said.

The change in reporting is likely to fuel speculation that Apple’s iPhone unit sales will decline in the current fiscal year.

It is “typically not a good sign” when a company reduces its financial disclosures, BTIG analyst Walter Piecyk said in a report.

“Not reporting unit data effectively eliminates any discussion about rising and record ASPs (average selling prices),” Piecyk said. “This was a positive point for investors, but perhaps a risk to Apple, as press reports about squeezing more money out of its loyal customer base is not a good look for the company.”

Jefferies analyst Timothy O’Shea said the change is “fueling fears the company has something to hide.”

Apple Stock Dives On Light Outlook, Move To Hide iPhone Unit Sales

Today, this follow-up by the New York Post

Market research firm Strategy Analytics is out with new data showing a year-over-year decline of 360 million units, the equivalent to an 8 percent dip, in the third quarter, with Strategy Analytics director Linda Sui going so far as to declare the smartphone market “effectively in a recession.”

“The smartphone industry is struggling to come to terms with heavily diminished carrier subsidies, longer replacement rates, inventory buildup in several regions, and a lack of exciting hardware design innovation,” she said.

Samsung, no surprise, is still the king of the global smartphone hill. It’s got a 20 percent market share and shipped a little more than 72 million units during the third quarter — but that was 13 percent less than the third quarter of 2017. Huawei, meanwhile, is continuing to nip at Samsung’s heels, shipping almost 52 million smartphones during the quarter (a 32 percent gain). It only has a 14 percent global market share, in part because its phones have little to no presence in North America.

Apple, meanwhile, rounds out the top three, having shipped almost 47 million units during the quarter. That was basically flat with where Apple was a year ago and gives the Cupertino-based company a 13 percent global market share.

We’ve officially reached peak smartphone

Apple hiding their sales figures is not a good sign, especially for a company flirting with a valuation of one trillion dollars. They’ve been living off of goodwill for a while but maybe this is a signal that Tim Cook should be looking for a golden parachute and a graceful exit.

 

 

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