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Goldman Defends Apple Following Underwhelming Product Announcements But Another Problem Emerges
As we documented, and annotated (if not with an Apple pencil yet) the market's reception of AAPL latest convocation for the faithful was less than enthusiastic, pushing the stock to close near its day lows after a flurry of product announcements that led many to wonder if the Steve Jobs creative magic is now officially dead:
However, with AAPL still the most important stock in the world for the largest number of hedge funds, not to mention the biggest by market cap, the sellside banks felt compelled to immediately defend it and halt any further bloodshed (even as AAPL is doing all it can by issuing about €2 billion in EUR-denominated bonds in a 2 part deal today whose proceeds will be used for buybacks).
This is what Goldman said:
A broad refresh, with several key platform enhancements
What's changed
Apple announced several new products and updates at its September 9 event in San Francisco, CA, including the iPhone 6s and iPhone 6s Plus, the iPad Pro, a new Apple TV, and a series of enhancements for the Apple Watch. Apple is also offering a new iPhone upgrade plan starting at $32 a month, whereby users can finance an iPhone with AppleCare+ and return the phone for a new model every year; while we are not changing our iPhone estimates at this time, we believe this program may eventually lead to higher iPhone sales as replacement cycles could compress.
Implications
Overall, we were encouraged by the event’s announcements, and we were perhaps the most positively surprised by the enhancements to Apple TV and by the introduction of tvOS. There were no major surprises with the new iPhone cycle, which is typical of an “s” device; with that said, as we have argued several times, the “s” cycle is more likely to surprise on gross margins rather than units. We are somewhat skeptical that the newly-announced iPad Pro will be able to stimulate overall iPad demand— consumer weakness continues to outpace commercial adoption—but we believe the enterprise-centric iPad Pro is a step in the right direction. We are not changing our model at this time, although we present a series of sensitivity analyses in the body of this report. We remain bullish on Apple stock and we reiterate our Buy rating.
Of course, with Goldman's desk making millions in commissions executing AAPL's weekly, if not daily, buyback orders, the last thing Goldman would dare to do is issue a report that angers Tim Cook.
But another problem may be emerging for AAPL: China. As a reminder, China recently became the biggest end-market for iPhone demand and any hints this may be jeopardized could have severe repercussions on the stock price. Which is why we paid particular attention to a report overnight from China's finance ministry, which accused a China unit of Apple of underpaying taxes in 2013 by 452 million yuan ($71 million), "which comes as China toughens its stance on tax payments by foreign firms."
Xinhua has the details:
Apple Inc.'s computer subsidiary in China failed to pay 452 million yuan (more than 70 million U.S. dollars ) in due taxes by the end of 2013, an official accounting inspection report showed on Wednesday.Apple Computer Trading (Shanghai) Co. Ltd. included maintenance costs into pre-tax deductions, wracking up the giant deficit, the Ministry of Finance (MOF) said in the report. But the company has paid back the taxes and 65 million yuan in late fees.
The firm also under-reported 8.8 billion yuan of revenue and 3.45 billion of costs and overstated 5.35 billion yuan of profit, the report showed.
The problem was disclosed along with violations of rules in other state-owned, private and foreign companies after the MOF inspected on accounting information for tens of thousands of firms across the country.
The Ministry of Finance (MOF) report, dated Sept. 9 but cited by official news agency Xinhua on Thursday, said Apple Computer Trading (Shanghai) Co Ltd had already repaid the taxes as well as paying 65 million yuan in late fees.
So while AAPL may be out of the woods in this case, the report and the investigation, "underlines an increasingly hard stance being taken by Beijing against foreign firms underpaying taxes after authorities said in December last year that they would crack down on the practice. Apple officials in China did not respond to phoned and emailed requests for comment."
Worse, the finance ministry report said the Apple subsidiary had understated its revenues by 8.8 billion yuan and its costs by 3.4 billion yuan. It had also overstated its profits by 5.4 billion yuan.
And considering the recent financial relations between China and the US have been anything but without blemishes, the question on everyone's lips is whether the currency war will progress to their next evolutionary phase, namely trade wars, and will the biggest symbol of former China-US symbiosis, i.e., AAPL products, be the next casualty in what is becoming an increasingly more hostile relationship? For the answer, keep an eye on upcoming channel checks - if recent history is any indication, AAPL's troubles in China are only just starting.
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Every Western Business that has a Factory in China is about to get the ol Reacharoo into their Wallets.....
iGive-up
Now you can spend 100 bucks for an ipencil to go with your iwatch!
My fitbit is telling me it's time to move my ass ... and get a Krispy Kreme, so bye for now.
I already got a mePencil [lead] and a mePad [yellow legal] both cost less than a buck and are "Green Certified" and "Energy Star" rated. Zero electrical input need, lifetime use without charging.
So that's why the Chinese Navy is staking out Alaska now.
They're gonna get their taxes one way or another.
China has started it's operation to destabilize the Western financial system. Just as the Fed used to prop the market any time there was a minor correction China will now take action to destabilize every rally. Fade every rally from now on. The barbarians are at the gates.
Since apple is the most widely held stawk by Congress, if they tank it much pain will ensue.
iPain
iBailout coming soon
Do they shoot people for this?
"Every Western Business that has a Factory in China is about to get the ol Reacharoo into their Wallets..."
How many western businesses have their ONLY factory in China?
Hope they have a Plan B.
Goldman is selling AAPL. Got it.
... as fast as they can, as should anyone who owns their stock
Apple was great with Jobs, today it's lost without him. A gay activist running Apple is not going to produce the same results. In the end it does come down to leadership.
"Who wants a stylus..." Quote from Jobs when releasing the iPad.
Steve Jobs main focus: Product innovation.
Tim Cook main focus: Stock price.
Tim Cook should rename the iStylus the iDildo to complete his total g*yness.
He reminds me of the Heinken pitchman.
"Drink Heineken so you can be really g*y."
Heineken must have a death wish just like the Apple board members. Cook is a joke.
I don't buy products pitched by sodomites.
The ipad Pro, with $100 stylus, and $160 keyboard... And you're going to need a case for that thing ($100). .... Why didn't apple just make the MacBook with a touchscreen? Once you take that keyboard out, you can't use it on your lap. You might as well just have a laptop. It just confirms the tablets are tweener tech. And with the macbook, you get 8gb of RAM, +500 gb of storage, it comes with a keyboard, and all the apps you need. As if a doctor is going to carry around a 12.8 inc piece of glass everywhere, please.
Business traveler... do I throw the macbook or the ipad pro in my backpack to go on a trip? Laptop it is. I'm not carrying two extra things that need to be charged just so I can use an ipad like a laptop.
Then the AppleTV. The audacity of these people to set a different price point for a 32gb of storage difference. F you. Flash storage costs close to nothing. The Apple TV is the size of a desktop now. They could have throw 3tb on that thing for a $1.
If you want to watch streaming content on your big screen order an amazon fire stick, load Kodi on, along with the SportsDevil, Xmovies8 plugins and you can watch almost every movie or sport for free. Screw apple tv.
Just bought a NUC and threw Kodi on a memory card I had laying around. Streams 4k video. Not locked into Crapple ecosystem and does general computing as well.
I have a Surface pro....... problem solved
My TV is still working just fine. Why should I fork out all that dough for a new one?
http://www.earlytelevision.org/images/RCA_CT100-hd.jpg
I'm a Cheap Bastard.
Since everything on TV today is of moon-landing caliber, you've got the perfect TV.
>>.... Why didn't apple just make the MacBook with a touchscreen?
Because only a complete idiot would think that is a good idea.
>>It just confirms the tablets are tweener tech.
Laptops won't see 2021.
>>As if a doctor is going to carry around a 12.8 inc piece of glass everywhere, please.
Except they do, which shows just how blind you are.
>>I'm not carrying two extra things that need to be charged just so I can use an ipad like a laptop.
So take neither and use it as a tablet, just like the entirety of the S&P 500 does.
>>The audacity of these people to set a different price point for a 32gb of storage difference.
WOW. DIFFERENT AMOUNTS OF SPACE COST DIFFERENT AMOUNTS OF MONEY. HOW DARE SEAGATE SELL ME A 5 TB HARD DRIVE FOR MORE THAN A 1 TB! You're mentally ill.
>>The Apple TV is the size of a desktop now.
In no way, shape, or form, yes.
you can see the OS on the iphone getting more and more complex as the Jobs "elegant simplicity" fades into history. Hell to figure out how to play songs randomly on the damn thing now takes 3 or 4 clicks. Just another mega company pumping out as little as possible each quarter in the form of upgrades to keep the market happy. or not.
No way I ever buy a Faggle product.
Apple iSurface Pro
http://hijinksensue.com/comic/surface-tension/
With all this talk of a US-China economic and currency war, rising tensions in the South China Sea, exploding Chinese warehouses and factories, Citadel banned from trading in China, over $6 trillion lost in market cap in China and Hong Kong since June 14, how can Apple sales not go down in China?
They may easily fall 20% to 25%
inconceivable! don't you remember? timmy sent cramer a perfectly legal onair email reassuring everyone about their china sales...
"Battery life 10 hours" I have not had a laugh like that in a very long time. Thank you Tyler.
I guess I will shelve my idea for a I pencil sharpener . Given projected sales
There's still hope for the iFax machine.
Tim Cook will bend over backwards to get the stock price up.
Looks like Cramer could be getting another 'exclusive' email from his old pal Timmy soon.
Steve Jobs is still dead.
Apple fans show their bewilderment at the new huge iPad and $100 pencil
Read more: http://www.dailymail.co.uk/news/article-3228762/Apple-fans-bewilderment-new-huge-iPad-100-pencil-hilarious-memes.html#ixzz3lLBLgZFl
Tim Cook - taking Apple absolutely nowhere at the speed of light.
Who put this token LGBT moron in charge anyhow, The Chinese?
UNDERstated profits by 5.4 B?
Buy Apple like theres no tomorrow
iDiocracy
too much Brawndo (Tim Cook) on those Apple plants
Apple products, it's what iDiots crave
each new Apple product comes with an "iShitYouNot" stamped on the box
GS just talking their book again.
WASSAMATTA GS???? LOSING YOUR FKG SHIRTS LONG AAPL????
...that's a shame.
Just explain to the Chinese authorities that their taxes are in a lockbox in the Channel Islands. I'm sure they'll understand.
Let's put it this way:
Jobs dies.
The next product apple comes out with is a little smaller iPad. Gee wiz. An iPad minus, minus. Woo, woo. Genius at work.
They will run the company intto the ground EXACTLY like they did after they threw Jobs out 30 years ago. Its a hell of a lot bigger company now, so it will take longer to destroy.