October 27, 2016
Apple Q4 is overall in line as expected, but guided up the Q1 2017. Margin missed. At this time, the market seems to be concerned with the supply chain, not the demand, of the iPhone 7.
iPhone unit sales has beat the already high estimates that the street has been rushing in to raise up to the eve of the Q4 announcement. Though, the beat may not be recurring due to the Samsung Note 7 failure tailwinds. There are over 280 million 3-year old iPhones waiting for upgrades into iPhone 8 or 10-Year Anniversary iPhone in 2017. It is unrealistic to assume that Apple has returned to the growth stage.
It is more important to see if the average phone price can break the downward trend from $690 Q1 2016 to $595 Q3 2016. 20% of the IPhone 7 was expected in SE’s, up from 5.1% in Q3. The rising percentage of the SE has been blamed for the decline in average selling prices.
Apple has been traded like a value stock for a long time. Yet, it is common that the technology stocks typically traded at a discount due to the volatility of the earnings.
That being said, today, Tim Cook’s only job is to control the transfer rate from Apple to Android, which has been rising over time . This is why Apple desperately needs to step up their game to create technology breakthrough products, not just having iPhone N+1.