Goodbye Apple ...
I have exited Apple after holding on to the stock for a few years (before Covid).
Some of my reasons:
Lacking innovation. While Apple offers great products, the quality of its competition is catching up. Seeing the good gross margins, I am not sure I am willing to pay such a premium to leave the Android ecosystem.
The above news article mentioned that Apple Car could still be in reality in a few years.
The above is an aged news article from 2022 that spoke about the team issue managing Apple Car.
Lost the core team for Apple Car. We are waiting for the official word from Apple on this matter.
Apple M2 GPU performance
From PCMag article:
M2 packs 25% higher graphics performance than the M1 when using the same amount of power. At maximum power, the advertised performance boost climbs to 35% over the best the M1 can do. That should translate into smoother, faster performance in games and other graphics-intensive apps for anyone using the new M2-powered MacBook Pro or MacBook Air.
The potential savior is their chips. Good reviews about the recent M1 & M2 chipsets.
From the 31 Oct 2023 article above, China’s Huawei smartphones grew 37% YoY with Apple experiencing a double-digit decline. Would this spread to other products due to ongoing sanctions by the USA?
Once geopolitics become nationalistic, Apple’s products could be affected.
Foxconn saw troubles in India as per the article above.
CNBC reported the failure of the $19.5B semiconductor and display production plant in July 2023.
More troubles when a fire broke out in an iPhone assembly facility in Chennai, India as per the news above.
Their recent relocation of production to India has various production issues. Source: FP
For now, I am an Apple consumer but no longer an investor.
Apple’s Financials
Annual revenue growth from $182B (2014) to $383B (2023)
Annual gross profit grew from $70B (2014) to $169B (2023)
Annual operating profits grew from $52B (2014) to $114B (2023)
Annual EPS grew from $0.45 (2014) to $6.13 (2013)
P/E is 31.0 and 10-year Median margin for FCF is 25.7%
The above is a stellar record.
From the above news, Apple has dropped the price of their latest phones to drive sales in China. This can be seen as a drop in their demand or interpreted as weakening pricing power. In either case, Apple is losing its edge.
Conclusion
Yet, looking at the revenue and profits, Apple remains one of the best-performing companies in the world. I have exited partly because I wish to cash out my positions to reallocate my funds. Apple remains the biggest stock in the portfolio of Berkshire. I am no way better than Warren Buffett when it comes to investments but I prefer to take profits and re-deploy my funds.
Please do your due diligence. For Apple’s coming earnings, there is a chance to disappoint.
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Charlie Munger once said that the big money is not made in the buying and selling but in the waiting
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Good read on $appl
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