Your bear case rested on iPhone decline. My bear case rests upon margins * sales resulting in declining profits. I expected flatter iPhone sales this quarter and lower profits as well, but nothing indicates they have resumed substantial profit growth. Yes, if the iPhone 6 both maintains similar margins and leads to continued sales records, then they could absolutely see substantial profit growth for the year. But no one knows how that will pan out. Similarly, if new promised products make up for iPad declines, it could help. But I don't think it will happen. I see the problems with tablets and the problems Samsung is having with their pricing as leading indicators. We'll have to wait and see.
I believe that you called Apple insanely undervalued if it could continue to grow profits. And I stand by that. I'm not talking about quarterly fluctuations, but real YoY growth. If they reach $50/share (current shares) profits in the coming year, and continue to grow profits at even a modest clip beyond that, than they were hugely underpriced at $520 in hindsight. If you are convinced that profits will do as described, I suggest you buy every share you can get your hands on!
You seem to be moving your goalposts drastically. Not moving them at all - my thesis since 2012 (albeit early 2012, which was premature) has been that profits would stall, then decline, and that market share numbers were forecasting (not causing, in the near term) this. In mid-2012, expectations were that profits would be in excess of $50/share by now. Don't get carried away by a beat on estimates. Actual growth is still very modest. As others have said, the latter part of the year will reveal a lot. An iPhone 6 that demolishes past sales and has similar margins will prove that my thesis was a short-lived phenomena. |
