Greater Than Expected Expectations and a Bad Day to Get Attention

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Greater than expected expectations, follow-up news around iPads, and Tuesday might have been a hard day to get attention.

Morgan Stanley: Apple Will Beat the Street for September and December Quarters

If everybody expects Apple to beat expectations, where are we getting our expectations? 

Morgan Stanley analyst Erik Woodring is calling for a beat. Apple 3.0 ran part of a note he wrote. In it, he called for September-quarter revenue of $90.1B — 2% higher than the Street’s expectations. What he’s really into though is the December-quarter. While he does not expect the mass of September-quarter earnings will “put to rest investor concerns about a hardware downturn,” he thinks Apple’s December guidance will be constructive. According to his note, three points stick out in particular:

First, iPhone, iPad and Mac production has remained remarkably stable (and in some cases, stronger than we expected 90 days ago) despite signs of deteriorating consumer hardware spending intentions, as iPhone lead times remain extended (…) and improving component supply helps Apple catch-up to iPad/Mac demand.

The second thing is the shift toward the high-end on the iPhone line. That’ll keep ASPs higher through year’s end, in his estimation. 

The third thing: Timing. The analyst points out that “Apple has a 14-week quarter” this quarter. That sets up a favorable compare versus last year’s 13-week quarter, letting Apple post “an acceleration in Y/Y Services revenue growth and sets up the Product business to grow above normal seasonality in the quarter (…). 

Mr. Woodring has an “Overweight” rating on Apple shares. His price target on the shares is $177.

Bernstein Research: Apple Will Beat December Expectations, Murky Road Ahead

If everybody expects: Take Two. Apple 3.0 has run part of a note from Bernstein Research analyst Toni Sacconaghi. He’s already over the September-quarter, it seems, and is eyeing the ever looming holiday quarter. 

It’s kind of funny — for a guy who’s expecting something positive, he focuses pretty hard on the negative. That’s our Toni! He’s worried about iPhone unit sales, choosing not to look to the rising ASPs thanks to sales of the Pro phones. He’s also worried that Apple was a big beneficiary of the COVID crisis now that people aren’t buying the way they were when they were locked down. Quoting the analyst:

We see risk-reward on AAPL as neutral to modestly negative over the next the 3 – 6 months. Ultimately, we worry that recent strength could revert in its hardware and are below consensus for FY 23. Moreover, Apple’s valuation remains elevated vs. history and its tech peers.

Didn’t I say he was expecting a beat? I did and he is. It is, it seems, all about that 14th week in the December-quarter. He and his “estimate that Apple’s extra week in the December quarter will add 7%+ to revenue growth, which does not appear reflected in consensus.” Unless you read Morgan Stanley analyst Erik Woodring. Or Evercore analyst Amit Daryanani, come to think of it. 

Apple 3.0’s Philip Elmer-DeWitt says get used to the 14th week thing. You’ll be hearing it a lot over then next few months. 

Sacconaghi has a “Market-Perform” rating on Apple shares. His price target on the shares is $170.

Ups and Downs in iPad Pricing

Apple Drops Price of Refurbished 2018 iPad Pro

If you thought prices on Apple’s iPad line were confusing already, hang on tight. A piece from MacRumors says the Cupertino-company has lowered the price of the 11-inch iPad Pro in its refurbished store. Not an M2. Not an M1. This is the 2018 machine, powered by Apple’s A12 Bionic. 

Not the latest and greatest, though the prices may make them worth considering. According to the report, “The 64GB refurbished model now costs $469, 256GB for $539, 512GB for $689, and 1TB for $849.”

Good prices, though the machine’s four-years old. Your math may vary. 

Apple Raises iPad mini Prices Outside U.S.

While prices drop among the refurbs, minis rise outside the U.S. A separate piece from MacRumors says Apple “significantly increased” the cost of the iPad mini on Tuesday — despite that being the one segment of the iPad line untouched by updates. 

In the UK, the piece says prices for the two configurations of iPad mini rose 19% and 21%. In Italy the prices rose about 18%. The report indicates that that’s kind of indicative of the rest of the EU. Prices are said by the piece to be up in Australia, India, and the Asia Pacific region, though to a lesser extent. “In Australia, for example,” the piece says “‌iPad mini‌ prices have risen by around 11%.” 

Though Apple offered no reason for the price hike, a piece on the issue from 9to5Mac figures a strong dollar is the reason. “…both the pound and euro are worth a lot less than they were a year ago,” according to the report. Quoting the piece:

If Apple wants to maintain its dollar margins (and you bet it does!), then the only way to do this on overseas sales is to hike local pricing to bring in the same dollar amount.

Inverse Says Apple Pencil 2 Leaves No Room for Landscape Camera on iPad Pro

If you’re wondering why the tenth-gen iPad has the camera positioned for landscape mode while the new iPad Pros do not, ask and answer a question asked an answered by Inverse: Where would you charge Apple Pencil 2? 

Writing for the site, Raymond Wong figures that’s got to be the issue. “Put simply,” he writes:

…there is no room to fit the webcam into the iPad Pro’s bezel (right when positioned vertically, top when held horizontally). On M2 iPad Pros (and the iPad Air and iPad mini), the side houses a magnetic connector for attaching and charging up a second-generation Apple Pencil. This component is literally in the space where the webcam is located on the 10th-generation iPad.

May not make you happy, but that seems like a likely answer. 

Apple Kills 3.5mm Jack on Tenth-Gen iPad

If you get a tenth-generation iPad and go to plug in your old, trusty headphones — try not to scratch anything. A piece from AppleInsider says the 3.5mm headphone jack is gone. That means your old, faithful cans won’t work. Of course, with the lightning port replaced by USB-C — the last headphones Apple gave out free with devices won’t work either — not without heading to Dongletown.

Dongleton. Dongleton Abbey. 

Where was I? If you want to hear what’s happening on your tenth-gen iPad without everyone else hearing, your AirPods, AirPods Pro, and AirPods Max should work nicely, as will other wireless offerings. You can also use a set of USB-C headphones. Or — if you want to keep on keeping on with a 3.5mm connector, Apple sells a $9 adapter that’ll send your sounds from a USB-C port to your old fashioned, audiophonic friend. 

Australian Apple Store Workers Strike and Slow Services

If you were trying to get attention in the Apple space Tuesday, it was tough to do if you weren’t Apple. We had heard that retail workers in Australia had planned a one-hour strike for Tuesday 18 October. That happened… the same day Apple announced new iPads and Apple TVs. 

Engadget highlights a report from the New York Times, saying “about 150 store staff went on strike for an hour Tuesday after negotiations for better pay and working conditions hit an impasse.” It sounds like that was just step one of who knows how much protest. “On Wednesday,” Engadget says, some employees “refused to provide a mix of services that included repairing AirPods and managing deliveries.”

The piece says the actions are meant to drive Apple toward better time-off policies and higher wages. Apple is said to have offered employees a starting wage of $27.64 AUD (roughly $17.35 US). Australia’s Shop, Distributive and Allied Employees Association is said to be pushing for $31 AUD (roughly $19.50 US). They say Apple’s offer is a “real wage cut” that doesn’t account for inflation.

Apple TV+ Outs Trailer for Second-Season of ‘Slow Horses’

And finally today, Apple’s offered a sneak peek at season two of Slow Horses. The Mac Observer says the second season of the Apple TV+ series deals with old intelligence coming to light. “In season two,” says Apple’s description:

…long-buried Cold War secrets emerge which threaten to bring carnage to the streets of London. When a liaison with Russian villains takes a fatal turn, our hapless heroes must overcome their individual failings and raise their spy game in a race to prevent a catastrophic incident.

Academy Award winner Gary Oldman’s back, along with Academy Award nominees Kristin Scott Thomas and Jonathan Pryce. The first two episodes of season two hit Apple TV+ on Friday 2 December. You can, of course, catch the trailer now on YouTube. 

Today on the Daily Observations Podcast from The Mac Observer

TMO managing editor Jeff Butts thinks the iPad line-up is a total mess, while I am confused by Apple TV 4K splitting Threads. We’ll talk the talk on The Mac Observer’s Daily Observations Podcast.

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