THAT RIGHT NOW WE ALSO HAVE
THE OTHER STORY OF THE DAY
U.S. AND CHINA, BEGINNING A
NEW ROUND OF TRADE TALKS TODAY
IN BEIJING, JOINING ME RIGHT
NOW ALPHA ONE CAPITAL A
PURPOSE FUNDING PARTNER DAN
NILES I HOPE YOU TO BE THERED
YINT INTRODUCE SAID OUR
VIEWERS A WHOLE LOT OF MONEY
THANK YOU.
>> THANK YOU VERY MUCH.
>> YOU WERE WITH US ON OCTOBER
24, YOU WERE REALLY SKEPTICAL
OF WHAT WAS GOING ON, AT
APPLE, SO I HAVE GOT TO TALK
TO YOU FIRST ABOUT THAT.
THE BIG SHOCK THE COMPANY
SENDING SHOCK HE WAVES
THROUGHOUT WALL STREET A WEEK
AGO, AFTER CUTTING SAELTZ
FORECAST LAST WEEK CITING
WEAKENED CHINA SALES CAME AS
NO SURPRISE TO YOU.
WHAT IS YOUR TAKE ON WHAT WE
HEARD FROM APPLE WHERE THE
COMPANY IS TODAY.
>> I THINK THE BIG THING
CONCERNS ME MARIA IS APPLE
RECOGNIZED WHAT THE
PROFICIENCY?
THEIR CITING PROBLEMS WE ARE
IN TRADES ZPUT DISPUTE WITH
CHINA DOLLAR IS REALLY STRONG
UPGRADE RATES ARE BEING PUSHED
OUT AS WELL PEOPLE ARE BUYING
NEW PHONES, LESS FREQUENTLY, I
THINK THOSE AREN'T REALLY THE
PROBLEMS, AND THEY SHOE HAVE
KNOWN A LOT AHEAD OF TIME IF
YOU LOOK AT THINGS YOU SAY
CHINA HAS BEEN WEAKENING FOR A
WHILE APPLE SALES TO CHINA UP
21% MARCH WENT TOP 19% IN
JUNE, 16% GROWTH
YEAR-OVER-YEAR IN SEPTEMBER,
AND BRAZIL HAD GONE NEGATIVE,
AND INDIA FLAT IN SEPTEMBER
QUARTER ALL ISSUES THEY SHOULD
HAVE RECOGNIZED I THINK THE
FORECASTING PROBLEM, THE REAL
ISSUE IN MY MIND IS A
FOLLOWING: IF YOU LOOK AT THIS
YEAR TRYING TO SELL TWO
PHONES, ABOVE 1,000 DOLLARS,
AVERAGE ASPs UP 28 HE%
YEAR-OVER-YEAR IN SEPTEMBER TO
79 DOLLARS.
>> AVERAGE SELLING PRICE.
>> AVERAGE SELLING PRICE, YES,
SO IF YOU LOOK AT THAT YOU SAY
WOW THAT IS A LOT TO BE
PUSHING INTO A MARKET, WHEN
YOU'VE GOT CHINA WHOSE AVERAGE
GDP PER PERSON SITTING AT
10,000, IN INDIA 2000 THAT
CONTRASTS TO U.S. OVER 60,000
HOW ARE YOU SELLING EVER MORE
EXPENDITURE PHONES TO THOSE
MARKETS 2 TO 300 DOLLAR LEVEL
APPLE WEBLT FROM SECOND
LARGEST FOUNDER OF PHONES IN
THE WORLD HUAWEI PASSED THEM
OUT OF THE CHINA TO BECOME
SECOND LARGEST NOW DIVO, ALSO
IN CHINA 9% OR SHOW APPLE 11
BOTH COULD PASS APPLE NEXT
YEAR I AM NOT SURE APPLE
ROISTSDZ REAL ISSUE THAT IS
THEY ARE TRYING TO SELL IS A
FERRARI IN A MARKET THAT CAN
AAFORKED A FORD.
>> SOUND MERGING MARKETS
PROBLEM APPLE SELLING INTO HE
MERGING MARKETS TOO HIGH
EXCEPTION MERGING MARKETS
SLOWING DOWN 0,000 DOLLARS
16,000 PER CAPITA IN CHINA HOW
YOU SAID A BACK IN OCTOBER
WHEN WE WERE TOGETHER HOW
WOULD PEOPLE AFFORD A 1,000
DOLLAR PHONE.
>> WHAT PEOPLE ARE MISSING THE
OTHER THING APPLE KEEPS GOING
BOOK TO NARRATIVE DON'T FOCUS
ON UNIT OF PHONES FOCUS ON
SERVICES INSTALLED BASE
LOOKING INTO WHAT THEY SAID OH
LOOK INSTALLED BASE GREW 100
MILLION DEVICES OVER LAST
YEAR, ACTUALLY GO BACK DO MATH
ON THIS, A YEAR AGO SAID WE
HAVE 1.3 BILLION UNITS OF
INSTALLED DEVICES NOT
CUSTOMERS BUT DEVICES.
YOU ADD 100 MILLION TO THAT
GETS YOU TO 8% GROWTH THIS
YEAR, WHAT THEY ALSO SAID A
YEAR AGO IS THAT 1.3 PLAN IS
UP 30% OVER PRIOR TWO YEARS
CLEARLY INSTALLED BASE IS
SLOWING DOWN, LOOK WHAT THEY
SAID ON SERVICES SAID WE
EXPECT SERVICES REVENUE TO
DOUBLE FROM 2016 TO 2020 WE
HAVE HE 2018 NUMBERS, SO
SERVICES REVENUE HAS GROWN,
25% COMPOUNDED OVER THE LAST
TWO YEARS, FROM THE 25 AND ONE
HALF BILLION TO 39.5 BILLION
IN 2019 YOU SAY 25 1/2 BILLION
TIMES TWO 51 BILLION WAIT A
MINUTE TELLING ME SERVICES ARE
GOING TO GROW 14% COMPOUNDED
OVER NEXT TWO YEARS, THEY GREW
25% OVER THE LAST TWO SO THAT
IS SLOWING DOWN AS WELL.
NONE OF THE WALL STREET
ANALYSTS WANT TO TALK ABOUT
THAT BECAUSE THEY ALL HAVE
BUYS ON THE STOCK NOT ALL BUT,
YOU KNOW.
MARIA: A LOT OF THEM YOU ARE
RIGHT.
>> ONE PERSON HAS A SELL.
>> LOOK AT THIS CHART ONE-YEAR
CHART, AND REALLY BEGINNING IN
OCTOBER THINGS JUST FELL OUT
OF BED THAT IS WHEN YOU WERE
ON THIS SHOW TALKING ABOUT
SOME OF THE WEAKNESS THERE,
TELL ME ABOUT VALUATIONS I
MEAN THERE IS ANY REASON TO
BELIEVE OKAY WE'VE GOT A
SLOWDOWN, BUT THE STOCK IS AT
A BETTER PRICE SHOULD I BUY
NOW.
>> YEAH, THAT IS GREAT
QUESTION, HERE IS THE ISSUEIVE
THE STOCK SORT OF IN THE
MIDDLE OF THE VALUATION
TRADING RANGE WOULD NORMALLY
BE OKAY BUT WHAT YOU ALSO HAVE
GOING ON IS THE FACT THAT THE
SMARTPHONE INDUSTRY FOR THE
FIRST TIME IN IF HISTORY IS
GOING TO SHRINK IN 2018.
LOOKS LIKE GOING TO SHRINK
FURTHER IN THE 2019.
SO IF YOU SAY VALUATIONS?
MIDDLE OF THE RANGE, BUT THE
INDUSTRY THAT THEY ARE IN IS
SHRINKING IF YOU LOOK AT PC
INDUSTRY IN THE 201 THAT IS
WHEN REPLACEMENT RAIDS STARTS
TO LENGTH PEOPLE WENT TO BUY
PCS LESS FREQUENTLY UPGRADE
MARKET SHRANK SIX YEARS THIS
ABOUT HAVE FIRST YEAR SINCE
2011, 2018 THAT IT GREW I
THINK THE SMARTPHONE INDUSTRY
IS IN FOR A MULTIYEAR SEGMENT
OF SLOWING DOWN.
>> INTERESTING BECAUSE WHEN WE
WERE ON THE PHONE YOU WERE
SAYING LOOK AT LIKE HOW LONG
YOU HAVE YOUR CAR YOU KNOW YOU
REPLACEMENT CAR IN CAR HOW
MANY YEARS SEVEN YEARS.
>> ACTUALLY U.S. TODAY THE
AVERAGE CAR ON ROAD OVER 10
YEARS OLD.
>> 10 YEARS OLD SO, I MEAN.
>> PC SIX YEARS.
>> THE PHONE.
>> THREE YEARS.
>> YOU GO.
>> EXACTLY -- BY THE WAY I
KNOW 5G IS A BIG DEAL IF 5G ON
THE HORIZON I KNOW THAT I WANT
TO GET THE LATEST GREATEST ON
MY PHONE BUT IPHONE IS NOT
INCOMPATIBLE FOR 5G WHY APPLY
AN IPHONE.
>> REALLY GOOD POINT WHEN YOU
THINK ABOUT 2019, 5G IS GOING
TO ROLL OUT CARRIERS, IN JUNE
QUARTER, WELL APPLE DOESN'T
HAVE A 5G PHONE OUT IF YOU ARE
TRYING TO CONVINCE SOMEBODY
SPEND 1,000 BUCKS THEY GO DOES
IT HAVE 5G.
>> NO, SO THEY WAIT THIS YEAR
COULD ACTUALLY BE WORSE THAN
LAST YEAR, IN TERMS OF HOW
MUCH THE SMARTPHONE MARKET
SHRINKS, APPLE NOT HAVING 5G,
IS EVEN BIGGER PROBLEM BECAUSE
CARRIERS LIKE SAMPSON ARE
GOING TO GOING TO ROLL OUT A
FOLDABLE PHONE A MILLION UNITS
NOT MUCH ANOTHER FEATURE APPLE
IS NOT GOING TO HAVE IF YOU
ARE TRYING TO SELL HIGHEST
PRICED PHONES OUT THERE IT IS
HARD TO CONSEQUENCE CONSUMERS
TO DO IT I THINK APPLE
FOCUSING ON WRONG THINGS ONE
OF THE THINGS I PUT OUT IN A
TWEET RECENTLY HAD.
FOR THOSE VIEWERS WHO ARE
INTERESTED, DANIEL TNILES, I
TRY TO PUT BOT HAT ON
FREQUENTLY.
>> I'VE GOT FOLLOWERS ALSO
GAINED GREAT VALUE FROM YOUR
COMMENTARY TALK TO US ABOUT
THE BROADER MARKET FOR A
MOMENT DAN VALUATIONS HAVE
GOTTEN BETTER.
>> YES.
>> BUT VOLATILITY IS THERE, ON
THE OTHER HAND YOU'VE GOT
VALUATIONS GETS BORDER FED
SAYING WE ARE NOT IN A RUSH
ISN'T THIS GOOD TIME TO APPLY
STOCKS.
>> I THINK DAGEN SET THIS UP
WELL TALKED ABOUT THE FACT
THAT NONFARM PAYROLLS CAME IN
312,000 BIG THING RIGHTLY
POINTS OUT FED JAY POWELL SAID
BALANCE SHEET NOT ON AUTOMATIC
PILOT ANY MORE SAID THAT
DECEMBER 19 MARKETS ABSOLUTELY
FREAKED OUTZ ON FRIDAY HE SAID
LOOK WE ARE FLEXIBLE LISTENING
TO THE MARKETS ET CETERA
PEOPLE LIKE OH YOU KNOW MAYBE
THIS IS LIKE 94 TO 95, WHAT I
MEAN BY THAT IS 1994 THE FED
RAISED RATES FROM 3% TO 6%,
AND THEN THEY STOPPED.
94, MARKET DOWN 2%, 95 MARKET
WENT UP 34%.
>> YOU WANT TO BUY STOCKS
HERE.
>> I LIKE THEM.
>> YOU LIKE STOCKS RIGHT HERE
DAN GREAT TO HAVE YOU ON THE
PROGRAM I KNOW YOU ARE LOOKING
AT OTHER AREAS AS WELL ENERGY.
>> EMERGENCY BANKS I JOEN J.P.
MORGAN YOU ARE GOING TO HAVE