The Long Term Investor

HERE is Apple.

Apple beats soft expectations driven by 8% services growth: Live updates

https://www.cnbc.com/2023/08/03/apple-earnings-live-updates.html

(BOLD is my opinion OR what I consider important content)


Apple reported third fiscal quarter results that beat Wall Street expectations for both earnings and sales, driven by stronger services sales that grew 8% on an annual basis.

Overall sales still fell 1% year-over-year, however, and revenue in the company’s iPhone, Mac, and iPad lines were all down year-over-year.

Apple shares were off less than 1%.

Here’s how Apple did versus Refinitiv consensus estimates:

• EPS: $1.26 vs. $1.19 estimated,
• Revenue: $81.80B vs. $81.69B estimated, down 1% year-over-year
• iPhone revenue: $39.67B vs. $39.91B estimated, down 2% year-over-year
• Mac revenue: $6.84B vs. $6.62B estimated, down 7% year-over-year
• iPad revenue: $5.79B vs. $6.41B estimated, down 20% year-over-year
• Other Products revenue: $8.28B vs. $8.39B estimated, up 2% year-over-year
• Services revenue: $21.21B vs. $20.76B estimated, up 8% year-over-year
• Gross margin: 44.5% vs. 44.2% estimated

Apple didn’t provide official guidance. It hasn’t provided official guidance since 2020, citing uncertainty. However, Apple CFO Luca Maestri gives investors data points during the earnings call that allow them to get a sense of where Apple’s expects its results in the current quarter to end up.

Apple’s Services business is the big highlight

Apple’s services business revenue was the highlight of its report. Apple’s services business is extremely profitable, and important for investors because it signals how Apple is monetizing its active base of 2 billion devices by selling them subscriptions, streaming TV, warranties, advertising, payment services, and other products included in the category.

Apple’s services revenue grew 8.2% on an annual basis, stronger than the 5.5% growth rate posted last quarter, showing that the business has accelerating growth, a key result that investors were eager to see.

Cook said that many services components were growing.

“We set revenue records in many categories in services this quarter from video, to AppleCare, to cloud, to payment services, and we set June quarter records for advertising, the App Store and Apple Music,” Cook said. He added that App Store growth has accelerated.

Cook said that Apple has over 1 billion paid subscriptions. That’s a stat that Apple uses to measure both people subscribing to things like Apple Music or Apple TV, as well as anyone who subscribes to a service through the company’s App Store.

“That’s up 150 million year over year and nearly double what it was just three years ago,” Cook said."

MY COMMENT

All in all a good report. I will call it a BEAT....although some of the specific product categories missed slightly.

 

I would think the APPLE earnings will be.....satisfactory. I dont know why the markets are so down on poor Apple lately......but they are. Same with Microsoft....the market seems to be punishing them for not starting every sentence with......"AI".

I believe the medium term results over the next 2-4 earnings reports will be just fine.....for both companies.

 

Poor AAPL.....they are the only one of the big seven that is basically a consumer product design, manufacturing, and retailing operation. They are one of the most ICONIC consumer brands of all time. I think that gives them a nice edge over many of the others that are simply "tech" companies....or....in the case ot TSLA a BIG product (cars) manufacturing company.

If Apple can keep their management stable for some good number of years they have a very bright future. I definately see the recent earnings as a BEAT. Not a huge beat....but still a beat. Money in the bank for owners of the business.

Of all those companies......the two that I would be buying right now are MSFT and AAPL. They have been disrespected lately for no reason and are a bit under-priced.

 

Well.....the markets are nicely strengthening at the moment. LETS GO.

 

I like this jobs info.....a good indicator that the FED is done.

Jobs report: US economy creates 187,000 new jobs in July as labor slowdown continues

https://finance.yahoo.com/news/jobs-report-august-4-july-2023-123149729.html

(BOLD is my opinion OR what I consider important content)

"The US labor market continues to cool.

The US economy created 187,000 new jobs in July while the unemployment rate fell to 3.5%, the Bureau of Labor Statistics said Friday. Economists had expected job gains to total 200,000 with the unemployment remaining unchanged at 3.6%.

Job gains in July were the least since December 2020. Over the last year, job gains have now averaged 312,000 per month.

Wages, a closely watched indicator of how much leverage workers are exerting in the labor market, rose more than expected last month, rising 0.4% on a monthly basis and 4.4% over last year. Economists expected wages to rise 0.3% over last month and 4.2% over last year.

For the Federal Reserve, the slowdown in hiring is likely a welcome sign as it works to cool the labor market in an effort to tame inflation. Wage gains, however, are likely to signal to some Fed officials that additional rate hikes are needed to limit additional inflation pressures.

"The July jobs report is just one datapoint before the September FOMC meeting, but we think it offers enough evidence of cooling labor market conditions to weigh in favor of no additional rate hikes," wrote Nancy Vanden Houten, lead US economist at Oxford Economics, in a client note on Friday. "However, an upside surprise in any of the forthcoming data on the labor market and inflation would put another rate hike back on the table."

The Federal Reserve is set to announce its next monetary policy decision on September 20; last month, the Fed raise its benchmark interest rate by an additional 0.25%, bringing the fed funds rate to its highest level since 2001.

In an interview with Yahoo Finance's Jennifer Schonberger earlier this week, Chicago Fed president Austan Goolsbee said "nothing is off the table" when it comes to the Fed's September meeting. Data from the CME Group on Friday showed investors were pricing in a roughly 85% of a pause in the Fed's rate hikes next month.

Revisions down, cyclicals slow

July's jobs data also showed the length of the average workweek fell slightly last month, dropping to 34.3 hours from 34.4 hours in June. Labor force participation stood at 62.6% for the fifth-straight month.

Revisions to jobs data from the last two months also reflected more modest hiring than previously reported, with June's nonfarm payroll gains revised down to 185,000 from the 209,000 initially reported while May's job gains were cut to 281,000 from 306,000.

By industry, health care and social assistance was by far the biggest job creator last month with 87,100 new roles created in this industry, accounting for nearly half of the total growth in nonfarm payrolls.

Several industries also reported declines in employment last month, including manufacturing, motor vehicles, nondurable goods, transportation & warehousing, and temporary help services. Government jobs increased by 15,000 last month.

In an email on Friday, Paul Ashworth, chief North America economist at Capital Economics, noted that, "cyclical sectors of the economy contributed less than 100,000 additional jobs, pointing to a real economy that, echoing the muted survey-based evidence, is a lot weaker than the pick-up in second-quarter GDP growth suggested."

"These are softish payroll numbers, especially when taking into account the downward revisions to the prior data," said Ian Shepherdson, chief economists at Pantheon Macroeconomics.

"Most of the recent softening is in services, with the trends in leisure/hospitality and — ominously — temporary hiring weakening markedly...The big picture here is that the wave of post-Covid catch-up hiring now appears to be over, and modest downward cyclical pressure is now the dominant force in payrolls.""

MY COMMENT

A good report for the end of the FED. We have some time till the next FED meeting in September....so there is still some chance for various data points to change and support a rate hike. I dont expect this to happen. I think the FED is NOW DONE.

AND....that is good news for the young BULL MARKET.

 

THIS is actually what I like about AAPL.....they are a consumer product company and at the same time a tech service company. I think this makes them a much stronger company.....a mini.....tech conglomerate.

Apple’s most profitable line of business is making up for some hardware struggles

https://www.cnbc.com/2023/08/03/app...table-and-may-be-ready-for-takeoff-again.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• In its third-quarter earnings report on Thursday, Apple reported a decline in sales for its most iconic hardware products.
• Offsetting the hardware softness is accelerating growth in the services business, a major profit driver.
• The services division’s growth was “better than we expected,” Apple CEO Tim Cook said.

Apple’s third-quarter earnings report on Thursday showed a revenue decline in the company’s most iconic hardware products — iPhone, iPad and Mac. The current period could also be rough.

But offsetting the hardware softness is accelerating growth in services, Apple’s most profitable business. That’s the division that includes subscriptions, warranties, licensing fees, and Apple Pay. In the June quarter, services grew over 8% to $21.2 billion in sales, speeding up from 5.5% the prior period. In the fiscal fourth quarter, the unit will grow even faster, Apple said.

The division’s growth was “better than we expected,” Apple CEO Tim Cook told investors on Thursday.

Apple’s services business is critical for shareholders because it has stronger margins than hardware products, is more predictable because of recurring billing, and provides more ways for the company to make money from its installed base of over 2 billion devices. Gross margin for services in the June quarter was 70.5%, almost double the 35.4% margin for all of Apple’s hardware products.

“It goes from the fact that our install base continues to grow, so we got a larger pool of customers, to the fact that our customers are more engaged, as we have more transacting accounts and paid accounts on the ecosystem,” CFO Luca Maestri said on the earnings call.

Sales of iPads and Macs could fall double-digit percentages on an annual basis, though the company expects iPhone sales do better than the 2% decline the business posted in the latest quarter.

Apple won’t set growth records for its services business, which topped 38% at one point during the pandemic. But the business is larger now, and analysts expect it to post almost $60 billion in total sales in fiscal 2023.

“We know that there’s a lot of customers that we have that are very familiar with our ecosystem, they’re engaged in the ecosystem,” Maestri said. “Still, today, they’re using only the portion of the ecosystem that is free, and so we think that by offering better content and more content over time, we’re going to be able to attract more of them as paid customers.”

Gene Munster says he would own Apple over Amazon ‘in a heartbeat’

Apple’s report should reassure analysts who had worried over the segment’s dramatic slowdown since December 2022.

Contained in the services business is a variety of products. Apple never breaks down how the services pie gets sliced, but officials did give a number of data points on Thursday about why they’re again optimistic about the business.

Here’s what’s in services, according to Apple’s annual SEC filing:

• Advertising, which includes the company’s own platforms that serve ads on Apple News and in the App Store, as well as licensing arrangements like the company’s deal with Google

• to be the default iPhone search engine.
• AppleCare, the company’s extended warranty program.
• Cloud services, like iCloud storage.
• Digital content, like Apple Music, video subscriptions such as Apple TV+, and Apple’s cut from sales on its App Store.
• Payment services, including the fees Apple collects from use of Apple Card and Apple Pay.

“We set an all-time revenue record for total services and in a number of categories including video, AppleCare, cloud, and payment services,” Cook said on Thursday.

Maestri added that the company was also seeing growth in advertising, App Store, and music, although those only set June quarter records, suggesting there were other quarters with higher revenue from those categories.

Apple said it has over 1 billion paid subscribers, a number that’s doubled in three years, and is up by 150 million in the last year. Included in the figure is subscriptions to Apple’s owned and operated services as well as subscriptions to an app on its App Store, as the company takes a cut of each purchase.

Cook said the company’s deal with Major League Soccer to broadcast its games on Apple TV was beating internal expectations for subscribers, partially because of one star: Lionel Messi.

“The fact that Messi went to Inter Miami helped us out there a bit,” Cook said.

Apple shares fell a little over 2% to $187.15 in extended trading after the report."

MY COMMENT

This combination of hardware and consumer products that are top of the line along with services is a HUGE advantage for this company. I LOVE IT.

Amazon has somewhat the same thing going on.....their retail business and at the same time their web services.

I just got rid of my 13 year old Macbook Pro in favor of a new Macbook Air. This new one is a great example of an iconic product. You get what you pay for.....as I said my old one lasted 13 years.

 

Speaking of Amazon.

Amazon CEO Jassy’s cost cuts deliver investors biggest profit beat since 2020

https://www.cnbc.com/2023/08/03/ama...s-produce-biggest-profit-beat-since-2020.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Amazon CEO Andy Jassy showed investors his cost-cutting efforts are starting to bear fruit.
• The company posted its biggest earnings beat since the fourth quarter of 2020.
• Jassy has been aggressively slashing expenses through layoffs and eliminating unproven bets.

Amazon founder Jeff Bezos famously shunned Wall Street’s earnings obsession, claiming the customer was always more important.

While his successor, Andy Jassy, also talks plenty about serving customers, he’s been forced by investors to get serious about profitability. And his efforts are paying off.

Amazon delighted investors on Thursday, posting earnings of 65 cents a share, blowing past estimates of 35 cents a share. The company’s stock surged almost 9% in extended trading.

The last time Amazon delivered an earnings beat that big was in February 2021, when profit for the fourth quarter of 2020 came in at $14.09 per share, almost double analyst projections. At the same time, the company surprised investors by announcing Bezos would step down as CEO.

Jassy closed out his second year at the helm in July. Under Jassy, Amazon has morphed into a leaner version of itself, as slowing sales and a challenging economy pushed the company to eschew the relentless growth of the Bezos years. Investors dialed up the pressure after watching the stock lose half its value in 2022.

Jassy pared back underperforming projects in riskier, newer verticals like health care and grocery, froze corporate hiring, and eliminated 27,000 jobs.

In Jassy’s prepared remarks at the start of Thursday’s earnings call, cost cuts were one of his central themes. He emphasized steps the company has taken to reduce expenses in its fulfillment system, such as moving from a national network to a “series of eight separate regions serving smaller geographic areas.”

“We keep a broad selection of inventory in each region, making it faster and less expensive to get these products to customers,” he said.

Amazon said its core business of selling goods in North America earned $3.21 billion during the quarter, a reversal from the same period a year ago, when the segment lost $627 million.

The broad-based changes under Jassy have left the company less dependent on its cloud business, Amazon Web Services, for profits. AWS, which provides cloud infrastructure and a wide range of software services to businesses around the world, has often accounted for all, or almost all, of Amazon’s profit.

In the second quarter, Amazon was able to expand its overall margin while AWS’ profit margin declined to 24.2% from 29% a year earlier.

AWS beat revenue estimates in the quarter. But at only 12% year-over-year growth, the cloud business is seeing its slowest expansion since Amazon began breaking out its revenue in 2015.

Jassy wants investors to think about it in a different way. Last year, as economic concerns became the dominant theme in corporate America, companies were looking to reduce expenses, including finding ways to lower their cloud bills. Jassy says AWS helped them with their “optimization,” getting more productivity at lower costs.

That trend has continued, which Jassy says makes the cloud unit’s growth rate a rather impressive feat, given it’s already generating more than $20 billion in sales a quarter.

“To still grow double digits on a base that size means that we’re acquiring a lot of new customers and a lot of workloads,” Jassy said, near the end of the call. “I’m very bullish of the growth of AWS over the next several years.”

Jassy and other Amazon executives have also been quick to remind investors that the generative artificial intelligence craze should be a boon for its cloud business. Traditional forms of AI and machine learning have driven a significant amount of business for AWS in recent years, Jassy said, and generative AI is expected to spur further adoption of its cloud services.

However, that means Amazon will likely need to increase its capital expenditures to fund its AI initiatives.

“One of the interesting things in AWS, and this has been true from the very earliest days, the more demand that you have, the more capital you need to spend, because you invest in data centers and hardware upfront, and then you monetize that over a long period of time,” Jassy said. “I would like to have the challenge of having to spend a lot more capital on generative AI because it will mean that customers are having success, and they’re having success on top of our services.”"

MY COMMENT

I like this retail/tech CONGLOMERATE.....if they can perform. They did with this earnings BEAT. NOW....I want to see the next year of earnings.

They had some hard comparisons recently to pandemic distorted earnings data......now that is done. It is time to PERFORM. I think they will....but we will soon know....if you consider a year soon.

 

Markets are picking up steam and growing into the day......BRAVO.

 

MAN....I go away about noon......come back about three hours later.....and see that someone killed the markets today. I have not read anything.....but....I m blaming skittish profit takers that took advantage of the little rally today to sell out of some positions after the drop on Wednesday.

I did not do too bad considering.....a very minor loss. Also a nice beat on the SP500 by 0.45%. I had only four stocks UP today but they did their job to hold my portfolio in there close to flat for the day. They were......AMZN, NVDA, MSFT, and NKE.

Glad to be done with this little erratic week.

 

Speaking of the week....here is how we did.

DOW year to date +5.79%
DOW for the week (-1.11%)

SP500 year to date +16.63%
SP500 for the week (-2.27%)

NASDAQ 100 year to date +39.71%
NASDAQ 100 for the week (-2.99%)

NASDAQ year to date +32.89%
NASDAQ for the week (-2.85%)

RUSSELL year to date +11.14%
RUSSELL for the week (-1.21%)

MYSELF for the week......I ended the week with my entire portfolio at a year to date of.....+35.03%.
Last Friday I was at....+38.55%. So I lost (3.52%) this week. Thank you Fitch rating agency for all your help.

 

Since I was not paying any attention here...for me...is what happened today.

Stocks flip to losses to end rough week, Amazon surges

https://finance.yahoo.com/news/stoc...surges-stock-market-news-today-200617333.html

(BOLD is my opinion OR what I consider important content)

"Stocks flipped into the red Friday afternoon after looking set to rebound earlier in the session, putting the cap on a rough first few days in August as the jobs report's release took center stage and an earnings-heavy calendar continued.

The S&P 500 (^GSPC) finished down 0.5%, while the Dow Jones Industrial Average (^DJI) fell 0.4%. The tech-heavy Nasdaq Composite (^IXIC) slipped by 0.4% after gaining as much as 1% earlier in the session.

The S&P 500 and Nasdaq were both down more than 2% to end the first week of August trading.

The July jobs report showed continued cooling in the labor market, as nonfarm payrolls rose by 187,000 last month while the unemployment rate dipped slightly to 3.5%. The numbers will serve as a key indicator for the Fed as it determines whether to halt its interest rate hiking campaign next month.

Elsewhere, Amazon (AMZN) stock was buzzing Friday, finishing more than 8% after earnings beat all around, combined with rosy guidance for the near term. Apple (AAPL), by contrast, was down almost 5% after the iPhone maker reported sluggish sales of that flagship product and a third straight quarter of declining revenue overall.

• Stocks lose ground to start a bumpy August
• 
  Wall Street retreated to wrap the first week in August. The summer rally began to cool even after more observers predicted that the US economy will avoid a recession but questions remain about the Fed's interest rate policy and how corporate earnings will fare in the months ahead."

MY COMMENT

The statement above is simply MORONIC. I assume someone gave this information to the writer.....but.....the line that questions remain about the FED policy......and......how corporate earnings will fare in the months ahead is simply DELUSIONAL.

The FED is DONE......but lets assume they have one more hike in their bag of tricks......who cares....they are DONE anyway. As to earnings.....they will continue as they have for the past TEN to TWELVE reporting periods.....just fine and above expectations.

We are just at the start of the time period of a NORMAL economy after all the distortions and disruptions of the pandemic. We are FINALLY back to NORMAL.

 

Just another week in the life of a young bull market. TO INFINITY AND BEYOND.

HAVE A GREAT WEEKEND EVERYONE.