“One of the reasons being used for Apple being down today, besides the market being weak, is a report from Gartner that smartphone sales declined 4% in the June quarter in China. This was the first time that smartphone sales have declined in the market that was 30% of total smartphone sales in the world,” Chuck Jones writes for Forbes. “If this is the reason investors are selling Apple along with general concerns about China I believe they are not digging deep enough to understand why this reasoning is wrong.”
“Apple generated $13.2 billion in revenue, up 112% year over year and was 27% of total company revenue in the June quarter. This directly contradicts investor’s perception from Gartner report that Apple is having a tough time in China,” Jones writes. “China Mobile is a key driver for Apple’s growth in China. China Mobile added almost 50 million 4G subscribers in each of the past three quarters and its 19.2 million new customers in July is the third best month after 19.7 million in March and 19.3 million in June. This report is one data point reinforcing UBS’ Evidence Lab analysis that Apple could sell over 50 million iPhones in the September quarter.”
Jones writes, “I calculate that Apple’s stock is trading at less than a 10x PE multiple (9.8x to be exact) based on fiscal 2016’s earnings of $9.78 (Street average estimate) and net cash of $17 per share. While a stock can remain at low valuation levels longer than expected at some point in time the stock should move higher.”
More info and links in the full article here.
MacDailyNews Take: Let the bears have their fun and let Apple execute as many buybacks at a discount as they possibly can.
[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]
Buying AAPL is betting on the company leadership to do more than just update products once a year with incremental improvements.
Tim Cook is not Steve Jobs, and Apple’s future success at innovation is in doubt. Hence, the lack of buying based on forward P/E.
And Steve Jobs was not Tim Cook..
And He hired him to turn the company around to the mega profitable entity it is.
Get over this Steve bs… It getting too old and too ignorant….
Finally an honest comment around here. Boy will you get voted down. And you’re just being honest you’re not even being negative.Truth hurts and they just can’t stand it here.
Tim may not be Steve Jobs, but he doesn’t have to be. For the stock to do well over the long term, Tim and the rest of Apple management just need to be better than their competition.
On the hardware side, I have not seen anyone that can out-innovate Apple. Samsung clearly can’t be original in their thinking, and no other company has the scale to economically design custom chipsets like Apple can with the A series processors.
The area where Apple is giving up valuation really only in cloud software, as they don’t seem very capable in this area. I think Apple really needs to separate the cloud services from OS and native apps and put cloud under a dedicated senior manager.
China is and will continue to be a goldmine for Apple for a while. The population is approaching 1.4B and under 20% of the country has 4G/LTE cell service. I’m not sure of the current percentage. The mobile carriers, especially China Mobile, have huge incentives to connect the country to the 21st century. It’s called capitalism. Apple sold a mere 61M iPhones in the March ’15 quarter growing from ~37M 3/14Q. If only 50% of China gets 4G/LTE (the largest population areas) how many will buy iPhones and eventually by extension iPads, macs, music, watches, etc.? I’m sure Apple has some idea. The middle and upper class is also growing leaps and bounds. Things are drastically changing in China and it will continue to happen for a while. 20 more Apple stores coming to China soon!
The question is how’s India going to work out for Apple?
Innovation will come. IOT is going to be HUGE! They’re building the spaceship for a reason. They’re able to pick the smartest people on earth. Innovation is hiding out but growing. You can’t rush it.
India doesn’t work out for anyone not located in India.
They understand AAPL , is you don’t understand big investors use this as an excuse to sell AAPL then buy back cheap .
Oh, people in general keep following the doom and gloom,
There WAS a time many many years back , when i i though funds, analysts and investors must be truly smart people…….
Now i realize MOST of them are knee jerk, panic oriented , pull the triger first think later, short sighted fools !
IMHO
That’s what happens when people play in a large collective (like stock market) with high personal stakes. We are all conditioned to rely on decisions made unconsciously by our emotional selves—fight or flight—and a nervous herd can stampede at any signal of danger. The nefarious Rumour-mongers are very good at providing such signals, and profiting from the resulting carnage.
Keep in mind that fund managers are measured quarter by quarter on their results, both by customers and their own managers. This incentivizes them to bail out if something is dropping.
There is a reason that Warren Buffett is richer than everybody on Wall Street. He doesn’t play by Wall Street rules, and his investors are smart enough to know that. He is the only one that truly invests for long term results. He buys what he thinks is good and almost never sells.
The decline in stock price will not help as far as buy backs are concerned. If Apple did not do buy backs they would be in a better position with all the cash on hand. Only the shysters in WS and management (if they get their options repriced) will benefit.
The buy backs are the biggest scam costing Apple shareholders while WS laughs. Let me sum this up assuming $40 billion in buy backs.
Loan $40 billion WS fees (30 basis points): $120 million
Buy shares transaction fees: (30 basis points): $120 million
Sell shares transaction fees: (30 basis points): $120 million
Based on the fact that buy backs are negotiated prices and past history (Q average pps was 124 while buy back price was 134) WS has another spread of 10/124 = .08 x $40 billion = $3.2 billion.
Total WS: $3.5 billion while Apple share holders loss in equity $150 billion from price manipulation. Mind you this is not counting the options sales that WS can arbitrage based on the negotiated price of the buyback.
Cook is so naive. They are after him. They want another ex-soda salesman like in there. Already other carnival barkers are after that position. They are salivating about the chance to get a piece of the cash hoard.
Why do you think one company is trying to say that they are in the forefront of car and battery technology? Their genius of a CEO will then be first in line for replacing Cook. Apple’s skunk works is partly about cars and batteries. Cook will be/is being stabbed in the back by apple’sfinancial folks and the board of directors.
Now if the buy backs were instead pure dividends the stock would not have lost its value. The clamor will rise for Cook’s replacement.
With another ex-soda salesman like person in place, apple’s technology will be shared with others plus ARMwill be replaced by intel. You can iCal this.
It is both comic and tragic that Cook has given WS the funding/means to do what they have always wanted to do to Jobs. I really miss the guy. He was the only one who could stand up to these shysters.
Oh boy.. Please spare us!
Apple is the profitable company it is becouse of Tim Cook Child….
When the panic settles down.. ie PE goes back to its normal range of 15-18….You will see how the buyback puts money in investors pocket…
Kneejerk more often than not ends up being the wrong recaction.
The naysayers are always trying to spook Apple investors for their own hidden purposes. It’s a despicable way to make money, but they have children to feed and thus justify playing the Steve Jobs card without shame.
No way the P/E is going back up. Why should it? No one in their right mind wants to buy Apple. For new investors, putting money in Apple is just throwing it away. Why would anyone want to own a manipulated stock where even increased revenue sends the share price plummeting? Look at Amazon. It only goes up and they’re not making nearly the revenue and profits Apple is and yet the stock is performing far better than Apple’s stock is. Where’s any downward manipulation taking place at Amazon? Jeff Bezos is seen as a god and Tim Cook is considered a loser. So Wall Street messes with Apple and leaves Amazon alone.
All Apple should keep doing is reinvesting money to widen their revenue base and to hell with all the financial tricks. Throwing away $120 billion was foolhardy after Wall Street said Apple should repurchase shares and then the stock collapses after decent quarterly results. Apple needs to build a company that has a greater product base and grinds up all the businesses around it. Each time Wall Street bets on a certain market, Apple should step right in and take it over. Give the Wall Street crooks no place to run. I’m sick and tired of hearing Apple called a one-trick iPhone pony.
You say we’ll see the buybacks put money back in investors pockets. This I’ll have to see because I frankly don’t believe it in my wildest dreams. I hope you’re right. I’m sorry but there’s no logical reason Apple’s share price should be tanking worse than competitive stocks.
Jobs is dead. So is George Washington, Albert Einstein, Stan Musial and Leonardo da Vinci. Move on. Live your own life. Quit worrying about what others might have done should they still be alive today. Because they wouldn’t give a shit if you were dead. They wouldn’t wonder what you would’ve done in some situations today. Go read a self-help book. They write those just for people like you.
And in other news, Francisco Franco is still dead.
Nobody cares what you think.
Well, you seem to care…but then, you’re nobody.
🌟🌟🌟🌟🌟🌟🌟🌟🌟🌟
Been long Apple since April 2003 when shares could be bought for < $1 (split-adjusted) per share. Added to position over the years. Cannot tell you how many times during the past 12 years this whole boom-bust, talk-'em-up-talk-'em-down, thing has happened. Cannot tell you how many times smart people around me have advised selling. But steady as she goes has been the best approach. Apple is now trading at $788 per pre-split share. Still looks like a huge success story to me. Sorry, I just cannot get too caught up in the "sturm und drang" thing.
In a downturn, I predict Apple shares will perform relatively well compared with most other companies, as it has done in the past. It is relatively easy to look good in a bubble. The downturns are when the successful companies shine, when the less successful ones fade away. We get financial report cards on all listed companies every 3 months. No need to jump to conclusions.
That is exactly my experience. You are absolutely correct.
Apple was a stellar performing company during the Great Recession.
I’m with MDN on this one. The lower it goes in the short term the better for Apple and investors in the long haul.