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Businesses Apple

Apple's Dark Cloud Might Linger (wsj.com) 64

Posted by msmash from the closer-look dept.
Winter has come early for Apple, and it might last a while. From a report: The world's largest company by market value has become worth considerably less over the past three months. Apple's share price has slid 11% since the company reported its fiscal third-quarter results on Aug. 3, erasing nearly $400 billion in market value. It is hardly a typical swing given the fact that the company has long used the fall season to launch its biggest products for every year, including new iPhones. This is the first year since 2015 that Apple shares have lost ground between the company's key Worldwide Developers Conference in June and its fiscal fourth-quarter earnings report that typically takes place in late October.

That report is expected Thursday afternoon, and it will be the first to reflect sales of the iPhone 15 family that was launched in late September. Investors are worried that Apple's largest business is now facing new and potentially long-term threats. The growing geopolitical rift between the U.S. and China has finally caught Apple in its vortex, spurring reports of Chinese authorities considering a ban on the use of iPhones and other Apple devices by government employees. To make matters worse, Apple's old China-based rival Huawei appears to have made a comeback. The company launched a new smartphone called the Mate 60 Pro in September that reportedly is capable of 5G speeds, even though U.S. sanctions were supposed to deny the company the chips necessary for such an accomplishment.
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Apple's Dark Cloud Might Linger More

Apple's Dark Cloud Might Linger

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  • We're not far from Global Financial Crisis 2.0, and Apple is sitting on high premium hardware where you can't even easily replace the battery.

    • Re: (Score:1)

      by Anonymous Coward

      I can have the battery on my iPhone replaced at a mall kiosk while I eat lunch.

    • Re: (Score:2)

      by garote ( 682822 )

      You know, it's funny... I can swap the battery out of my truck using an off-the-shelf socket wrench and about five minutes. But I am in the minority among the people I know, who would rather drive to an oil change shop and have them do it at the same time they pretend to check the belts and tire pressure.

      Same deal with a phone. You could open the sucker up and swap the battery yourself. But a guy in tiny mall storefront will do the same thing for you, as you shop for giant crap made out of straw at Pier

  • They have $1,000,000,000,000. There is no dark cloud in there lives what so ever.

    • Re:What dark cloud? (Score:4, Insightful)

      by Z80a ( 971949 ) on Tuesday October 31, 2023 @10:13AM (#63968938)

      They don't, "being valuated at" and actually having the cash are two distinct things you discover in practice when you try to actually cash it out.

    • Re:What dark cloud? (Score:5, Interesting)

      by larryjoe ( 135075 ) on Tuesday October 31, 2023 @10:44AM (#63969090)

      They have $1,000,000,000,000. There is no dark cloud in there lives what so ever.

      They, the corporation, have over $60 billion in cash on hand, not to mention huge non-cash assets. Not only is there's no dark cloud in terms of any hint of bankruptcy, the ongoing operations and cash flow are doing well and should do well for a long time.

      They, the executives and employees, receive effective bonuses denominated in AAPL stock. So, any news that portends a drop in AAPL share price is a huge dark cloud.

      Apple corporate decisions are idealistically focused on the former. However, in reality, decisions for all corporations are almost entirely based on the latter.

      • They, the executives and employees, receive effective bonuses denominated in AAPL stock. So, any news that portends a drop in AAPL share price is a huge dark cloud.

        Only if you planned on selling tomorrow, and all of the AAPL you'd been issued to date was from June this year, the highest price of all time, then you'd have a huge dark -10% cloud hovering over the free money you were just given.

        For future stock awards, those are valued at the price they were bought for, at the time they were bought, and that's where you start for tax purposes. If the price is down 10% at the end of the year it has jack to do with you getting $50,000 of stock. You'll get $50,000 worth of

      • Re: (Score:2)

        by mjwx ( 966435 )

        They have $1,000,000,000,000. There is no dark cloud in there lives what so ever.

        They, the corporation, have over $60 billion in cash on hand, not to mention huge non-cash assets. Not only is there's no dark cloud in terms of any hint of bankruptcy, the ongoing operations and cash flow are doing well and should do well for a long time.

        They, the executives and employees, receive effective bonuses denominated in AAPL stock. So, any news that portends a drop in AAPL share price is a huge dark cloud.

        Apple corporate decisions are idealistically focused on the former. However, in reality, decisions for all corporations are almost entirely based on the latter.

        Really, this is just the market correcting itself.

        Everyone and their dog could see Apple was never worth US$1 trillion, however "market cap" is a largely made up figure and the "market" that makes it up is akin to a slightly autistic child that has been given far too much sugar and left on it's own by neglected parents.

        Apples "dark cloud" is merely a dose of reality. It'll stay around for a while.

        • Apple's current Market Capitalization, the value of all outstanding shares, is currently $2.769 Trillion. $1 Trillion would be a bargain basement price for Apple right now.

  • Apple is going to be fine soon. Something like 79% of Gen Z prefer iPhones. As older folks age out that's going to leave the entire market to Apple.

    That said it might be harder to sell high priced phones at the rate they've been doing, given that younger generations make significantly less than their parents. I know there's a stereotype of kids buying expensive phones they can't afford, but you'd be shocked how frugal Gen Z actually is. Marketers are a bit worried because they're showing the signs of a
    • Thank you for increasing my vocabulary with "veblen goods." I think another factor building on that is how younger generations see the Android text bubble and immediately think it's from a poor person who can't afford an iPhone. So it's almost like the younger generation needs to see the iPhone at a higher price in order to feel special for buying it.
      • but the main thing is that there are a *ton* of social media style features that only work if you and all your friends have iPhones. My kid actually prefers the Android UI and the look of the phones (albeit the pricier ones), but they're still rocking an iPhone because when they text their friends they get a bunch of silly little features that old farts like me (who only care about the content of the post :P ) couldn't care less about.

    • Re:Unless Android does something drastic (Score:5, Insightful)

      by Comboman ( 895500 ) on Tuesday October 31, 2023 @10:33AM (#63969032)

      Gen Z only want iPhones because "OMG green bubbles? So cheugy!" Once they start paying for their own phones/have other financial priorities, many will switch to Android. The bigger issue (for both Apple and Android) is that phones will soon reach the point that PCs did decades ago, i.e. the one you already have is still good enough to do everything you need it to do. Replacement cycles going from 2-3 years to 5 years will be the equivalent of cutting the market in half.

      • Re: (Score:2)

        by pr0nbot ( 313417 )

        I doubt this. I think a mobile phone is central to Gen Z lives in a way that a Gen Xer like me can't really comprehend, but if there's one thing I'd bet they'll spend silly money on for the rest of their lives, it'll be that. Moreover, without regulatory intervention, I think ecosystem effects will keep them on Apple. ("If I switch to Android I'll have to buy all my apps again" etc.)

      • one way or another. Sooner or later my kid's iPhone starts exhibiting strange behavior. And even my Android doesn't have a replaceable battery (grumble grumble grumble) meaning a pricey repair at a shop unless I want to try using my fat fingers and cheap soldering iron to do it myself.

        If we had government laws against planned obsolescence I think you'd be right, but that's communism /s.

        Hell, I sometimes wonder, if we took away all the work we do for the sake of short term profits and other business

        • one way or another. Sooner or later my kid's iPhone starts exhibiting strange behavior. And even my Android doesn't have a replaceable battery (grumble grumble grumble) meaning a pricey repair at a shop unless I want to try using my fat fingers and cheap soldering iron to do it myself.

          If we had government laws against planned obsolescence I think you'd be right, but that's communism /s.

          Hell, I sometimes wonder, if we took away all the work we do for the sake of short term profits and other business scams how many hours a week we'd all be working...

          Hey, doofus! Secondary (rechargeable) batteries wear out. If they are abused, they wear out faster.

          Many people (even adults), do not seem to realize this, and unwittingly abuse those batteries by repeatedly running them down below about 20%, sitting the phone outside in the hot sun for hours, trying to charge them when the phone is extremely cold, etc. Do you think kids are any different?

          It's not "planned obsolescence"; it's Physics.

      • Gen Z only want iPhones because "OMG green bubbles? So cheugy!"

        Only a fool would believe the caricature you've painted. I'll file it away with the "clueless boss that justifies their existence through meetings". Maybe a couple exist, but most do not conform. Try to include a little nuance in your world view - almost nothing is as clearly delineated as you seem to think.

      • Gen Z only want iPhones because "OMG green bubbles? So cheugy!" Once they start paying for their own phones/have other financial priorities, many will switch to Android. The bigger issue (for both Apple and Android) is that phones will soon reach the point that PCs did decades ago, i.e. the one you already have is still good enough to do everything you need it to do. Replacement cycles going from 2-3 years to 5 years will be the equivalent of cutting the market in half.

        Every iPhone owner I know is already keeping their phone at least until they are no longer supported (4 years or so). The myth of the iPhone User perpetually chasing teh New Shiny is largely just that; a myth.

        I am currently rocking an iPhone 8 Plus, which was a freebie hand-me-down from a friend. Before that, I had an iPhone 6 Plus I bought, and my first iPhone was a 4s; which I also bought. Each one was only replaced after I could no longer Upgrade to the Current iOS. Hence, I will probably get a new iPhon

      • It isn't just Gen Z. When I was dating, I met people who would immediately reject anyone texting them with green text bubbles, and when I asked why, the response was, "iPhone guys are richer."

    • Marketers are a bit worried because they're showing the signs of a scarcity mindset, making it hard to get them to buy traditional Veblen goods.

      I'm not sure the iPhone, even the Pro/Pro Max is a Veblen good. It really doesn't confer status on the owner and certainly doesn't have exclusivity given how easy it is for most people that want one to get one. I don't see how it would have an upward sloping demand curve; I suspect there is simply some inelasticity in demand around a price point that enables Apple to keep prices high.

      • all the time? It's so people can glance at you and see if you've got the $400 iPhone or the $1500 one.

        I remember a buddy of mine told a story once, he and a girl of his met with a buddy and after the meeting the first thing she mentioned was the lifts in his shoes.

        My buddy had known the other guy for years, never once noticed it. That's not to call out women, but anyone who's paying attention to fashion and veblen goods in general is gonna pick up on stuff you and me are blissfully unaware of.

        • I learned this while networking. The difference in how people treated you if you have a reputable watch versus no watch on was quite noticeable. I learned that one could dress as a hobo, but if they were rolling with a Rolex, or some other respectable watch brand, they would get respect, otherwise, they would get the back turned, cold shoulder, or a middle finger.

          • I learned this while networking. The difference in how people treated you if you have a reputable watch versus no watch on was quite noticeable. I learned that one could dress as a hobo, but if they were rolling with a Rolex, or some other respectable watch brand, they would get respect, otherwise, they would get the back turned, cold shoulder, or a middle finger.

            Yea. I often wear my $15 Marvin the Martian watch to client visits; except in the Middle East where status counts. Some react like you say; others with "Cool. Marvin". I want to work with the later. Then again, I'm the guy who shops in ratty jeans and an old t shirt.

        • all the time? It's so people can glance at you and see if you've got the $400 iPhone or the $1500 one.

          I suspect most people could not tell the difference between 15 models and simply react to it being an iPhone. While people want an iPhone it certainly isn't a fashion statement like say a Daytona. Someone noticing an item doesn't mean it's a Veblen good.

          I remember a buddy of mine told a story once, he and a girl of his met with a buddy and after the meeting the first thing she mentioned was the lifts in his shoes. My buddy had known the other guy for years, never once noticed it. That's not to call out women, but anyone who's paying attention to fashion and veblen goods in general is gonna pick up on stuff you and me are blissfully unaware of.

          The thing about a Veblen good is rising prices increase demand, and I seriously doubt that is the case. Apple can, and has, maintain a high price point, for a variety of reasons, but if tehy doubled the price, demand would likely drop as consumers chose o

    • Apple is a global company. The problem they're having is that iPhones aren't especially popular outside of the USA and that situation looks to only be getting worse.

  • Yes the Apple silicon transition took a tumble with the loss of native bootcamp and some game developers like valve discontinuing Mac support, but Apple's iOS ecosystem is still popular as ever, and Apple fans still have plenty to look forward to with many willing to put up the large amounts of money for the Vision Pro and the rumored Apple Car. Apple is still the biggest company by market cap, it has too many fans that will keep giving them their money.

    • and some game developers like valve discontinuing Mac support.

      That's a feature, not a bug. Apple fanatics typically view not playing gross, ugly video games with their fun garish colors as a status symbol. Every Apple fanatic I know, the ones who make Apple part of their identity, will get quite smug about it. Reasonable or casual Apple fans play video games, but not the fanatics. Your mac is supposed to look pretty and be the pinnacle and blend in seamlessly with your decor, not actually do much.

      Obviously, there are many who enjoy Apple products and aren't po

      • Your mac is supposed to look pretty and be the pinnacle and blend in seamlessly with your decor, not actually do much.

        Wrong.

        Most Mac Users think their Macs are for "serious" stuff; or their Macs are their Work. It sounds effete; but that's the truth.

        The Mac Users that are gamers nearly universally do so on Consoles; and/or have a separate Computer (usually Windows) on which they do their Gaming.

        But I don't personally know any Mac User, even the very rich ones, where their Mac just sits in a corner, largely ignored.

      • As someone who uses Apple devices in most of my personal use cases, I can't even comprehend spending this much energy constructing elaborate fantasies about how other people do or don't use their computing platform of choice.

  • Unsustainable (Score:3)

    by PuddleBoy ( 544111 ) on Tuesday October 31, 2023 @10:31AM (#63969026)

    I know that we all want our 401k's to endlessly grow, but someday we will need to face the fact that growth can't be indefinitely sustained, especially if we finally get population growth under control.

    I'd like to see Apple do well... but should any company be so large that an 11% loss in market cap equals $400 billion? I mean, how many countries have annual budgets that are less than just this loss in stock value?

    Having said that, look at how emotionally invested we get in headlines like that. OMG - Apple lost $400B in value! The economy will crumble! And headline/article authors take advantage of our sway-ability to get us worked up and click, click, click.

    Maybe it's just Halloween getting inside my head...

    • I know that we all want our 401k's to endlessly grow, but someday we will need to face the fact that growth can't be indefinitely sustained, especially if we finally get population growth under control.

      This seems to assume that the amount that an individual can produce some fixed amount, which doesn't account for productivity growth. Technological advancement has allowed humanity to produce more and more in a trend that started probably around the time that we started farming 10,000 years ago. I don't see any compelling reason to believe that that technological advancement is going to halt, and prevent us from continuing to deliver more with the same number of people/resource.

  • I used to own a lot of Apple stock, because over many years I could see how plainly they were getting things right in a world where many other companies faltered.

    However a few years ago I sold it all, and indeed all tech stocks because I could see the stock market was pushed WAY out of whack with actual value of companies. Apple is not as bad as the others, but even Apple I had to question the stock price vs what they actually sold.

    Now I sold too early and missed some further gains this year. But those ga

    • So Apple itself is not in a dark place

      Quite.

      The lights have barely flickered.

      Apple: Proudly going out of business for nearly a half-century. . .

  • He farts, and the whole world comments on the dark cloud surrounding him.

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