shares are taking it on the chin Friday one day after the company reported a strong September quarter, but one which triggered just enough questions to give investors pause after the stock’s big 2020 run.
For the quarter, Apple (ticker: AAPL) reported revenue of $64.7 billion, up about 1% from a year ago and slightly ahead of the Wall Street consensus of $64.2 billion. Profits were 73 cents a share, two pennies ahead of consensus.
It was a down quarter for iPhone sales, as demand slowed ahead of the iPhone 12 launch, but Apple had substantial growth in almost every other category. Mac sales were $9 billion, up 29%. iPad sales were $6.8 billion, up 46%. Wearables increased 20.8%, to $7.9 billion. Services revenue was $14.5 billion, up 16.3%.
There are multiple factors weighing on the stock. For one, the 21% drop in iPhone sales, while not a big surprise, was a little worse than some analysts had modeled. Two, the 29% drop in Greater China sales was a little shocking and a reflection of the company’s lagging position in 5G phones in a key market. And three, Apple declined to give guidance for the third straight quarter, which really shouldn’t have surprised anyone but seemed to rattle some investors.
On the post-announcement call with investors, the company responded to all of those concerns. Without providing detail, it said iPhone 12 sales are off to a strong start—but it just started shipping the iPhone 12 and iPhone 12 Pro, and won’t even start taking orders on the low-end iPhone 12 Mini or high end iPhone 12 Pro Max until next week.
On China, the company said it was hurt more there than other markets by the lack of 5G phones in the quarter, but a rebound is expected in the December quarter, and early demand for the new phones is promising.
As for guidance, Apple didn’t provide detail, but did say that iPhone sales would be up year over year in the holiday quarter despite only a partial quarter of iPhone 12 sales—and it expects double-digit growth in services and in all non-iPhone hardware categories in the quarter.
Citigroup’s Jim Suva adds two other logs onto the worry pile—a modest decline in gross margin and worries about potential regulatory oversight. On the guidance issue, he writes that he was “a bit surprised” that Apple didn’t give an outlook. On China, he writes that “China has a more advanced 5G network compared to many countries and simply put consumers want a 5G phone rather than a 4G phone.” On margins, he says the issue is mostly one of mix, with Macs and iPads carrying lower margins than iPhones and services. (It was a spectacular quarter for both Macs and iPads, remember.) And as for regulation, he sees headline risk, but no risk to fundamentals for at least the next 12 months.
Bottom line: He keeps his Buy rating and $125 target price.
Bernstein analyst Toni Sacconaghi, who keeps a Market Perform rating on Apple shares, writes that the quarter was “solid, but not spectacular.” He finds it noteworthy that Apple didn’t provide explicit guidance. “The upshot is that we doubt that consensus EPS forecasts are likely to change materially, which we view as a likely disappointment given high investor expectations,” he writes.
Sacconaghi agrees that the key from here is iPhone 12 demand. “So how do we interpret Apple’s Q1 guidance/commentary, and what does it say about the iPhone 5 cycle?” he asks. “Unfortunately, it is likely too early to tell—and Apple itself legitimately does not appear to know, given very limited selling days and the unique timing of the iPhone launch. But the punchline is simple: iPhone revenues have to grow double digits year-over-year in fiscal Q1, or March needs to be dramatically stronger than seasonal for this cycle to have a shot of being the super cycle buyside investors appear to be anticipating.”
Katy Huberty came away from the call more bullish than ever. “All signs point to a supercycle,” she writes in a research note, repeating her Overweight rating and $136 price target. “We continue to see upside to fiscal 2021 estimates after Apple grew revenue double-digits across all products including iPhone after normalizing for [the iPhone] product cycle. iPhone growth will accelerate further on extended replacement cycles, more new [models] and aggressive subsidies.”
Huberty adds that her “confidence in Apple’s ability to retain existing users, attract new users and accelerate growth and profitability has never been higher as Apple enters fiscal 2021 with its strongest product and services portfolio in years and several tailwinds at its back, including the growing proliferation of 5G technology; work, learn and play from home demand; and rising adoption and monetization of digital services.”
Wedbush analyst Dan Ives likewise is undeterred in his bullish view. “Last night…the Street and the overall market was hoping for blow out results from FAANG tech stalwarts with Apple and
leading the way and ultimately came away disappointed with tech stocks selling off this morning on the news,” he writes. “Taking a step back, we believe Apple is on the cusp of its largest iPhone product cycle since iPhone 6 in 2014 and we would be buyers on any weakness.” He keeps his Outperform rating and $150 target.
Apple was off 4.9%, at $109.70, in recent trading. The
was down 1.3%.
Write to Eric J. Savitz at email@example.com
Qualcomm to launch a new 7-series Snapdragon chipset in Q1 2021 – GSMArena.com news – GSMArena.com
Qualcomm introduced its new flagship chipset called Snapdragon 888 earlier this week. We expected an upper-midrange platform to take the stage as well, but the San Diego company had nothing more to share about a new 700 series top dog.
According to one leakster on Weibo, the new chipset will be introduced in Q1 2021 and will start shipping almost immediately.
The new 7-series chipset by Qualcomm is expected to be the main competitor to the 5nm Exynos 1080 with integrated 5G modem and the MT6893 platform by Mediatek – a 6nm upper-midranger that is yet to be announced.
So far we know virtually nothing about the new Snapdragon 7xx aside from its model number SM7350 and the codename Cedros, named after an island off the coast of Mexico (and relatively close to San Diego, Qualcomm’s HQ).
A prototype of this platform scored over 530,000 on AnTuTu, meaning it would be performing way better than the SD765G but will still be a step behind the last year’s flagship SD865 that easily reached over 600,000 on the same benchmarking platform.
Verizon's Galaxy S20 family (sans S20 FE) now receiving Android 11 with One UI 3.0 update – GSMArena.com news – GSMArena.com
Mere hours ago, Samsung officially announced its Android 11 update timeline, with the first devices slated to get it being the Galaxy S20, S20+, and S20 Ultra. Little did we know at the time that the company would be pushing out the first updates later today, but it is now happening.
Verizon’s S20, S20+, and S20 Ultra are now in the process of receiving the One UI 3.0 update based on Android 11, through build G98xUSQU1CTKH, where “x” is different based on which phone you have.
As usual, the rollout is expected to be staged and take at least a few days, if not weeks, to reach all devices out there. Now that the ball’s rolling, and surprisingly with Verizon as the update launch carrier, perhaps other carriers will get in on the action soon enough, in the US.
The Android 11 update should spread to many more regions of the world for the S20 family before the end of the year, as Samsung already announced. It’s unclear what will happen to the S20 FE, because weirdly enough it wasn’t on Samsung’s list.
Verizon’s Galaxy S20 models are the first to get Android 11 and One UI 3.0 – The Verge
Verizon revealed this morning that Samsung’s Galaxy S20 lineup will be the first Samsung phones to receive Android 11 and Samsung’s One UI 3.0 in the US, and now the software has already started trickling out to customers, according to Droid Life. One UI 3.0 has been in public beta for the last two months, but this marks the official release of the final software.
One UI 3.0 has the messaging, notifications and security features of Android 11, along with some add-ons specific to One UI. Samsung has added easier ways to access widgets, take screenshots, and double-tap the screen to put your phone to sleep, to name a few, but if you want a more exhaustive list of all of the One UI 3.0 changes, you can check out this roundup at Android Police.
Outside the US, the international launch of One UI 3.0 also seems to be spinning up as well. Android Police says that Samsung sent a full schedule of release dates to users in Egypt, with the flagship S20 line receiving Android 11 and One UI 3.0 some time in December, though after the US. According to the schedule, the next phones to receive the update will be the Note 20, Z Fold, Note 10, and S10 phones in January 2021. The update will take some time to hit every Samsung phone that supports it you’re using a Galaxy A10, A20 or A30S, don’t expect to see it before August.
When we reviewed Android 11 in September, we appreciated all its added features for managing the complexity of modern Android phones, but noted the possibility for fragmentation, as Google and Samsung’s takes on Android have started to diverge yet again. Samsung was known for taking a long time to release updates, like when it took five whole months to send out Android Pie. But that’s changed over the years as it’s gotten better at managing its timeline. Last year’s Android 10 update took three months to hit the first phones, and that’s what we’re seeing with Android 11 this year too.
Issues like fragmentation are important because Samsung is the largest smartphone vendor globally, and the largest producer of Android phones in the US. That means the widespread adoption of new features largely relies on the company choosing to include them in new versions of One UI. From our early preview, it seems like the most important bits of Android 11 have made it into One UI 3.0; but when it comes to Google’s other Android projects, Samsung might not have as much to gain.
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