A Very Bad No Good Day for Apple

The Daily Observation Deck Feature

It might have been a good day for Apple and shares of Apple. Rosenblatt Securities raised its price target on Apple, Counterpoint Research said the Cupertino-company was still running away with a huge chunk of global smartphone revenue and a much chunkier chunk of smartphone profits, and a slate of release dates for Apple TV+ series headed back to the streamer. As days went, it stood to be mellow, with an underlying feeling of, “things are good.” 

Then BofA analyst Wamsi Mohan wrecked the markets and an Apple exec lost his jobs for being crass on TikTok. These are the sorts of things we saw Friday from the Observation Deck.

BofA Dorps AAPL from Buy/$185 Target to Neutral/$160

Let’s start with Mr. Mohan. Apple 3.0 ran part of a note he wrote, wherein he cut his target price on Apple and lowered his rating on the Cupertino-company’s shares. Saying that Apple shares have been “perceived as a relative safe haven” to this point, he had big buts and he could not lie. Actually, he had a however. “However,” says his note:

…we see risk to this outperformance over the next year, as we expect material negative est. revisions driven by weaker consumer demand (Services already in slowdown and we expect products to follow)…

Perceived risks include:

  1. a weaker iPhone 14 cycle as risk to consumer spending is elevated globally (especially in Europe) and lead time data has been moderating even for Pro models;
  2. weaker near-term Services trajectory where App Store and Licensing (Google payments), which account for over 60% of Services, have incremental risk of deceleration;
  1. stronger Pro-mix won’t offset decline in rev/profit if overall units decline;
  1. stock performance is correlated to gross profit dollars that will likely decline y/y over the next few qtrs.;
  1. reversion to pre-COVID levels for iPads and partially on Macs; and
  1. pressure from a stronger dollar…

With that, the analyst dropped his rating on Apple shares from “Buy” to “Neutral.” He also slashed $25 from his price target — lowering it from $185 to $160.

As Apple Went… 

It was the drop heard ‘round the investing world, according to a piece from CNBC. The fintertainment site says BofA’s downgrade of Apple sparked a tech sell-off “sending Alphabet and Microsoft to one-year lows.” According to the site:

  • Microsoft ended the day down 1.5%
  • Alphabet was down 2.6%
  • Meta was down 3.7%
  • Amazon was down 2.7%
  • Tesla was down 6.8%

Also: 

  • Dow was down 1.5%
  • NASDAQ was down 2.8%

And Apple — Apple was down 4.9% or 7.36. It ended the day at  $142.48.

Counterpoint Data Shows Good News for Apple, Bad News for Smartphones

And it could have been such a lovely day. Sure, smartphone sales and revenue are down around the planet, though Counterpoint Research says not for Apple and Samsung. According to the firm:

A fall in global handset shipments due to factors including Chinese lockdowns and ongoing geopolitical uncertainty caused the revenues to decline despite the average selling price (ASP) going up by 6% in the same period. Consequently, the annual operating profit growth of 6% corresponded with ASP growth rather than shipment decline, reaching $13.1 billion in Q2 2022.

If you can figure out exactly what’s happening in the Counterpoint numbers, I tip my hat to you. It sounds like, from the firm’s release, any good news is either Apple driven or negligible. “Given that handset revenues as well as profits are largely driven by Apple,” the firm says, “we expect a growth in both the aspects in the second half of the year.” That’s the Apple driven part. As for the negligible, Counterpoint seems to indicate that numbers are suffering from a… good compare? A quote from a Counterpoint senior analyst says:

…much of the annual growth can be attributed to a smaller base in the COVID-battered Q2 2021 rather than to consistent growth in operating profits through the quarters.

So — remember when nobody was buying phones because everybody was afraid of dying? Q2 of this year seems to have been this lovely window of less fear and more money. Lots of “might not last” going around, though. Counterpoint Associate Director Jan Stryjak was quoted in the release, saying:

Revenue growth in the second half of the year, when compared to the first half, is a near certainty due to the cyclical launch of the highly profitable and relatively economic downturn-resistant iPhone. But with geopolitical uncertainty worsening, inflation levels rising and fears of recession growing, the handset market is bound to get impacted and may take longer to return to the trajectory predicted prior to the pandemic.

Rosenblatt Ups Apple Target to $189 on iPhone 14 Pro Strength

What’s the phrase? “A lie will go round the world while truth is pulling its boots on?” See also negative versus positive sentiment. Apple seems to have spent not one minute of Thursday’s trading session in positive territory despite a raised price target and a positive note to start the day. Andrew Orr over at AppleInsider wrote up a note from Rosenblatt Securities. That had the firm surveying:

…over 1,100 adults in the US. The survey found that many already had bought or are expecting to buy an iPhone 14 model in the next 12 months.

As with most findings to this point, orders and intent skewed to the Pro side — so much so that Rosenblatt raised its price target on Apple shares from $160 to $189. 

That kind of got drowned out.

Apple VP of Procurement Out After Crass Comments on TikTok

The other bit of unfun on Thursday was the Apple exec I mentioned. AppleInsider says some TikTok and Instagram creator quizzed some some guy in a fancy car on camera. The content creator, Daniel Mac, apparently asks people with super-swank cars what they do for a living. The guy he interviewed gave a pretty crude answer. He wasn’t just some guy though. He was Tony Blevins, an Apple VP who works on procurement. Or — did. 

I won’t say what he said, but I will thank friend of the show Keith — @mymacguru on Twitter — for giving Blevins’ answer a bit of context. His response to the inquiry about what he does for a living was kind of a riff on Dudley Moore’s answer to the same question in the opening credits of the 1981 movie Arthur. But his answer was more boorish than Arthur’s. Also, it’s not 1981. According to AppleInsider:

The video got over 40,000 likes on Instagram and 1.3 million views on TikTok. The clip was found by some employees of Apple’s operations and procurement teams that Blevins heads as vice president.

Or… headed. Employees reportedly reported the video. HR investigated. Apple COO Jeff Williams — Blevins’ boss for most of his 22-years at Apple — apparently made the decision about Blevins’ departure. “In a statement to Bloomberg,” AppleInsider says Blevins said, “I would like to take this opportunity to sincerely apologize to anyone who was offended by my mistaken attempt at humor.”

So, just not a super day in Apple Park.

Apple Pledges Support for Florida in Hurricane Ian’s Wake

Hurricane Ian hit Florida this week, and it did not come to play. “‘Substantial loss of life’ possible in Florida” says part of a headline from CNN. “Worst thing ever in my whole life” said one survivor to the BBC. With record rainfall and winds as strong as 150mp at some points, it’ll likely be a minute before the extent of the damage is known. 

As it tends to in such times, Apple has pledged support. Company CEO Tim Cook hit Twitter Thursday morning, saying:

We are keeping everyone being affected by Hurricane Ian in our thoughts, and we thank the first responders for helping those in harm’s way. Apple is donating to relief efforts on the ground.

Tales from Apple TV+ Land

Let us turn now to the comforting glow of the television. Two trailers from Apple TV+ about which to tell you, and dates for four returning series. 

Hello to Season Two of “Hello Jack…” 

On the kids’ front, Apple TV+ issued a press release Thursday announcing a premier date for the second season of “Hello, Jack! The Kindness Show.” The list of guest stars this season is off the charts, including Gillian Jacobs, D’Arcy Carden, Kristen Schaal, Kumail Najiani, and that list goes on. 

Kids and kids at heart can head back to Clover Grove next Friday 7 October. On your way, you can catch the trailer on YouTube.

Raymond and Ray Are on the Way

Definitely not for kids is the Ewan McGregor/Ethan Hawke film Raymond and Ray. A piece from Cult of Mac says the two play half-brothers called together for the funeral of their less than stellar father. “Together,” says the piece, “they try to discover who they’ve become as men, both because of their father and in spite of him.”

With such star power as McGregor and Hawke, news of a theatrical release is not a surprise. Cult of Mac says Raymond and Ray will hit theaters on Friday 14 October. It’ll hit Apple TV+ one week later — Friday 21 October. You can, of course, catch a trailer for that on YouTube. 

Apple TV+ Announces Premier Dates for Several Returning Series

Proving that “TV” does belong in “Apple TV+,” the Cupertino-streamer has something like returning fall roster. Well, late fall anyway. AppleInsider ran a piece Thursday covering premier dates for returning shows. On the schedule:

  • Viewers can head back to “The Mosquito Coast.” The drama’s back for its second season on Friday 4 November.
  • “Mythic Quest” returns for its third season on Friday 11 November. 
  • You get to enjoy your Thanksgiving before “Slow Horses” saunters in. Season two of the spy series hits Friday 2 December.
  • And one that I did not expect, but am very excited to see: The second season of the anthology series “Little America” lands on Friday 9 December. 

Travelin’ Tim Talks Augmented Reality

We’ll wrap the day with something even more fun than television to look forward to: It’s television you can strap to your face! Travelin’ Tim has pushed on from the UK, hitting points in Europe. MacRumors says one of those was a university in Naples, Italy that gave Apple CEO Tim Cook an Honorary Degree in Innovation and International Management.

That cost him a Q&A session, and that gave him a chance to tease the planet with talk of augmented reality. Asked by a student what future tech excites him, Apple’s CEO said:

I’m super excited about augmented reality. Because I think that we’ve had a great conversation here today, but if we could augment that with something from the virtual world, it would have arguably been even better. So I think that if you, and this will happen clearly not too long from now, if you look back at a point in time, you know, zoom out to the future and look back, you’ll wonder how you led your life without augmented reality. Just like today, we wonder, how did people like me grow up without the internet. And so I think it could be that profound, and it’s not going to be profound overnight…

Dude. Uncool. I want it to be profound overnight. 

“…this will happen clearly not too long from now…”

I guess that’ll have to do. For now.

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