This page has been archived and commenting is disabled.

"No Brainer" AAPL Investors Anxious Amid iPhone Momentum Concerns, JPM Expects "Cautious" Guidance

Tyler Durden's picture




 

Yesterday's tumble on the read-through from component-maker Dialog Semi added to fears, noted by Berenberg Bank the previous week, that iPhone sales momentum was not as rosy as Tim Cook told Jim Cramer after all, is not seeing many BTFDers this morning. As we previously noted, the China channel checks painted an ugly picture, and now JPMorgan (while maintaining their 'overweight' rating on AAPL) is warning that it expects "cautious guidance" amid a weakening global macro picture.

 

 

Are iPhone 6s volumes tracking at a lower level than the iPhone 6 a year ago?

There are signs. In its earnings report on Monday, Dialog Semiconductor, who supplies custom power management chips to Apple for the iPhone, said it was expecting only around 2% growth for 4Q. According to a research note from Killik & Co, volume growth for iPhones in 4Q will be negative.

 

This dovetails with another research note last week, this time from Berenberg Bank, which said momentum and fast money funds are exiting Apple stock as speculation around declining iPhone volumes heightens. This means that Apple, which the bank said has kept the tech complex alive, is probably going to be the trigger to bring that tech complex down.

 

"When Apple cracks, and we emphasize 'when' as opposed to 'if'," the bank said, it should bring down semiconductor stocks again, and especially those Apple supply-chain names that have been relatively resilient.

And JPMorgan is "Expecting cautious guidance"

Apple is expected to release their FQ4 results and guide to FQ1 on Tuesday. After the unexpected weak Dialog Semi guidance on Monday we believe the setup into earnings is mixed. Given weak macro we believe cautious guidance for FQ1 to December is likely but this is now at least partially (though probably not completely) discounted.

Bigger picture Apple’s guidance will be the next major global consumer datapoint though we don’t believe Apple or anyone else know how aggregate consumer demand will shape up this Fall.
 

  • Dialog Semi read-across: DLG released its Q3 earnings statement and preliminary Q4 guidance today ahead of their full earnings call this week on Wednesday the 28th. Weak guidance for Dialog’s Q4 implies Mobile Systems Y/Y revenue growth of ~0% in Q4 after 18% growth in Q3. After adjusting for lead times, we estimate that DLG’s Q4 revenue guidance implies ~7% Y/Y growth in revenue related to Apple. We believe this implies ~2.5% Y/Y decline in iPhone units based on our assumption of 8.5% Y/Y ASP growth for DLG. We note that the range of possible outcomes here is wide though the implication is incrementally negative.
  • Cautious FQ1 guidance anticipated. We believe that global demand for the iPhone 6/6S and 6+/6s+ remains strong. We are forecasting 47.6m iPhone shipments in FQ3 (+21% Y/Y) and 75.5m in FQ4 (+1% Y/Y). While macro data remains mixed to slightly positive, we believe that Apple will likely guide conservativelygiven recent negative datapoints.
  • FX headwinds: FX impact on Apple’s total revenue on a Y/Y basis is a headwind for FQ4’15, in our opinion. We believe that FX will continue to be a factor in FQ1’16 on a Y/Y basis as well. Using FX rates up to this point and assuming spot rates going forward we estimate Y/Y depreciation of 13% for the EUR, 6% for the JPY, 30% for the RUB and 52% for the BRL.  In FQ1’15, FX had a negative 4pp impact on Y/Y revenue growth according to Apple. This is similar to the blended ~4% impact we current calculate for Apple’s revenue this FQ1.
  • Apple Watch reviews: We are forecasting 9m Watch shipments in FY15, growing to 47m in FY16. We hope for some indication of Watch units from Apple today though we suspect the company will refrain from providing this data.
  • iPad shipments to decline: We expect another weak iPad quarter from Apple. We are forecasting 10.59m iPad shipments in FQ4and 19.71m in FQ1’16.
  • Mac share flat: We are forecasting 4.69m Mac shipments in FQ4. We are currently expecting the Mac to losea slight 0.2pp share Y/Y in FQ4.
  • FQ4’15 estimates/guidance/consensus: For FQ4’15, we are forecasting total revenue of $50.71bn (cons: $51.02bn, guid: $49-51bn), gross margin of 39.2% (cons: 39.3%, guid: 38.5-39.5%), opex of $5.93bn (cons: $5.88bn, guid: $5.855.95bn), EBIT margin of 27.5% (cons: 27.8%), and EPS of $1.84(cons: $1.88).
  • FQ1’16 estimates/consensus: For FQ1’16, we forecast total revenue of $81.34bn (cons: $77.05bn), gross margin of 38.8% (cons: 39.7%), opex of $6.41bn (cons: $6.16bn), EBIT margin of 30.9% (cons: 31.7%), and EPS of $3.30(cons: $3.20).

*  * *

"No-Brainer"

Charts: Bloomberg

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 10/27/2015 - 11:44 | 6716863 venturen
venturen's picture

The Apple mind control software must have a bug?

Tue, 10/27/2015 - 12:27 | 6717064 Doña K
Doña K's picture

(i) fatigue.

Tue, 10/27/2015 - 12:31 | 6717079 Oracle of Kypseli
Oracle of Kypseli's picture

Make that "eye fatigue" and "pink eye"

I mean "peak eye"

Tue, 10/27/2015 - 15:20 | 6717848 Arnold
Tue, 10/27/2015 - 12:41 | 6717112 nosam
nosam's picture

No more Steve Jobs to sprinkle fairy dust on Apple products. How do you justify the premium margins anymore?

Without Jobs, Apple is just another tech company...susceptible to gravity.

Tue, 10/27/2015 - 15:22 | 6717857 Arnold
Arnold's picture

Shut the fuck up.

Apple is Gay friendly.

Tue, 10/27/2015 - 11:46 | 6716877 Id fight Gandhi
Id fight Gandhi's picture

Shell out another 800$ for a light upgraded 6s. No updates to the iPad with dated specs and high price.

I haven't even seen the watch or mentioned since may. Even fan boys are selling them off and not using them.

Ios updates used to be step up each time. Now they slow down the device and need patches next day of launch.

Tue, 10/27/2015 - 11:49 | 6716889 Haus-Targaryen
Haus-Targaryen's picture

Yeup.  I seriously have no idea what they are thinking.  

Windows Phone isn't any better.  No idea what to try next.  

Tue, 10/27/2015 - 12:28 | 6717065 Bernoulli
Bernoulli's picture

Try this one:

http://www.amazon.co.uk/Samsung-E1200-Free-Phone-Black/dp/B0079JZ4O2

12-14 days battery life (including phone calls and 24h standby); less than 20 EUR.

I bought five of them and stashed away 4 in the basement.

Tue, 10/27/2015 - 13:10 | 6717233 silverer
silverer's picture

Good for you.  An astute shopper.  Yep.  They're out there.

Tue, 10/27/2015 - 13:57 | 6717420 tdag
tdag's picture

47mil iWatches in FY 2016? Good luck with that.

Tue, 10/27/2015 - 12:34 | 6717095 CL Spec
CL Spec's picture

BlackBerry Priv.

Tue, 10/27/2015 - 11:47 | 6716882 CheapBastard
CheapBastard's picture

iPhones are no longer the "in" thing in China.

 

That could be a problem for AAPL.

Tue, 10/27/2015 - 11:56 | 6716913 JustObserving
JustObserving's picture

Increasing tensions between US and China over islands in the South China Sea do not bode well for iPhone sales in China. 

Tue, 10/27/2015 - 13:12 | 6717227 silverer
silverer's picture

The Chinese have the Apple technology right in front of them.  So what can't they build?  I've seen lots of pretty cool Chinese phones.  High quality, incredible storage, 5000 milliamp hour batteries, super cameras, dual SIM cards.  There's about 10 of them I saw on a review.  And a lot of them, with really good specs, less than $300.00.

 

http://www.phonearena.com/news/Best-Chinese-Android-smartphones-2014-edi...

 

Tue, 10/27/2015 - 11:47 | 6716883 Bunga Bunga
Bunga Bunga's picture

What did Apple expect? That Sony can sell 15 trillion Walkmen in 2015?

Tue, 10/27/2015 - 11:49 | 6716888 valley chick
valley chick's picture

We hope for some indication of Watch units from Apple today though we suspect the company will refrain from providing this data.

 

Now that is funny shit!

Tue, 10/27/2015 - 11:57 | 6716915 thesonandheir
thesonandheir's picture

Sheeple need moar eazy credit to buy moar Apple innit.

Tue, 10/27/2015 - 11:57 | 6716917 Oldballplayer
Oldballplayer's picture

Well, shit.  I thought Apple would save the day.

Tue, 10/27/2015 - 11:59 | 6716922 Dr_Snooz
Dr_Snooz's picture

This really is a "no-brainer." Apple's business model under Jobs was to put a bunch of mediocre tech into a pretty box, charge a bloody fortune for it and put Jobs up in his signature outfit to enchant everyone into thinking they were getting fire from the gods. With his death, that business model collapsed. Jobs isn't around to keep people from realizing that they're overpaying for nothing much. AAPL has no business model and the only money to be made here is in shorting their stock.

Tue, 10/27/2015 - 12:06 | 6716951 Raymond_K._Hessel
Raymond_K._Hessel's picture

Awful lot of sales for a collapsed biz model.

Which tech company would you say has an uncollapsed biz model - just curious/

Tue, 10/27/2015 - 13:06 | 6717215 silverer
silverer's picture

The undertaking business, using convenient kiosks.

Tue, 10/27/2015 - 12:09 | 6716967 MaxMax
MaxMax's picture

Years ago, Apple made some nice products that were good like Final Cut Pro, servers that worked and computers that almost never crashed  There was a point where I switched from Windows to mostly Mac because I couldn't keep with the Windows server technology.  I just didn't have the time to figure out arcane settings to keep Windows working.  Then Windows got better, options like Linux, Proxmox and FreeNAS exist, and Apple has switched to a company that mostly sells iPhones.  If Apple phones stop selling as well, they are toast.

Tue, 10/27/2015 - 12:45 | 6717129 Raymond_K._Hessel
Raymond_K._Hessel's picture

sounds familiar.

http://aaplinvestors.net/2012/12/27/iphonedeathwatch/

Look, I'm no fan boy, but if I walk around Harvard Square or Kendall - I see plenty of Samsung and plenty of Apple.

Samsung might be a better buy right now, but Apple still makes a lot of things that are best or near best in category, and they sit on billions of $. Not a lot of companies can say that.

So while its refreshing to see people who have been consuming the haterade, if you will, at the same time my sense is not a lot of commenters here can supply their pessimistic assessments with technical evidence of why the software/hardware/design is all of a sudden bad.

I mean plenty of people buy and sell pharam stocks who don't know the first thing about the biochem or even the studies, but I still tend to think that the place to study tech stocks is on tech/tech stock boards.

:}

Tue, 10/27/2015 - 15:46 | 6717959 Arnold
Arnold's picture

Ferrari, best in category.

99.9% cannot use them in the way that they were designed and are not getting even a miniscule return on investment.

Really , why spend too much for stuff you cannot use.

Tue, 10/27/2015 - 15:51 | 6717982 Arnold
Arnold's picture

Raymond_K._Hessel

Gud luk havad

roundeye sluts.

Tue, 10/27/2015 - 12:01 | 6716928 RadioFlyer
RadioFlyer's picture

<- Good news stocks go up!

<- Bad news stocks go up!

Tue, 10/27/2015 - 12:08 | 6716962 The man with po...
The man with pointy horns's picture

At least Apple can fall back on its 200 billion dollars of cash which is actually invested in all kinds of assets managed by Braeburn Capital. Oops.

Screw that, lets raise Apple bonds instead to raise cash for buybacks instead of taking a slice out of the 200 billion dollar motherload.

Also lets double down on the i-branding, iTV, iWatch, iPencil regardless of how ridiculous these products actually are.

So Apple is at the mercy of smartphone and ipad sales which must keep increasing or the company will downsize or perhaps even go bankrupt.

Of course Apple's popularity is a given just like always rising house prices were a certainty. Oh wait...

Give it 5 years and the company will be gone, or acquired for a dime by another company or even bailed out.

Tue, 10/27/2015 - 12:11 | 6716977 Urban Roman
Urban Roman's picture

Maybe they can get the pentagon to drop fifty tons of pallet-loaded iPads to the Syrian freedom fighters ...

Tue, 10/27/2015 - 12:18 | 6717015 buzzsaw99
buzzsaw99's picture

they pay $600 for an iphone in china or is aapl gouging usa consumers?

Tue, 10/27/2015 - 12:58 | 6717178 mijev
mijev's picture

iphones are around 15-20% more expensive in china and around the same as the US in hong kong.

Tue, 10/27/2015 - 12:20 | 6717026 Bernoulli
Bernoulli's picture

I think Apple earnings tonight will be a HUGE deal.

After all they are releasing the Q4 earnings!!!

Just check on finance.google.com:

Oct 27, 2015
Q4 2015 Apple Inc Earnings Call - 5:00PM EDT - Add to calendar
Oct 27, 2015
Q4 2015 Apple Inc Earnings Release - 4:00PM EDT - Add to calendar

(glitch by google? or done on purpose??)

Tue, 10/27/2015 - 12:26 | 6717052 taopraxis
taopraxis's picture

Apple is to a computer as a fast food restaurant cash register with cheeseburger and milkshake buttons is to a generic cash register/scanner. I've never owned an Apple product...never liked them.

Tue, 10/27/2015 - 12:31 | 6717078 Raymond_K._Hessel
Raymond_K._Hessel's picture

I can't claim to follow your comment, but ooc, what tech products have you liked?

Tue, 10/27/2015 - 12:48 | 6717146 taopraxis
taopraxis's picture

None of them. I dislike computers more or less across the board which is why I left that field. Obviously, I use one, but most any computer would probably work for me. My generic advice is buy a simple, cheap flexible device suitable for the tasks you're likely to perform on it. Shop and compare extensively before you buy. Buy only what you need because it will very rapidly be rendered obsolescent and your money will be gone.

Tue, 10/27/2015 - 12:39 | 6717110 CuttingEdge
CuttingEdge's picture

Icahn pimping Aapl in 3...2...1...

Tue, 10/27/2015 - 12:45 | 6717128 I am a Man I am...
I am a Man I am Forty's picture

Zerohedge has been bearish on apple since about 400% ago.  They will make more profit than anyone else in the world and ZH will talk about what a shitty quarter they had.  It's really quite impressive to watch, ZH can make Fox news look like a bastion of truth when it comes to Apple.  Then they are going to post a chart on how their billions and billions of dollars of cash growth is starting to slow down and not take into account cash spent on stock buybacks and dividend payments.

Tue, 10/27/2015 - 12:47 | 6717136 Raymond_K._Hessel
Raymond_K._Hessel's picture

+ 100

it is very strange - iconoclasm for iconoclasm's sake, at times. Like Steve Jobs got everybody's wife pregnant...

I'm not sure hating hipsters and fanboys is as brazen and edgy as it once was.

Tue, 10/27/2015 - 13:03 | 6717200 silverer
silverer's picture

Apple is failing.  A long time fan, I'm looking around now.  I will not allow them to force me into an ecosystem that demands monthly payments to them.  They want it so bad, they are chomping at the bit.  Forget product and service.  It's monthly revenue.  Jobs is rolling in his grave.  Linux continues to improve every day.

Tue, 10/27/2015 - 16:25 | 6718181 Arnold
Arnold's picture

Nice statement . I heart you , not in a homosexual way.

Tue, 10/27/2015 - 12:49 | 6717139 earleflorida
earleflorida's picture

apple with intel inside is a match made in heaven

huge cost savings

a no brainer for newtonian's :-0

Tue, 10/27/2015 - 12:52 | 6717154 E.F. Mutton
E.F. Mutton's picture

iDont give an iShit about AAPL

Tue, 10/27/2015 - 13:01 | 6717193 silverer
silverer's picture

Me, I like the word 'anxious' that they used in the headline.  Makes me picture a bunch of preppies standing around with their hands in their pockets nervously twitching while they wait for the money to roll in.  But it isn't.

Tue, 10/27/2015 - 16:28 | 6718197 Arnold
Arnold's picture

Twitchy  aphorisms are an indication of withdrawal

Tue, 10/27/2015 - 13:08 | 6717226 mijev
mijev's picture

I don't know much about tesla or elon musk but I do wonder about the broad dislike of the company from most analysts. They do make innovative, real products that seem to sell and their manufacturing is largely domestic. Also, unlike uber or just about any other disruptive service they can't be ripped off cheaply by just copying a business model and a piece of software. And they have actual money coming through the door paying for actual priduct.

Tue, 10/27/2015 - 22:11 | 6719446 Abbie Normal
Abbie Normal's picture

For every dollar coming through the showroom door, another $0.30 comes from the federal subsidies.  Even a lemonade stand could survive in the winter if the Bank of Mom & Dad subsidizes it.

Do NOT follow this link or you will be banned from the site!