Opinions Charles Lannon
Apple IncAAPLCOMMENTJun 24, 2015
Charles LannonStock price when the opinion was issued
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Is one of the best-run companies ever with great margins and great growth. A recent knock is that they lack innovation. Their googles were a flop and are absent in AI--though maybe they're waiting for the dust to settle before they buy an AI company. Maybe they're positioning with the next era of Apple as they transition to a new CEO.
A dividend pick. Dividend are one of the best, easiest ways to hedge against inflation. This is a dividend grower, increasing each year by nearly 5% annually over the past 5 years. The total return over 3 years is 80%.
Kevin SimpsonReally good opportunity on the AI front. Hasn't missed the boat; by its history, lets other companies do the heavy lifting and then steps in when things are more mature. Then a decade later they own the sector.
Talk of an AI phone. Changes in management (interesting tell that CEO has a hardware engineering background). Tremendous resources. Generates an unbelievable amount of cash. Yield is 0.36%.
Gordon Reid
Capex for the quarter was nothing compared to the other guys. The GOAT of companies. Demand for products continues strong. Stock's up today on guidance of double-digit topline growth.
Barry SchwartzCredit them for not getting into the AI arm race and spending a gazillion dollars unlike at least four peers. Meanwhile, they announced enough cash flow to announce another $100 billion share buyback and increasing their dividend. Also, services revenue came in at a record high and 16% growth, their profit generator going forward. iPhone sales have been surprisingly steady recently. The valuation is high, but can grow into that valuation, say they go into a new hardware phase under the new CEO.
Had a very good quarter. Chinese sales are rebounding, up 28%, services hit a new record, gross margins at 49.3% and a $100 billion share buyback. iPhone sales are a little light, but Apple is exciting. He holds a full position. True, it's valuation is too high, but deserves that premium. Give credit that they reduced capex during this period of huge AI spending.
Kevin SimpsonNew CEO will have to prove himself. Company's had ups and downs but, ultimately, knows how to succeed. Its AI strategy is based on what it's done all along -- let other people spend the $$ initially, and then step in and take the helm.
Gordon ReidIt has enormous free cash flow and has 20% of the world's smart phone market. It is not a hyper-scaler name so does not have hundreds of millions in capital expenditures like the other hyper-scalers. The service part of its business is adding growth with an overall earnings growth rate of 12 to 15% along with solid margins. AI is embedded in partnerships with different companies. It is at its 200 day moving average so maybe it is time to add.
Stan Wong
Concerned about its hardware business versus its recurring-revenue services business. Trouble with its 30x PE multiple for mid-high, single-digit revenue growth. Partnering with GOOG to roll out intelligence services on new products. Doesn't meet his price target upside.
If you don't own, don't buy. Street has another 10% upside from current price, so hold if you already have it.
It is important to separate the outlook for the stock versus the company. They both have challenges. At the company level, it is no longer a fast growth company. The key areas where it makes its profits are pretty mature. It is hoping to develop new revenue lines through music streams, watches, etc. As the stock goes through the transition of being a very high growth company, to being a lower growth company, to being an average growth company you are going to get a rotation in their shareholder base. It is tough to see how the stock will do well over a sustained period of time.