Category: Apple Insider

Since 2012, Apple has been buying back shares at the extraordinary rate of around $10 billion per quarter. A year ago it picked up the pace to around $20 billion per quarter. After a reprieve in the March quarter, the company has resumed its buyback frenzy with its largest-ever quarterly funding: $24 billion in the June quarter. Here’s why.

Apple’s chief financial officer Luca Maestri noted in the June earnings call that “we returned over $21 billion to shareholders during the quarter, including $17 billion through open-market repurchases of almost 88 million Apple shares and $3.6 billion in dividends and equivalents.”

A frantic pace of stock buybacks

Maestri’s figures indicate Apple bought back its shares at a price of around $197. Over the last nine months, Apple reported buying a total of 252.6 million shares of its common stock for $49.2 billion, at nearly $195 per share.

That price is far higher than the lowest troughs Apple stock reached over the winter where phony reports claimed nobody was buying iPhones anymore and in particular that nobody was buying high-end iPhones—at a time when it was abundantly clear that most of the iPhones being sold were high-end models, and that the worst news for Apple was that its replacement rate was slowing down as economically battered buyers in China simply deferred new purchases into the future.

But why is Apple buying back shares seemingly regardless of their price? It appears clear that Apple expects its share price to grow much higher in the future. So rather than carefully timing its repurchases to only occur when the stock price hits its lowest levels, Apple continues to buy shares back nearly as fast as it can all the time, even as the stock price jumps up and down as it continues to increment higher.

Since 2012, Apple has now funded a total of $271.3 billion in stock buybacks. Most of these shares were repurchased at what would today be an incredible discount. While analysts have occasionally picked out a given trough in Apple’s stock price and declared that its buybacks were a huge mistake, it’s hard to imagine in hindsight how Apple could have better invested $271 billion of its past iPhone profits.

Effectively spending lots of money is hard work. Apple has been able to spend at most around $4 billion per quarter on highly effective R&D. Further, Apple’s 10K noted that it “anticipates utilizing approximately $10.0 billion for capital expenditures during 2019, which includes product tooling and manufacturing process equipment; data centers; corporate facilities and infrastructure, including information systems hardware, software and enhancements; and retail store facilities.”

Maintaining a cash pile of over $100 billion —actually $200 billion balanced with $100 billion in debt —is a liability, as it is extremely difficult to effectively invest that much money in anything productive. Apple is already leading the tech industry while spending a mere $10 billion annually on Capex and historically less than $15 billion annually on R&D. Its cash holdings are mostly invested in government and corporate debt securities and other safe investments that do not pay out a high rate of return.

So, Apple’s solution has been to buy up its own shares as rapidly as possible, effectively concentrating its value as a company for its shareholders. And at the same time, also paying out around $12 billion per year in dividends.

And yet, even as it funds a record $24 billion in share repurchases in the quarter, it also generated another $10 billion in net income in the quarter. Of all the problems that analysts invent for Apple, the most challenging thing the company faces is actually how to responsibly spend all of the money it is generating from leading the development of the world’s consumer technology.

Return of the ASR

The $17 billion that Maestri outlined for the June quarter wasn’t even the total buyback spend initiated in the quarter. In addition to the cash that was used to actively buy shares directly, Apple also initiated its first Accelerated Share Repurchase in over a year. Under an ASR, Apple pays an investment bank to buy back shares on its behalf. The bank effectively shorts the stock held by its clients and then later buys new shares to replace them, assuming the risk itself while Apple retires its shares at a planned cost per share.

Apple has previously performed ASRs in addition to buying back shares directly. However, over the last year, it stopped doing ASRs and began funding buybacks directly even faster —that pace of $20 billion or greater per quarter. In the March quarter, these buybacks slowed down to $8 billion, but that has now reversed with the largest ever buyback Apple has funded in a quarter: $12 billion in direct buybacks and a $12 billion ASR.

The reasons for doing an ASR might involve enabling its partner bank to buy up shares during the blackout period where Apple itself can’t buy shares. It’s also considered to be a financial engineering effort to reach a specific metric.

Apple doesn’t need to cover up its real-world performance. Despite being hit by unfavorable currency exchange rates, a chaotic tariff war, and a rollercoaster ride of economic uncertainty in its important Chinese market, Apple has expanded and enhanced its overall businesses so much that its new sales alone have made up for the weakness hitting its largest segment of iPhone sales —something most analysts claimed would be impossible.

So while it spends as much money as it can on buybacks, even using an investment bank to handle a massive ASR, Apple’s overall cash holdings are only slowly decrementing, even as it pays off debts incurred to finance earlier buybacks.

Apple currently has so much cash —$225 billion, half of which is balanced by debt holdings, meaning the company has $113 billion free and clear to spend —that it certainly could use it to play financial engineering tricks to make its performance as a company look better than it is. However, it doesn’t need to: Apple’s real-world performance is incredibly far ahead of all of its peers.

Why Apple is investing in AAPL

In the June quarter, Apple suffered through a sales slump, particularly in China, that resulted in a 13 percent drop from last year’s peak revenues and an 8.5% drop in profits. But that compares to the much larger collapse in Samsung Mobile performance—an incredible 41.6% collapse in operating profits—which hit its premium flagship sales so hard that its Mobile IM segment reported profits of just 11% that of Apple. Huawei also suffered through a bleak period of no growth, caused mostly by U.S. policy blocking its sales and partnerships with American companies.

And while research groups are desperately trying to portray Apple as being troubled due to the volumes of phones it sells compared to all other vendors on earth collectively, Apple’s lock on premium sales to the world’s most affluent buyers is making it vastly more profitable than every other phone company put together. Any comparison of market share that frets over how many phones Apple is selling while ignoring the real value of those phone sales is worthless.

Apple doesn’t have to burn any cash to create the smokescreen impression that it is performing extremely well in a difficult environment. Apple is both building as a manufacturer and retailer, and as a platform vendor, and as a sales organization, and —somewhat invisibly —as a training organization that’s teaching incredible numbers of people worldwide how to use its platforms to build third-party tools for its platforms.

The executive team with the clearest picture of Apple’s future prospects is actively investing the company’s cash resources as rapidly as effectively possible in the company’s expansion, but the company is simply generating so much cash that it is effectively forced to return the excess to shareholders as efficiently as possible by increasing the value of their investment.

 

By William Gallagher
Tuesday, August 06, 2019, 03:58 am PT (06:58 am ET)

Emphasizing the simplicity and speed of signing up, ten new videos from Apple cover applying for Apple Card directly in your iPhone’s Wallet app through using the titanium card at retail.

Alongside a limited release of the Apple Card for a small group of testers outside the company, Apple has released a series of 10 videos that not just details the remarkably few steps needed for you to apply, but how to activate the titanium card, how to get support, and more.

[youtube https://www.youtube.com/watch?v=rVFUocmDNVM&w=560&h=315]

To apply, Right now you need to have received an invitation before the feature is available in your Wallet app, but thereafter it’s a fast process.

Inside the Wallet app, there is a button with a plus sign at top right of the front screen. Tap this and all users go to a section that lets you add regular credit and debit cards. Those with invitations, however, also get an option to tap to add Apple Card.

Then you get a description of the card alongside optional information you can see about how Apple and Goldman Sachs Bank manage your data, plus details about the card’s rates and terms.

If you tap Continue, you’re shown a form with details such as contact information, date of birth and so on. Very nicely, that information is likely to have already been filled out for you because your device gathers it from your Apple ID. You can change or correct it here, then tap Next.

Apple’s video rather skips over a section now as it does not detail what you see as you wait to find out if you’ve been approved. Users who are already signed up report that this stage takes no more than a minute or two, though.

If you’re approved, the next screen you see will show you a summary of what your Apple Card is offering you. That will be the credit limit, the APR and the fact that there are no fees.

[youtube https://www.youtube.com/watch?v=WrybAHup-Sc&w=560&h=315]

Apple recommends that you check the fine print in the Offer Terms and Conditions, and that you should look into your credit score.

Assuming you want to go ahead, you tap Accept Apple Card and you’re done.

[youtube https://www.youtube.com/watch?v=Qf95qO3av1M&w=560&h=315]

The card is immediately added to your iPhone, and also to your Apple Watch. It’s really been added to your Apple ID, so it’s even available in Safari.

One thing to note is that Apple tells you the Apple Card will “be automatically selected when you use Apple Pay.” That might not be what you want, so you’ll have to go through Wallet settings to change it.

The Microsoft Surface Book 2 is a hybrid 2-in-1 laptop that can be used as a tablet or a full blown laptop. But, given the performance, is it worth the money?

The Surface Book is essentially parallel to the MacBook Pro lineup for Microsoft. There are 15-inch and 13.5-inch variants, and even though Microsoft has its own Surface Pro lineup, its specifications are not as powerful or as feature packed as the Book.

[youtube https://www.youtube.com/watch?v=Q85ioi2ksr0&w=560&h=315]

Top of the line Surface Book 2

The model under review is the top-of-the-line 13.5-inch Surface Book 2 with an 8th-generation i7 processor, 16GB of RAM, 1TB of SSD, and it has Intel’s UHD 620 GPU coupled with the discrete Nvidia GTX 1050. Our configuration sells for $3,000.

The Surface Book 2 is a little bit big for a 13-inch laptop at 12.3 x 9.1 x 0.9 inches versus the 13-inch MacBook Pro coming in at 12 x 8.4 x 0.6 inches. On paper it may not look all that drastic, but in reality it’s a noticeable difference.

The 13.5-inch PixelSense display on the Surface Book is stunning to look at, equipped with a 3000 x 2000 resolution which results in a taller display, making it perfect for browsing the web or creating documents. While the display looks beautiful in its own right, it’s just not as nice as the MacBook Pro’s version due to the fact it doesn’t have a P3 Wide Color Gamut, so colors aren’t as vibrant and color accurate. It’s still a good display, and it’s one of the best displays on a Windows laptop.

You can also disconnect the display from the keyboard and use the Surface Book 2 as a tablet —which you obviously can’t do with anything from Apple. Disconnecting it is super easy thanks to the dedicated button on the keyboard, and connecting it back to the keyboard is plug and play.

The Surface Book 2 also features 10-point multi-touch and is compatible with the Surface Pen, and Surface Dial which Apple doesn’t offer for any of their laptops. We unfortunately don’t have the Surface Pen or Dial to review alongside the Surface Book, but it is nice to have the option to use accessories to help get more out of the laptop.

The Surface Book 2 looks similar to its predecessor, using the same gray magnesium with a reflective Windows logo stamped on the back of the device. It’s a sturdy device, and a laptop that looks like it cost a lot of money.

The keyboard on the Surface Book 2 is great, it offers plenty of key travel, and it’s well spaced out for a 13-inch laptop. It’s a nice refreshing change from Apple’s butterfly keyboard which may end up breaking months after purchase.

Battery life on the Surface Book 2 is rated for 13 hours, and during our two weeks of testing the laptop, it exceeded our expectations. From web browsing to 30-minute game sessions and watching videos, we never felt like we needed to be by a wall outlet and charge the laptop.

Can’t have everything

The trackpad is one of the best I’ve used on a Windows laptop, and as a daily MacBook Pro user, I appreciate having multi-touch gestures on the trackpad which allows me to use similar gestures as my MacBook Pro. Whether it’s pinch to zoom or showing all my open windows at once, it’s nice to have these features on a premium laptop.

What I’m not a fan of though are the speakers on the Surface Book 2, offering a mediocre experience at best. It distorts at high volume and lacks bass, and it doesn’t get very loud. The 12-inch MacBook sounds louder and clearer than the Surface Book 2, which is a huge disappointment for such a jam packed hybrid laptop.

In terms of inputs and outputs, we have plenty of ports on the Surface Book 2 including two USB A ports, a full sized SDXC card reader, a USB-C 5-gigabit-per-second port and the Surface Book’s charging port. The charging port is magnetic, which is similar to Apple’s old MagSafe technology which I really like, but it really needs another USB-C port, or even better, a 40 gigabit-per-second Thunderbolt 3 port.

Performance is concerning

So when it comes to performance, the 8th generation quad-core i7 processor on this top of the line Surface Book 2 works really well in everyday tasks and some casual gaming.

In Geekbench 4 the Surface Book 2 scored 5,081 in single core, and 15,595 in multi-core which is in line with the base model 13-inch MacBook Pro that retails for just $1,299. Apple’s top-of-the-line 15-inch MacBook Pro scored 5,879 and 29,976 in single and multi-core tests, respectively, which is clearly a much faster device.

In Cinebench R20 we received a CPU score of 942 which is way below than the base model 13-inch MacBook Pro which posted a CPU score of 1,583 in Cinebench R20.

When it comes to its drive speeds we averaged a 2,500MB/s for its read speeds, and 1,200MB/s for its write speeds which is really fast for everyday operation, and gaming. The $1,299 base model 13-inch MacBook Pro tops out at around 495MB/s for its write speeds and around 1,350MB/s for its read speeds., while the top of the line 15-inch MacBook Pro tops out at 2,600MB/s for both its read and write speeds.

Gaming isn’t the Surface Book 2’s strong suit

In Unigine Heaven we received a score of 529, an average frames per second of 21, and a max frames per second of 48.3. Comparing that to Apple’s 13-inch and 15-inch MacBook Pro. The base model 13-inch MacBook Pro received a score of 784, and an average frames per second of 31.1 with a max frames per second of 66.7, while the top-spec 15-inch MacBook Pro with Vega 20 graphics pulled in a max FPS of 147.4 and an average of 82.3 with an overall score of 2072.

When it comes to gaming, we installed some of the games we play occasionally on PC, and that’s Overwatch, Apex Legends, and Black Ops 4. We weren’t very optimistic about gaming on the GTX 1050, and with Overwatch we were able to play at a constant 60fps in 1080p with settings in Medium.

With Apex Legends and Black Ops 4, we were able to get 50 to 60fps in its lowest settings in 1080p, which isn’t terrible, but the game doesn’t look as good versus a laptop with a much higher-end graphics card. Gaming isn’t the Surface Book’s strong suit, and while it can run some popular titles in low to medium settings at 1080p, serious gamers may want to look elsewhere.

Overall, the Surface Book 2 is a solid device for everyday tasks, and the best Windows two-in-one you can buy, but the hefty price tag of $3,000 is a bit concerning given the performance is similar to a $1300 MacBook Pro. The unique design, beautiful display, and 2-in-1 functionality is a refreshing change from a traditional laptop, but it’s hard to recommend the Surface Book 2 in 2019.

We think it’s best to wait for the next generation Surface Book or pick up the much more affordable base model 13-inch MacBook Pro.

Rating 3.5 out of 5

How to save on Microsoft’s Surface Book 2

Microsoft’s Surface Book 2 is currently on sale at top retailers, including Amazon, Adorama, B&H Photo and Microsoft itself.

Shoppers looking for bonus perks can also take advantage of no interest financing offers at the above retailers or even a sales tax refund in eligible states at B&H with the Payboo Card.

Those in the market for a Mac can also save on Apple’s MacBook Pro with instant and exclusive promo code savings in the AppleInsider Apple Price Guides.

Following Apple’s decision to temporarily halt Siri grading as it evaluates the program’s privacy safeguards, Amazon and Google this week followed suit and updated their respective policies on human reviews of recorded voice assistant audio.

Apple on Thursday suspended its Siri grading program, which seeks to make the virtual assistant more accurate by having workers review snippets of recorded audio, after a contractor raised privacy concerns about the quality control process.

Now, Apple’s competitors in the space, namely Google and Amazon, are making similar moves to address criticism about their own audio review policies.

Shortly after Apple’s announcement, Google in a statement to Ars Technica on Friday said it, too, halted a global initiative to review Google Assistant audio. Like Siri grading, Google’s process runs audio clips by human operators to enhance system accuracy.

Unlike Apple’s Siri situation, however, a contractor at one of Google’s international review centers leaked 1,000 recordings to VRT NWS, a news organization in Belgium. In a subsequent report in July, the publication claimed it was able to identify people from the audio clips, adding that a number of snippets were of “conversations that should never have been recorded and during which the command ‘OK Google’ was clearly not given.”

The VRT leak prompted German authorities to investigate Google’s review program and level a three-month ban on voice recording transcripts.

“Shortly after we learned about the leaking of confidential Dutch audio data, we paused language reviews of the Assistant to investigate. This paused reviews globally,” Google told Ars Technica.

Google did not divulge the halt to global reviews until Friday.

Amazon is also taking steps to temper negative press about its privacy practices and on Friday rolled out a new Alexa option that allows users to opt out of human reviews of audio recordings, Bloomberg reports. Enabling the feature in the Alexa app excludes recorded audio snippets from analysis.

“We take customer privacy seriously and continuously review our practices and procedures,” an Amazon spokeswoman said. “We’ll also be updating information we provide to customers to make our practices more clear.”

Amazon came under fire in April after a report revealed the company records, transcribes and annotates audio clips recorded by Echo devices in an effort to train its Alexa assistant.

While it may come as a surprise to some, human analysis of voice assistant accuracy is common practice in the industry; it is up to tech companies to anonymize and protect that data to preserve customer privacy.

Apple’s method is outlined in a security white paper (PDF link) that notes the company ingests voice recordings, strips them of identifiable information, assigns a random device identifier and saves the data for six months, over which time the system can tap into the information for learning purposes. Following the six-month period, the identifier is erased and the clip is saved “for use by Apple in improving and developing Siri for up to two years.”

Apple does not explicitly mention the possibility of manual review by human contractors or employees, nor does it currently offer an option for Siri users to opt out of the program. The company will address the latter issue in a future software update.

 

By Mikey Campbell
Wednesday, July 31, 2019, 09:11 pm PT (12:11 am ET)

Intel CEO Bob Swan in a Wednesday interview explained the reasoning behind selling his company’s smartphone modem assets to Apple, saying the exclusive nature of its relationship with the iPhone maker made staying in the business unattractive.

Speaking with CNBC, Swan said 5G modems were not an area that would drive growth for the industry.

The comment seems counterintuitive considering the 5G smartphone market is in its infancy, with device manufacturers around the world only now preparing hardware integrations for the next-generation communications technology. Swan partially explained his line of thinking by adding that Intel’s sole smartphone modem customer was Apple. As such, remaining in the business was not an appealing proposition.

“So we doubled down on 5G networks where we think there’s real opportunities and last week we announced the sale of the 5G smartphone modem to Apple. But we also retained access to the technologies in the event that we need a 5G modem for non-smartphone applications, like a PC or an automobile,” Swan said.

After relying solely on Qualcomm cellular modems for its iPhone and iPad products for years, Apple diversified its supply chain to include baseband chips from then-newcomer Intel with 2016’s iPhone 7. After splitting orders with Qualcomm in 2017, Intel became Apple’s lone iPhone modem supplier with 2018’s iPhone XR and XS.

At the same time, Apple in 2017 launched a legal campaign against Qualcomm alleging its licensing strategy amounted to extortion, monopolistic practices and price gouging. A series of countersuits and complaints were subsequently lodged in various world courts and with international regulatory bodies.

During the legal scrum, Apple was rumored to be working with Intel on a future integration of the chipmaker’s XMM 8160 modem, 5G-capable silicon initially expected to debut in the second half of 2019. Reports earlier this year suggested Apple ramped up efforts to build an in-house modem having “lost confidence” in the Intel’s ability to deliver its modem on schedule.

In April, Apple and Qualcomm reached a surprise settlement that involves a multi-year chip deal, allowing Qualcomm to once again supply iPhone modems. That same day, Intel announced plans to exit the smartphone modem industry, a move viewed by some as a concession that its 5G hardware was unable to compete with established Qualcomm chips.

Last week, Apple said it had purchased Intel’s smartphone modem patents in a $1 billion deal that included key personnel.

Swan’s comments on Wednesday steered clear of acknowledging Intel’s position prior to Apple’s acquisition.

Despite exiting the baseband chip business, Intel is heavily investing in mobile networks as it attempts to capitalize on so-called “cloudification” efforts. The company last month inked a deal with Japanese internet firm Rakuten to create the “world’s first end-to-end cloud-native mobile network,” CNBC reports.

According to Swan, Intel is betting that processing will move “from the cloud or from the data centers into the networks,” the report said.

 

By Christine McKee
Tuesday, July 30, 2019, 07:42 pm PT (10:42 pm ET)

We’re giving away 10 Adonit Note styluses for use with Apple’s current iPad and iPad Pro. Enter today for your chance to win!

Now through Aug. 6, AppleInsider readers can enter to win one of 10 Note styluses courtesy of Adonit. In our hands-on review, we found the Adonit Note is great for jotting down notes and can be paired easily with Apple’s 2018 iPad or iPad Pro. It’s also compatible with 2019 iPad Airs and iPad minis.

Retailing for $49.99, 10 lucky winners will each receive the Adonit Note delivered to your door.

Entering the giveaway is quick and easy. Simply retweet this tweet or subscribe to our YouTube channel using the widget below. You can also gain additional entries by following us on Instagram to view exclusive photos from Apple events. The entry period for the giveaway ends at 11:59 p.m. Eastern on Aug. 6, and the winner will be announced here on Aug. 7, so be sure to check back to see if you’ve won.

No purchase is necessary to enter and the sweepstakes is open to U.S. residents aged 18 years and older. Please note, contest entries will be verified upon selecting a winner.

Adonit Note Stylus

[youtube https://www.youtube.com/watch?v=AH66GWjZppU&w=560&h=315]

Apple Deals

AppleInsider and Apple authorized resellers are also running a handful of additional exclusive promotions this month on Apple hardware that will not only deliver the lowest prices on many of the items, but also throw in instant discounts on AppleCare, software and accessories. These deals are as follows:

See if there is a Mac, iPad or Apple Watch deal that will save you $100s by checking out prices.appleinsider.com.

 

By AppleInsider Staff
Monday, July 29, 2019, 07:12 pm PT (10:12 pm ET)

Apple this week posted a pair of images to its regional website in Japan teasing what appears to be plans to open two new brick-and-mortar stores in the country later this year.

The company recently updated its retail webpage with cycling banner graphics publicizing renovations at Apple Omotesando and two stylized Apple logos potentially representing plans to open new locations sometime in 2019.

Apple has in the past used artistic renderings of its trademark logo to promote retail operations in Asia, including store renovations and grand openings in Japan and China. In Japan, the general motif sees the Apple logo precede Japanese kanji characters that denote the store’s location.

In early 2018, for example, the company teased a then-upcoming shop in Shinjuku with logo art reminiscent of neon lights, a nod to the bustling Tokyo ward’s rich nightlife. Later that year, Apple advertised the impending opening of its Kyoto location with a stylized logo set off against a traditional patchwork pattern.

Not much is known about the forthcoming outlets beyond the two teaser images on Apple’s website. One version shows off the logo in a series of four lines with gradated colors that borrow from Apple’s classic rainbow branding, while the other hints at an orange sun reflecting off an arrangement of progressively thin slats. Beneath both logos sits text that translates to “planned for 2019.”

It can be speculated that one of the new designs relates to a rumored store thought to be under construction at the base of the Mitsubishi building next to Tokyo Station in the capital’s Marunouchi district. Apple’s line drawing might pay homage to the multiple train and subway stops lines that converge in the area, each of which bears a different color on official city maps.

Apple is quickly building out its physical presence in Japan. Last year, former retail chief Angela Ahrendts announced a five-year plan to reinvest in the market with new brick-and-mortar locations and a series of renovations. The company currently operates eight locations across the country.