Apple Confuses the Street

ByDon

So, if you had over $220 billion in the bank, just posted a $10.7 billion profit on nearly $50 billion in sales and achieved a 75% market share in a totally new category you might say that is good news, right? Apple posted record 3rd quarter sales – the best in the company’s history, they increased sales and profit by over 33% year-over-year, and beat their own estimates for the quarter. Apple’s Mac sales went up 9% when all other computer manufacturers’ were declining by double digits. They sold 47.5 million iPhones and beat the Wall Street earnings estimate of $1.81 per share by posting $1.85 per share. Oh yeah, while they didn’t release actual numbers it is apparent that somewhere around 2-4 million Apple watches were sold in the face of constrained supply for much of the quarter. That’s more than either the initial sales of iPhone or iPad and more that all the other smartwatch manufacturers combined!

Okay that’s a lot of good news and certainly paints a picture of a successful company continuing to innovate and generate profits from the money machine that is Apple. But what happened? Apple’s common stock took a beating as it usually does regardless of how good the news may be. Apple’s conservative accounting also revealed that they consciously reduced channel inventory by over 1 million units. This is probably in preparation for new product introductions in the next quarter. If they had chosen to leave those 1 million units in the channel, they would have posted significantly higher sales and profits, too!

The concerns expressed were that perhaps the Chinese market was saturated. Please. There is a vibrant and growing middle class in China that is hungry for Apple’s products and they have just scratched the surface of the market with 40 retail stores. Sure there is some turmoil in the Chinese stock market but that is a very new and very different market and it does not necessarily reflect the state of the economy there. In fact, the Chinese stock market is up something like 99% even with the recent downturn. I agree with the several commentators that this summer sale on Apple stock is a good thing if you are an investor.

Another hidden gem in the report is that Apple’s investment in R&D has exceeded $2 billion for the first time. You can do some good work creating new products and improving existing products when you are spending that much money every three months! Apple set an all-time record for revenue from their “services” category which includes the App Store and reported that revenue from the App Store in China more than doubled year over year.

Apple’s quarterly financial report was mostly good news. There was an expected decline in iPad sales but that decline seems to have slowed a bit and Tim Cook continued to express a lot of confidence in the iPad. There are 35 new MobileFirst Apps from the IBM partnership and Apple expects 100 by the end of the year.

I don’t think you can expect any company to do better than Apple has done this past quarter; they are truly remarkable results with another record-breaking quarter under their belt. Every now and then Apple stock takes a little summer vacation and you can thank the perpetual pessimists on Wall Street for the Apple stock bargains now. Our congratulations to the entire Apple team for an astounding quarter!

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  • I am taking a ride over to the Adirondacks on Saturday over to the Indian dealer so my friend can get her 500 mile service on her Scout before we leave on the big trip to South Dakota next week. Looks like great weather this weekend. I hope you have an awesome weekend and thank you for reading this issue of Kibbles & Bytes!

    Your Kibbles & Bytes Team,

    _Don, Dean & Scott_

  • Setting up Parental Controls

    Our devices are powerful tools. They provide us with endless resource options and allow us to create just about anything from anywhere. With power also comes the ability for young users to access information and content we might not want them to. Thankfully both Mac OS X and iOS on iPad and iPhones have fairly robust parental controls. I recently set up restrictions on both my Mac mini and my kids’ iPad to ensure I didn’t have to worry about what they were seeing or doing when using these devices.

    Admittedly the OS X operating system has significantly more options for restrictions and settings when it comes to parental controls. As many of us know, Mac OS X allows you to set up multiple users with different access levels, and managed parental control is one of them. Setting up a new user on your Mac is very easy. From your admin account simply go to **system preferences > users & groups** and select the **+** sign. From here you can easily set up a new account that specifically is set up as **Managed with Parental Controls,** and create a new user ID and password for the new account. This account will have a password associated with it, so make sure it’s not the same as the admin password.

    !{display: block;margin-left: auto;margin-right: auto;}http://blog.smalldog.com/images/4463.png!

    From here you can quickly and easily set multiple levels of controls such as restricting adult content on websites, what applications the user can access, and even setting time limits. For my purposes I set up my kids’ account to only be able to access specific websites. Apple makes this easy by starting you out with a default list of a dozen or so approved sites. You can add to this list or remove them all together and add your own sites. To ensure my settings were correct I tried to visit a website that was not in the list and I was quickly denied access. One great feature to this is that it does give you the ability to approve a website to the list without switching user accounts. All that you need to do is enter the admin username and password to quickly update the list. To further set up restrictions you can access **parental controls** from system preferences and adjust restrictions as needed. You can limit the time of day the user can access the machine with time limit, which applications on the computer they can or cannot access and even “**manage controls from another computer.**”:https://support.apple.com/kb/PH18571?locale=en_US

    !{display: block;margin-left: auto;margin-right: auto;}http://blog.smalldog.com/images/4464.png!

    With iOS you can also set up a number of restrictions as well. In my opinion the settings on the iPad are not as convenient as those within OS X. The biggest limitation is that you cannot set up for an individual user, so any restrictions apply to the iPad or iPhone itself. Nonetheless they are very effective and simple to set up. Simply go to **settings > general > restrictions.** From here you will be asked to set up a PIN code to access and update the restrictions and can customize many options from disabling Safari or the App store to restricting explicit lyrics. In my testing I did find some more refined restrictions such as age limits on Apps were not as effective as I had hoped. I did hope to restrict my kids from my FaceBook App by using age restrictions but regretfully it was still accessible. However you can easily restrict specific websites or even location services like you can within OS X.

    While I admit I do prefer the options within OS X, it’s good to know that no matter what Apple device your kids are using there are several options available to parents to control the content and usage of those devices. While in my house my kids might not be thrilled with the new settings, as a parent, I am much more comfortable when I hand over a device to them!

  • _Dear Friends,_

    Nothing beats coming home after work and having fresh berries to graze on in the yard. Yesterday after a rain storm I went out in the yard and spent some time getting wet and moving from bush to bush eating ripe blueberries, raspberries and a few lingering strawberries. I figure I have to beat the birds and other critters to this food but we share with the animals, too. Now, when it comes time for the sweet corn, however, I am not sharing with the raccoons!

    Apple posted their 3rd quarter financials on Tuesday and once again exceeded their guidance and posted record numbers. Overall sales were up over 33% and profits by 38% but Apple’s stock fell in overnight trading. Apple is held to a nearly impossible standard. It is not enough just to crush guidance and estimates, Apple must obliterate them to make some on Wall Street happy. I’ll go into the numbers some more below but I did want to congratulate Apple on another amazing quarter.

    We say goodbye to an 11-year veteran of Small Dog this week as Jaime Service leaves to take a position with the post office in my home town. Jaime has been a steady and positive influence in the company for over a decade. He has been our warehouse guy, knowing each and every product, handling our shipping and receiving and be a constant source of pirate jokes and Boston Red Sox cheering. We wish Jaime the best of luck in his new career, you will be missed!

    This week’s Kibbles & Bytes exclusive features the fully loaded Apple Certified Refurbished MacBook Air. This model has a 1.7GHz Intel i7 processor, 8GB of RAM and the big 512GB SSD drive. It comes with a 1-year Apple warranty and 90-days of free tech support, however, we are bundling it with the AppleCare Protection Plan which extends both warranty and tech support to 3-years. To make this an even more powerful bundle we are also adding in Safeware Accidental damage coverage which will provide 3-year protection from accidental damage, like when you drop your Mac and crack the screen.

    This bundle would be pretty good with the MacBook Air, AppleCare and Safeware but this week I want you to have a backup drive, too, so will include the Seagate Backup Plus Slim Portable in the 2TB size. This bundle would sell for $1899 but this week for Kibbles & Bytes readers you can get the “*MacBook Air, AppleCare, Safeware and the 2TB drive for only $1749*”:http://www.smalldog.com/wag900001917, a $150 savings!