A Solid Quarter and Less Flash Than Expected

The Daily Observation Deck Feature

Light with a chance of hardware, positive-ish notes from Wall Street and Amazon steps to Apple Music Live.

Bloomberg’s Gurman Expected M2 iPad Pro Today, and He Was Right

Checking the forecast where you are — we expected light out with a chance of new hardware. AppleInsider points us to a couple of Twitter posts from Bloomberg’s Mark Gurman. The first, on Saturday, had the Gurmanator saying, “Apple is launching the next iPad Pro with M2 very soon…” That was followed by a Tweet Monday afternoon on the west coast/Monday night back east, saying, “In case it wasn’t obvious with the ‘days away’ wording from Saturday, the launch should be tomorrow,” which is now today. We weren’t disappointed: Apple introduced us to a new entry-level iPad, new M2 iPad Pro models and a refreshed Apple TV 4K with HDR10+ support.

Evercore Sees Strong September-Quarter, Plus a Side of Strength for December-Quarter

Another call for a good September-quarter from Apple. I told you yesterday of Credit Suisse analyst Shannon Cross raising her Apple Q4FY22 revenue and EPS expectations. That’s on the back of strong sales of the iPhone 14 Pro phones. Now, Evercore analyst Amit Daryanani has written a note that’s maybe a tiny bit more bullish.

While Cross sees good things for last quarter, she’s actually lowered expectation for FY23 and FY24 (though she has maintained her “Outperform” rating on Apple shares and her price target of $190). But in his note, part of which was published by Apple 3.0, Daryanani sees strength not only for last quarter, but maybe for this quarter as well. 

For last quarter, he’s jazzed by sales of the Pro end of the iPhone 14 line. In the current quarter, he’s turned on by timing. “For Dec-qtr,” says his note:

…[the] street is modeling $89B [in revenue]/$1.26 [EPS] implying 2% y/y growth – we think there could be upside here given an extra week could alone add “several hundred basis points” to revenues (last time an extra week added ~4% to Dec-qtr growth). 

Even without that extra week, he and his think Wall Street is underestimating the rise in ASPs for Apple. That said, there are worries ahead in his estimation. 

  • He thinks Mac and iPad sales could miss September-quarter expectations, though Daryanani thinks strength in iPhone might make up for that
  • Services are a weird one, looking like both a negative and a positive. Growth for that segment has slowed, but Evercore seems to think that that has been overblown by many. While some on the street are looking for growth in Apple Services in the “mid-to-low single digits,” Daryanani thinks those will come in at ~9% growth
  • FX remains a headwind, in Daryanani’s estimation, though he and his believe “there will be some offset” as Apple secures “concessions from suppliers due to lower commodity prices and strong dollar.”

Daryanani has an “Outperform” rating on Apple shares. His price target on the shares is $190.

Morgan Stanley Shaves Apple Target to $177

News of another positive-ish note from another Apple follower. Barron’s (via Apple News+) has word of one from Morgan Stanley analyst Erik Woodring. He still likes Apple above all tech stocks, though that’s kind of a tough category to like right now. Hats off to Barron’s Eric J. Savitz for the following paragraph:

The sharp drop in sales of personal computer and consumer electronics in recent quarters augurs poorly for stocks in the computer hardware sector, Morgan Stanley analyst Erik Woodring cautioned in a research note Monday. He chopped earnings and estimates and price targets across the board for all of the stocks he covers. 

It’s not just consumers who’ve slowed electronics consumption, but the enterprise as well. With cuts in IT-spending budgets “ahead of a potential recession,” the piece has Woodring seeing “ebbing demand for PCs, printers, servers, and storage.”

He ebbs… he augurs… I’m really digging Savitz prose. 

What do Cricut, HP, Logitech, Seagate, Xerox, CDW, Vivint Smart Home, SmartRent, GoPro, Teradata, Sonos, Garmin, Snap One Holdings, Resideo, NCR, and Apple all have in common? They all got their price targets anywhere from shaved to shorn by Woodring on Monday. Apple was on the shaved side. “As for Apple,” says the Barron’s piece:

…[Woodring] doesn’t see the company as entirely immune from a weakening consumer-spending environment, but he adds that his channel checks find that “demand has held up better than expected in recent months.” 

Like Evercore’s Daryanani, Woodring actually sees strong September and December quarters coming for Apple. 12-months is a long way out, though. Though Apple is still his top pick in tech, he cut his price target on the company’s shares from $180 to $177. 

Nikkei Asia: Apple Kills Plan to Use NAND Flash Memory from China’s YMTC

Something of a hiccup in Apple’s supply chain plans. A Nikkei Asia report says the Cupertino-company has had to scrap plans to buy NAND flash memory from China’s Yangtze Memory Technologies Co (YMTC). This after Yangtze was added to a watchlist by the U.S. government. 

We first heard of Apple’s interest in NAND from YMTC back in the spring. I’d said than that the story seemed both weird and not for several reasons. On the not weird side, adding a brand new supplier would mean diversifying the supply chain. That could be good either to combat zero-COVID policies that fouled up manufacturing for the first half of the year or to keep pressure on NAND-makers that were already in Apple’s supply chain. (Actually — that might have been more and/and rather than either/or). 

Putting the deal firmly on the weird side though, were ongoing tensions between China and the U.S. And weird seems to win. Or lose, maybe. Nikkei Asia says the move to nix the deal:

…comes amid the latest round of U.S. export controls imposed against the Chinese tech sector and is a sign that Washington’s crackdown is creating a chilling effect down the supply chain.

While Apple is not technically precluded from using Yangtze NAND, the report says:

…U.S. companies are prohibited from sharing any design, technologies, documents or specifications to companies on the [list to which Yangtze was added] without a license.

Additionally, the list on which the chipmaker landed is said by one expert to be sort of a rest stop on the way to “the official export control blacklist…” Also, there was a threat. Citing a report in the Financial Times, a piece from the South China Morning Post on the issue says:

Marco Rubio, Republican vice-chair of the Senate intelligence committee, warned Apple that it would face intense scrutiny “like it has never seen from the federal government” if it used memory chips made by YMTC, which pose “security risks…”

One wonders what this will mean for future iPhone prices. Yangtze’s NAND is said to be 20% less expensive than NAND made by its rivals. While Apple originally planned to used the Yangtze memory only in iPhones sold in China, Nikkei says the company had hoped that Yangtze NAND might eventually fill 40% of future iPhone orders. 

Neither Apple nor Yangtze offered comment for the Nikkei piece.

‘SIM Not Supported?’ It’s Not Just You!™

Is your iPhone 14 giving you a “SIM Not Supported” message? It’s Not Just You!™ Not only is that a thing that’s happening to people, a piece from MacRumors says Apple has acknowledged that that is a things that is happening to people. 

On iPhone 14 — apparently up and down the line, MacRumors has Apple saying in a memo that — yup — someone on any one of the iPhone 14 models out there may get a message on screen that says “SIM Not Supported.” After that, the piece says, the device may freeze entirely. 

What should you do if this happens to you? Pray, apparently. Or hope for the best. According to MacRumors, Apple’s first advice is be patient. Wait a few minutes and see is the message just goes away on its own. If it does not, Apple emphasizes that users should not try restoring the phone. Rather, the piece says affected people “should head to an Apple Store or authorized service provider…”  Meanwhile, Apple is said to be investigating the issue.

Amazon Music to Stream Weekly Live Concerts

Apple Music Live has a bit of competition. A piece from TechCrunch says Amazon is launching a livestream concert series, cleverly titled “Amazon Music Live.” According to the report:

Next Thursday, October 27, at 9 p.m. PT, Amazon will launch the series which features rapper 2 Chainz as the host and performances by artists Lil Baby, Megan Thee Stallion and Kane Brown.

That’s three shows, by the way, week after week after week. Unlike the live offering from Apple Music, which seems to hit about once a month, “Amazon Music Live” will hit once a week, according to the report. So, it’s Lil Baby on Thursday 27 October, followed by Megan Thee Stallion on Thursday 3 November, and Kane Brown on Thursday the tenth.

NBA 2K23 Goes Live Today in Apple Arcade

And finally today, as the NBA takes the court, you can too — on your iPhone. MacRumors says NBA 2K23 hits Apple Arcade today, “alongside the start of the 2022-23 NBA season.” Announced last month, this year’s edition comes with a “The Greatest” mode, letting players go toe-to-toe with NBA greats of yesterday and today “to see who’s really the greatest finisher, shooter, play-maker, or defenseman in the NBA.” 

Additionally, MacRumors says the game still has an “Association” mode, tasking “players with managing an NBA roster by making trades, signing free agents, scouting up-and-coming prospects, and controlling their team’s finances…” You can even make up your own custom player to play out a “MyCAREER mode.” Honestly though, I think that should end with a chain of boutique clothing stores, a run for office, or a development deal with Apple TV+.

Either way — if you like basketball, should be cool. The game is expected to go live in Apple Arcade today. Once it does, tipoff is whenever you want.

Today on The Mac Observer’s Daily Observations Podcast

What might have been… TMO Managing Editor Jeff Butts and I talked over the implosion of the Apple/Yangtze NAND deal. Plus — South Korea is moving state-issued IDs to the blockchain — listen as Jeff tried to make me understand. That’s all today on the Daily Observations Podcast from The Mac Observer

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