Apple reports Q3 results (opens in new tab)

First and foremost, the stock market is not the economy. Second, stocks are primarily traded on their expected future value, not current profits, hence why companies like Tesla have a price to earnings ratio that is absurd.

Market cap is set by marginal prices, so supply of uninvested capital isn't super relevant and might even increase volatility due to lower liquidity.

The bond market is many times bigger. There is much more that could come to the stock market.

Where else? Derivatives and commodities,bonds,etc...

Why is that irrelevant?

While market cap may not be the actual realisable value of the company, that doesn't mean it's irrelevant. It's perfectly relevant when comparing the relative value of different companies, especially when they are in similar sectors. That's especially true when companies have very different numbers of issued shares.

Even then, market cap does actually correlate directly to realisable value in acquisitions. They rarely trade for exactly the market cap, but it's definitely a useful benchmark against which to compare the company's relative value to the acquirer and it's current owners.

There are alternative to each of the four. No one forces anyone to use any of their products.

Definitely no one forces people to buy Apple’s products at a large premium over their competitors. I would say that Apple has to work harder to get users to willingly depart with their cash.

I just shipped my parents my 2016 iPad with cellular with my unlimited T-mobile data plan. I removed all of the unneeded apps, installed all of the streaming apps that either I had a log in to, they had a log in to with their cable subscription, and the free streaming apps. I put both of their email addresses in Mail. I also put Office 365. My mom already has one of my six accounts.

Since I can’t see them because of Covid, I can now Facetime them. It was frustrating talking to my dad since he is losing his hearing. He can understand me a lot better when he can see me and FaceTime audio is much clearer than phone calls.

I bought an iPad Air and a pencil to take notes.

Got my nephew the $329 iPad, and its been great. No major complaints. We initially got him a similarly priced Chromebook, as they’re education targeted, but quickly returned. The Chromebook was unexpectedly sluggish and cumbersome.

Any educational apps you can recommend?

Personally I regret the new OS features; I find them clumsy and bothersome. I love the iPad overall though. (I’ve been all in on Apple since ‘08 for context.)

iPadOS 13, the new keyboard with trackpad and a cloud VPS mean even for typical HNers the capabilities of iPadOS are quickly approaching that of macOS. For me, it’s totally replaced my laptop. I still need a desktop because a fair number of very specific things are a PITA on the iPad but in general it offers a much nicer UX than my previous ThinkPad.

> For the majority of users (you don't fall into this category, fellow Hacker News reader), the capabilities of iPadOS are quickly approaching that of macOS.

Huh wow, I haven't thought about iPads for a while, but apparently they even added multiple windows (predictably, 5 years late). That's probably the biggest blocker I considered that made tablets a toy even for laymen users (you hardly need to be a leet haxorz to use multiple windows)

What iPad app are you using for this? And do you also have an Apple Pencil? I also do some math online tutoring, and what I’ve been doing is connecting my iPhone to my Mac, mirroring the iPhone screen on the Mac, and sharing that screen during a Skype call. Then I can use the camera app on the iPhone (mounted on a little tripod) to look down on a piece of paper that I write/draw on. I considered getting an iPad, but even with an Apple Pencil I imagine I wouldn’t feel as free as when drawing on a real piece of paper with a real pen, I’m curious as to what your thoughts on this are

Is that Computer Science at tertiary/undergraduate level? Or something else? If it is, is that common?

Picked up this exact one, maxed out the storage but WiFi-only, with an Apple Pencil. It hasn’t obviated my laptop which I do entirely different work on, but it has almost completely obviated my phone since I can route calls through it. I was planning to buy a new phone this year, but seeing as how it gets about 5 minutes of weekly active usage on average since I bought this iPad, which is like 99% camera and 1% Apple Pay, don’t think there would be much point in that.

This has also replaced paper notebooks for me which is what I bought it to do, and I had a pretty sizable book collection on my phone which has been shunted over.

This also might be by design. Apple has to know that Apple Arcade is going to cause less people to spend money on pay to win games. If Apple Arcade encourages more hardware sells, they would be okay with that.

If every single pay to win an advertiser supported game disappeared, nothing of value would be loss.

AppleCare+ is also in Services

If that's the case, I wonder if webcam sales would affect revenue for Logitech or another big manufacturer.

This is probably the largest driver.

AAPL's previous 7:1 split happened at $700, bringing the price back down to $100. This split fits in that same vein. It would seem that the board feels "accessible" is in the $100 range, if that's what you're trying to read into the situation.

Berkshire Hathaway is at almost $300k per stock.

Seems a lot less relevant now with the rise of fractional shares.

I haven't worked on trading systems in the US, but handling this type of gotcha is the bread and butter of the sort of trading software I have been working on.

There's a million tiny details like this that can cause consequences that are both different from what a customer intended and what our terms with said customer states, so making sure it's all handled in a safe way is just part of daily business.

Exchanges automatically cancel out GTC and GTD orders when splits occur.

Options are also split to take the stock split into account.

Trading platforms shouldn't have to do anything unless they are faking GTC orders by resending them out each day as Day orders.

But if your vendor is doing that then, get a new vendor as that's completely bush league.

One thing to note is stock price dramatically impacts the price of options.

For example 1 option contract for Amazon (over $3k share price) can easily be $4,000. In comparison, you can buy 1 option for Apple ($400) contract for $200. After the stock split, option contracts will be 1/4 the current price.

Lower stock prices make the options market much more accessible to people investing less money (for better or worse).

I don’t think splits are necessary. Fractional shares are an abstraction of share ownership though. Many people prefer not to rely on their broker for that.

There is no such thing as "split price". You get 4 shares for each share you previously owned, and it's up to the market to resume trading at a new level. It's a non-event, really, except it makes some operations easier.

Possibly, but its really however the market prices it.

For example, if the theory goes that more people will want to buy apple now that the price is a "steal" (people think it's harder to 2x a big number than a small number) then it could go above that on open.

You reminded me of the last time I spent money on a laptop before mac. Well, it wasn't me, it was my parents. For half the price of new mac air, I got a Toshiba budget notebook. It barely lasted 2 years, which was the amount it's "anything happens" warranty expired - which wasn't really anything happens. The CD ROM just didnt slide back in totally one day and stuck. The shift key got so fucked up I had to disable it preboot or I'd be stuck with caps. Fun times. Never again. Made me appreciate macs way more when I got one.

Oldest phone that gets iOS updates is what, the 6s or the 7? The former having come out in 2015, that is an amazing support lifetime.

I’m planning on keeping my iPhone X past the end of the year, which takes it to a 3 year lifetime, which works out as ~$600/year which is amazing value.

> save you money in the long run

My two broken Macbooks in 3 years say otherwise.

This might have been true 5 years ago, but the countless complaints of keyboard issues with 2017-19 era Macbooks says otherwise.

that was definitely not my experience when I bought a macbook air a decade ago. after a year it was unusuably slow, and the insulation at some point flaked off the charger wire. i went with a thinkpad in the same form factor after that (a year later), and I'm still using that today

>They often last for many more years than competitors' products

Apple products are often obsolete in a few years, especially iPads and iPhones. Their entire line of laptops and desktops is now practically obsolete with the move to ARM. Apple products are luxury products for people who can afford to simply throw away a device when Apple decides it's stopping support. I have several Apple devices that still boot up just fine, have capable CPUs inside, but are completely useless because Apple just decided they weren't interested in supporting them anymore.

I'm surprised to see you say "most people," as Android is what, 85% of the market?

The only issue is that iphone revenue was not up but mac and ipad was up considerable. So people are actually buying more computers and tablets.

iPad Pros for non-business use may be luxury devices, but the 'regular' iPad is down to $329 now, solidly low end- especially now that iPad OS has mouse support built in and Safari supports requesting desktop mode pages.

> Are these things actually luxury goods?

I have a lot of trouble characterizing tools as luxury goods. I don't consider my Dewalt tools "Luxury Goods" and they cost roughly twice what basic Harbor Freight tools cost.

You pay for longevity and performance. It's no different with phones/ tablets/ computers. If you want a phone or tablet that lasts 4+ years there is only one brand that offers that kind of device life.

Also, with Apple cranking out the base iPhone at $400, and the massive second hand market for iPhone, it's hard to argue many people associate the brand with luxury the way they do Coach or other luxury brands.

If anyone thought Apple was a "luxury" brand, the flop of the solid gold Apple Watch "Edition" sub-brand should have disabused them of the notion.

I'd be fascinated to see a breakout of Apple's quarterly sales by product. I don't know if such a thing is published, and if so I've been unable to find it, but I had also wondered what fraction of it the SE 2 would account for. I remember seeing headlines that it was selling above expectations shortly after launch, but there wasn't any real detail that I recall.

I don't disagree with your point (it is pretty interesting!) but I do think 2008 – one year after the iPhone was introduced – is a bit of a special scenario for Apple that isn't broadly applicable to other stocks/downturns.

A Ford F-150 is absolutely a luxury vehicle. And I don't see any way you can look at an Apple iPhone as anything other than a luxury purchase, regardless of the market share.

If you live in an expensive NY/CA metro, that money can be the difference between unemployment benefits covering your rent or mortgage payment or not, which is a very big deal.

California's unemployment benefit caps out at $450/week.

> If you don't live in NY or CA, those extra $600 a week can go very far

True. My girlfriend lost her job March. She is unemployed since then. We are not based in NY or CA. She has mentioned this to me several times that how much more she has in savings now. With all this time and some extra cash, I have asked her learn coding. She is working on her app idea.

What planet are we living on?

600 a week is 2400 a month, which way over any entry level salary in Europe.

How inflated are the salaries in US? Or are people used to some really abnormal level of living?

Plus, a lot of employed people got checks from the first round of stimulus -- $1200 per individual, $2400 for a married couple, and $500 per child. That's just free money for people who didn't lose their jobs. Some households have earned more during the pandemic than ever before.

That’s on top of state unemployment around $400/week. That’s annualized at $52K a year. The median household income is only $65K.

On top of that student loans have been frozen. That allowed me to save an extra $900/month.

CA has plenty of people living in poverty $600/wk make a world of difference for.

Anecdotally, our app spending is up a lot since the quarantine began—my kids (6 yo twins) got iPads for their birthday and we've probably spent at least $50 on apps for them alone (a mix of educational apps and games). I imagine there's a lot of educational app purchases happening in general.

As an aside, we use new apps as a reward for various exceptional acts. My son looked at my phone not long after we started this and told me that I must have done a lot for my mom to have put so many icons on my phone.

Correct. No family vacations in France/Italy ($15K easy), just spending on gadgets/home renovations.

Well, that's the safe way to vacation now, take your shelter with you. That seems obvious to me once you mention the trend.

RV's are not a good sign of recovery in this case.

Usually RVs are bought in addition to other travel, they are more of a luxury item.

In the current environment where booking a hotel is considered by some risky RVs are bought as a necessity if one wants to travel.

I don’t think RVs are a good indicator. My wife and I just bought a 32’ Class A motorhome to travel around the country in the fall, since I’m forced to work remotely and the kids will be doing school remotely. If there were no pandemic, we would have never dreamed of buying one.

My dad just bought one so he could get out while social distancing.

Either that, or a large number of people are unable to meet expenses and forced to break bad. /jk

Perhaps also that Apple is known for making quality phones. In times of economic pressure, people buy for the long-term.

> Wouldn't surprise me if a lot of people are buying new phones while they're sure they can, to avoid the risk of being stuck with an old and potentially failing one when they can't.

I think you're incorrectly assuming people are good at any form of long term financial planning...

The iPhone SE has the top of the line processor that is still faster than any Android phone.

Regarding Facebook ads: We are in the throes of a general election cycle, I'm curious how much of the slack that has been picking up. Anecdotally I am seeing tons of political ads across the internet.

I am also curious if increased internet usage in general is compensating for lower PPC as people are stuck at home.

You just had an entire planet told that they were going to stay at home, and that school-age children needed some type of device to learn through. That must have driven some percentage of new sales.

Many sectors are slashing their marketing budgets, especially their vaguely-targeted mass-marketing or big-incumbent-brand marketing.

But Facebook's ad engine allows micro-targeting, and is especially valuable to upstarts & small-businesses in times of changing behavior/consumer-loyalties.

To the extent big spenders free up inventory, Facebook has bidders-in-the-wings, offering just-a-little-less, and plenty of impressions among the 2.99 billion people who visit one of the Facebook family-of-sites monthly.

You're right. The work-from-home angle could be part of it.

My company recently announced everyone is staying home for at least the next 10 months, and is trying to get hundreds of iPhones for everyone who didn't have a company-issued phone before.

The company my wife works for is half at work, and half at home right now, but everyone is getting new phones, just in case.

When you start a company, you choose a "tax year" by filing a tax return. From then on out, you file your tax return the same month every year.

If it's a small business, you probably find it most convenient to have the tax year be the calendar year and match up with your personal filing.

Many businesses have some concept of a "selling season" that makes it really convenient to not use January through December. A retailer, for example, probably prefers not to close their books on December 31 every year because of all the post-Christmas gift returns. Walmart has a January fiscal year (February 1 through Jan 31).

If you sold stuff to schools, you might choose a June fiscal year; most universities use a June fiscal year so an entire school year stays in a single fiscal year.

I have no idea why Apple chose September, but it was probably a rational decision.

Apparently:

For a variety of reasons, some public companies will use a non-standard or non-calendar quarterly reporting system. For example, Walmart's first quarter is February, March, and April; Apple Inc's Q1 is October, November, and December; Microsoft Corporation's Q1 is July, August, and September.

In addition, certain governments use different quarter systems. The first quarter of the United States federal government’s fiscal year is October, November, and December, Q2 is January, February, and March, Q3 is April, May, and June, and Q4 is July, August, and September. State governments may also have their own fiscal calendars.

Sometimes a company may have a non-standard fiscal year to help with business or tax planning. The Internal Revenue Service (IRS) allows companies to choose a “tax year” that is still 52-53 weeks long but does not end in December. H&R Block (HRB) ends its fiscal year on April 30th, which makes sense because that is the end of the busiest part of the company’s year. Releasing your annual report, which may be accompanied by shareholder meetings and additional disclosures after the busiest part of your year will help managers and shareholders make better decisions about the year ahead.

Companies that rely on U.S. government contracts may use September as the end of their fiscal year, and the fourth quarter because that is when they expect new projects to be closed and budget planning from the government to be available. Historically, large technology firms had stronger quarters early in the year, which is why many of them (including Microsoft (MSFT)) have a fiscal year that closes at the end of June.

Some companies have very unusual quarterly systems. Adobe (ADBE) closes their fiscal year on the Friday closest to November 30th. In 2018, November 30th was a Friday, as well as the last day of the month but in 2017, ADBE closed their fourth quarter and the fiscal year on Friday, December 1st, because it was the Friday closest to November 30th.

It's because Apple has to account for returns, and their biggest quarter is the December quarter. Most retail companies do not end on Dec 31 for this reason.

There's a slight tax disadvantage in using a non-calendar fiscal year since tax brackets typically adjust upwards annually and the non-calendar accounting means that you'll be booking some revenue in year X at the less advantageous year X-1 tax rates. But other accounting matters can outweigh that.

https://www.benzinga.com/news/16/10/8617799/why-do-different...

Along other reasons, with such a massive percentage of their income (and income variability) in Q4, it really helps their accountants to close out a tax year in the (relatively) predictable and stable Sept after three quarters of normalizing cashflows.

Sheltering taxes in a double-Irish requires pretty accurate projections.

Also often they just don't have all the data they need to close out a year until a few weeks after holidays, especially if people are taking a break, so it's just a lot easier on the humans involved.