Two Takes on Apple Shares and Eyeing the Twitter Situation (2023)

Ken_Ray

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Two Takes on Apple Shares and Eyeing the Twitter Situation (2)

Foxconn struggles with space issues, Barron’s offers two takes on Apple stock, and what the heck’s going on with Twitter? All that and more from today’s Observation Deck view.

COVID Quarantine Requires Slow Hiring at Foxconn Zhengzhou Plant

Foxconn’s hiring rush came to a sudden stop at the end of the week last week. A piece from the South China Morning Post says Apple’s manufacturing partner put a freeze on staffing-up at its iPhone City plant in Zhengzhou, China, because it ran out of quarantine space.

I know you know which plant I’m talking about. It’s the one that saw a “small” COVID outbreak turn into a huge issue — first with closed-loop production, then workers complaining of mistreatment, then workers fleeing, then Apple warning of extended wait times for iPhones, then the plant and the area around it going into full lockdown before reopening (again in closed-loop mode) on 9 November, then the Chinese government appealing to retired members of the People Liberation Army to “answer the government’s call,” and “take part in the resumption of production.”

Hiring Hampered By Lack of Quarantine Space

Anyone who answered the call apparently found a shortage of space. On Friday, SCMP had “two local recruitment agents” saying the Foxconn plant had “suspended hiring for three days due to limited quarantine capacity…” That seems to have started a day or two before the report ran. The site says the freeze was only enacted through Saturday, Nov. 19.

After that, it looks like a lot of hurry up and wait. The Post says going in, new hires have to go “through a health check and a quarantine at a designated location before going to work on production lines.” That’s a four-day quarantine, which seems to be creating a bottleneck. The piece has an unidentified Foxconn exec indicating that over 100,000 people have submitted info into the company’s pre-hiring system. “If every applicant were hired,” the report says, “it would be enough for Foxconn to fill all of its vacant positions.”

I guess now they just need vacant rooms.

AAPL Gets ‘Best of/Worst of’ Treatment from Barron’s

Duality, thy name is Barron’s. That site had two pieces over the past few days, one arguing a “best of times,” the other arguing a “worst of times” — both centered on shares of Apple. Arguing “best of times…” well, let me correct myself. Neither Jacob Sonenshine nor Eric J. Savitz were arguing best or worst. Rather Sonenshine was looking at positives, while Savitz expressed worry over days to come.

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Starting with Sonenshine, he says a big reason “the stock market refuses to break,” is due to Apple. The markets were down a couple of days last week, though not as bad as one might have expected. Reasons for the hold, in his estimation, included a better than expected consumer price index report, a hope that the Fed will tap the brakes on interest rate hikes, and strength for the S&P 500.

That last one is tied to Apple in a pretty big way. According to Sonenshine, Apple’s market cap “is about 7% of the S&P 500’s total market value, so if Apple stock performs well, it supports the index.” It’s not just the S&P 500 helped by Apple shares, though. With hardware revenue expected to come in around $300B this year, shares for display makers, chip makers, and other components producers are also buoyed. “Finally,” says Sonenshine’s post:

…one of the most important reasons Apple can act as a market indicator is the reliability of its earnings. They have held up well recently, as iPhone demand remains strong. Services continue to grow as the company has entered newer markets such as digitalentertainment and payments, which are taking market share from traditional entertainment and transactions.

Of course, past performance is not indicative of future results — a fact of which Sonenshine is well aware. “The point,” he says:

…is that Apple shares haven’t broken yet, although that doesn’t mean they can’t—the market will have to see what the fourth quarter and the company’s 2023 outlook looks like.

And Now, the Not-So-Great Take on the State of AAPL

Cue Mr. Savitz. The self-professed “Apple fanboy” has “generally been pretty bullish” on Apple shares — again, that’s Savitz himself saying so. “But when I assess the situation now,” he writes, “I see reasons for concern—growth is slowing, and might go negative, and valuation is elevated. Apple shares look vulnerable.”

While he’s aware of Apple’s great looking numbers for the September-quarter compared to other tech stalwarts, Savitz argues that the whole thing hinged on the Mac. Revenue for Apple’s computers was up 25% versus the same quarter a year earlier, hitting $11.5B. That was driven largely by the Mac recovering from supply constraints in the June-quarter. Such a save won’t repeat this quarter. In fact, Apple CFO Luca Maestri warned on the last earnings call that Mac revenue was going to drop in a big way for the December-quarter, thanks largely to a particularly tough compare. Meanwhile, sales for everything else are expected to take a hit, thanks in part to foreign exchange headwinds and the off-and-on production problems for the iPhone 14 Pro line.

Savitz is an Apple fan. He likely knows there are plenty more out there just like him. But the economy is the economy. “People love their iPhones,” he writes:

…but they also like to eat, pay the rent, and fuel up their cars. To think sales won’t be affected by a recession seems unrealistic.

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The Twitter Tangle

Phil Schiller Kills His Twitter Account

If you’re looking for Apple Fellow Phil Schiller on Twitter, don’t. AppleInsider says the Cupertino-company’s former SVP of Worldwide Marketing has deactivated his Twitter account.

Content-wise, the world is not missing a lot. “When the account was active,” AppleInsider says:

…Schiller used it to promote Apple’s various products and services, as a continuation of his previous role as SVP of Worldwide Marketing, as well as his current Apple Fellow position.

Why’d he kill his account? Yeah — there’s no official explanation, leaving the world to assume it has to do with the bundle of chaos new Twitter owner Elon Musk has turned the service into. Listing a few issues, the piece says:

Musk’s initiatives have included mass layoffs and increasing demands to employees to reinvigorate the microblogging service, alongside various changes that have led many users to consider other services.

You could argue they’re Mastadone with it.

The latest controversy spewed from the birdhouse had Musk using a Twitter poll to decide whether to reinstate the Twitter account of former President Donald Trump. The vote ended with the account being reactivated, though it’s unclear whether the former president will actually start using the service again.

We don’t know, but it’s possible that Schiller is sending a message by ending his ability to send messages.

App Stores to the Rescue?

If Twitter under Musk looks like a runaway train, you may be wondering what can stop it — or, at the very least, keep it on the tracks. The answer may be in Silicon Valley.

(Video) Musk Buys Twitter | Bloomberg Surveillance 10/28/2022

Yoel Roth — former head of trust and safety at Twitter, has written an opinion piece for the New York Times addressing the company today. Having left after Musk came in, Roth says the exodus of marketing and advertising money may have an affect. Legislators and regulators may have an affect. However, Roth argues, perhaps the “most significant check on unrestrained speech on the mainstream internet” are “the app stores operated by Google and Apple…” The way Roth sees it:

Failure to adhere to Apple’s and Google’s guidelines would be catastrophic, risking Twitter’s expulsion from their app stores and making it more difficult for billions of potential users to get Twitter’s services. This gives Apple and Google enormous power to shape the decisions Twitter makes.

A bit further down the page:

Twitter will have to balance its new owner’s goals against the practical realities of life on Apple’s and Google’s internet — no easy task for the employees who have chosen to remain. And as I departed the company, the calls from the app review teams had already begun.

Would Apple and Google take action against Twitter? Bloomberg’s Mark Gurman doesn’t think so. In Sunday’s “Power On” newsletter he wrote:

…I expect Apple and Google to give Twitter an unusual amount of leeway. Twitter’s brand and importance remainstrong, and alienating hundreds of millions of users—who are glued to their devices because of the app—would be a losing situation. As would upsetting Musk, who operates two other influential companies, Tesla Inc. and SpaceX. That makes it in everyone’s interest to avoid an all-out digital war.

I’m not sure whether Gurman thinks too much of Musk or too little of Apple CEO Tim Cook. While he probably doesn’t want to go to war with Twitter’s owner, he does have certain expectations. Cook was asked about Twitter’s place in the App Store During last week’s interview with “CBS Mornings.” A piece from MacRumors quoted his response, saying:

They say that they’re going to continue to moderate, and so I count on them to do that because I don’t think anybody really wants hate speech on their platform.

Disney Ousts One Bob as CEO, Brings Back Another

Hey — did you hear about Disney bouncing Bob Chapek and bringing Bob Iger back as CEO? There’s no Apple tie-in. I’ve got no story for it. Just — kind of stunning. I feel kind of bad for Chapek. He was who he was when they hired him and he stayed that guy. That said: Bob Iger’s… kind of awesome. Chapek got business. Iger gets business… and the magic part.

(Video) Twitter tumult continues as company ends paid verification

Personally, I’m excited to see what happens.

Today on The Mac Observer’s Daily Observations Podcast

TMO Managing Editor Jeff Butts and I talk over the today’s two big “Mac OS Ken” stories: Barron’s duality on Apple shares and Apple’s place in the Twitter tale. That’s all today on the Daily Observations Podcast from The Mac Observer.

(Video) Elon Musk vs. Twitter: Inside the 6-Month Battle | WSJ

Videos

1. Elon Musk Twitter Buy Explained: Why He Offered $43 BILLION!
(CNET)
2. Musk Sells $6.9 Billion of Tesla Stock
(Bloomberg Markets and Finance)
3. Twitter reportedly finalizing deal with Elon Musk
(CBS News)
4. Elon Musk Isn’t the First to Want to Buy Twitter | WSJ
(Wall Street Journal)
5. How Twitter Evolved From Startup To President Trump’s Megaphone
(CNBC)
6. Higgins: Elon Musk's vision for Twitter is to transform it into a "super app" within Sillicon Valley
(CNBC Television)
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