by Tech Talk | Oct 31, 2022 | Articles
Apple was alone among the world’s top five smartphone vendors to register growth in the third quarter this year as the mobile market suffered a double-digit decline.
Global leader Samsung Electronics slumped 8% to 64 million units in the three months ended September, while Chinese vendors Oppo and Vivo were each down at least 20%, according to the latest data from Canalys and Counterpoint researchers.
Weak demand in China, which Samsung called out as a major drag on its sales of phone components this week, has weighed on the industry this year.
Xiaomi weathered the hit better than its compatriots because of its wider international presence, the researchers said. Shipments of iPhones, whose latest generation was released earlier this year than last, were up slightly.
The premium tier is the only segment of the mobile market that’s shown resilience, and Apple’s strength in that category helped it reach its best third-quarter share to date, according to Canalys.
It further closed the gap on Samsung, whose highlight in the period was the launch of new foldable handsets that improved its product mix with more high-end offerings.
The South Korean electronics giant, which appointed Jay Y Lee as its executive chairman this week, is betting on foldables as the key to unlocking growth in the largely stagnant smartphone business.
“Slow inventory turnover and poor economic figures have affected the channel’s confidence, falling back to major brands with iconic devices to generate traffic,” said Canalys analyst Toby Zhu. “Managing the gloomiest Q4 outlook in over a decade will show which vendors are well positioned for the long-term.” — Bloomberg
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by Tech Talk | Oct 11, 2022 | Articles
Investors expect this earnings season to pummel stocks further and will watch Apple Inc in particular as a bellwether of global economic conditions.
More than 60% of the 724 respondents to the latest MLIV Pulse survey say this earnings season will push the S&P 500 Index lower. That means no end in sight to the dismal run for stocks, after a tumble Friday decisively dashed hopes that the eye-popping two-day rally early last week would be the start of something bigger.
About half of poll participants also expect equity valuations to pull back even further from their average of the past decade.
The results underscore Wall Street’s fear that even after this year’s brutal selloff, stocks have yet to price in all the risks stemming from central banks’ aggressive tightening as inflation remains stubbornly high.
The outlook isn’t likely to improve any time soon with the Federal Reserve steadfast on hiking rates, likely weighing on growth and profits in the process. Data on Friday showed that the US labor market remains strong, increasing the chances of another jumbo Fed rate hike next month.
“Third-quarter earnings will disappoint with clear downside risks to fourth-quarter analyst estimates,” said Peter Garnry, head of equity strategy at Saxo Bank A/S. “The key risks to third-quarter earnings are the cost-of-living crisis impacting demand for consumer products” and higher wages eating into companies’ profits.
The US earnings season starts in earnest this week with results from major banks, including JPMorgan Chase & Co and Citigroup Inc, set to give investors a chance to hear from some of Corporate America’s most influential leaders.
As for stocks to watch in the next few weeks, 60% of survey takers see Apple as crucial. The iPhone maker, which has the heaviest weighting on the S&P 500, will provide insight into an array of key themes, such as consumer demand, supply chains, the effect of the soaring greenback and higher rates.
The company reports on Oct. 27. JPMorgan garnered the second-biggest mention, at 25%, but Microsoft Corp. and Walmart Inc. also drew a noteworthy number of votes.
The reporting stretch kicks off with the S&P 500 down 24% this year, on pace for its worst performance since the Great Financial Crisis. Against that grim backdrop, almost 40% of survey participants are inclined to invest more in value stocks, compared with 23% for growth, the earnings outlook for which is vulnerable when interest rates rise.
Still, 37% chose neither of those categories, perhaps reflecting Citigroup quantitative strategists’ view that equity markets have “turned decidedly defensive” and are only just starting to reflect the risks of a recession.
US stocks have had an awful year, but so have other financial assets, from Treasuries to corporate bonds to crypto. The balanced 60/40 portfolio mixing stocks and bonds in an attempt to protect against strong moves in the markets either way has lost more than 20% so far this year.
Survey respondents expect that references to inflation and recession will dominate earnings calls this season. Only 11% of participants said they expect chief executive officers to utter the word “confidence,” underscoring the gloomy backdrop.
“I’m expecting more cautious and negative guidance on the basis of broad economic weakness and uncertainty and tighter monetary policy,” said James Athey, investment director at abrdn.
About half of poll respondents see equities valuations deteriorating further in the next few months. Of those, some 70% expect the S&P 500’s price-to-earnings ratio to fall to the 2020 low of 14, while a quarter see it tumbling to the 2008 low of 10. The index currently trades at about 16 times forward earnings, below the average for the last decade.
Rough Outlook
Wall Street has a similarly dim view. Citigroup strategists expect a 5% contraction in global earnings for 2023, consistent with below-trend global economic growth and elevated inflation. The bank’s earnings-revisions index shows downgrades outweighing upgrades for the US, Europe and the world, with the US seeing the deepest downgrades.
Strategists at Bank of America Corp expect 20% downside for European earnings per share by mid-2023, while Goldman Sachs Group counterparts say Asia ex-Japan equities can see more earnings downgrades amid weak macro and industrial data.
With all the pessimism, there’s scope for positive surprises ahead. A beat to lowered earnings expectations is likely in third-quarter reporting, according to Bloomberg Intelligence strategists. Meanwhile, at Barclays, strategists led by Emmanuel Cau said that the results aren’t likely to be a “disaster” due in part to still-high nominal growth, but they doubt the outlook will be constructive.
“Earnings estimates for 2023 have started to move lower but have further to fall. Estimate revisions are a necessary part of creating a durable bottom in equity markets,” said Madison Faller, global strategist at JPMorgan Private Bank. “As estimates drop, investors will be anxious to get more engaged in anticipation of a potential pause in the Fed’s hiking cycle.”
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by Tech Talk | Sep 15, 2022 | Articles
Apple shares rallied the most since May as pre-order data showed the iPhone 14 Pro Max was the best-selling model, surpassing what the older version did in a similar timeframe.
Shares of the tech giant jumped as much as 4.4% on Monday, their biggest intraday gain in four months, as analysts from JPMorgan to Barclays pointed to strong demand for the latest mobile phone series which was unveiled at its product launch event last week.
“Pre-order data shows that the iPhone 14 Pro Max is the best-selling model, and that it is doing better than the iPhone 13 Pro Max did at this point,” KGI Securities analyst Christine Wang said in a report. The pricing of the iPhone 14 series is positive for its future sales, she added.
At its biggest product launch of the year, Apple introduced the iPhone 14, fresh AirPods Pro earbuds and new Apple Watch models. The iPhone retains the general look of the older version while getting camera enhancements and a long-anticipated satellite-messaging feature. The bulk of the iPhone upgrades are coming to the higher-end Pro line. Those devices will get a 48-megapixel camera and a screen that’s capable of always staying on in a low-power mode, similar to recent versions of the Apple Watch.
Apple is the top performing megacap US technology stock this year because investors have faith in its ability to tap into its more than one billion customers to earn more on its services including apps, video, fitness and gaming subscriptions. The next catalyst for the stock will be earnings for the September quarter, which are expected in late October.
Its shares are about 8% lower this year compared to the Nasdaq 100 Index, which has slumped about 22%. About 96% of the 50 analysts covering the stock recommending either buying Apple shares or holding on to their positions, while only two suggest selling. — Bloomberg
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