Blain’s Morning Porridge – Nov 2nd 2018

Blain’s Morning Porridge  – 2nd November 2018

“If the women in the factories stopped work for twenty minutes, the Allies would lose the war..”

In the headlines this morning:

I can’t help but wonder if Apple just had its Ratners’ moment?

(For anyone unfamiliar with the term Ratners’ Moment – it most famously occurred when the CEO of the then top UK high-street jeweller utterly destroyed the value of the company in a heartbeat with one carelessly chosen comment about the ultra-cheap ear-rings he was selling.)

Last night Apple decided to stop releasing numbers on how many of each of its “bright-shiny-things” it sells. In that same heartbeat the company moved from Special to Dull & Ordinary.

Telling us unit sales helped kept the myth alive – that new models were selling strongly to a still growing number of Appleista’s, strengthening the perception they remained the market leader. Now they just sell a range of stuff. When they stop telling us these numbers.. what are they trying to hide?

I can pretty much guarantee that in the 20 minutes (after I send this morning’s porridge) I will get a reply from a good friend who is also a senior Apple exec. He will patiently explain why I am wrong.. but….

Apple hasn’t really innovated anything new in years. It’s lived off maintaining the dream Steve Jobs sold to customers. He’s a long time gone.

I am an Apple fan and I grew up with them. I was still at University when the famous 1984 smashing the screen Mac Ad hit the screens. I bot the early “Return of Jobs” Mac in the early 90s and the trendy one in 1999 (light blue), I was an early adopter of the fantastic Ipod in 2002, got my first iPhone in 2008 (it wasn’t that different to the Ericson I was using before it and for years I carried a Blackberry as well), and an IPad in 2011. I have bot (Zerohedge readers – I know its spelt bought, but DIGAF what Americans think about my spelling.. ? ) just about every piece of Apple kit – the Mac, the Mac Pro, the iPhone X, the Watch (bit peeved when it fell apart and they refused to fix it) and even the Homepod (which I really can’t find any real use for except as a glorified music centre).

I like them all, but to be honest, none of these have changed the world the way the iPod conclusively did, or tweaked it like the iPad.

The company’s new policy will be to give us revenue numbers – neatly hiding and obscuring the fact total numbers might be dropping and are being compensated by Apple’s policy of constantly upping the cost; like charging $200 more for the latest iPad (the new one with added gripping hand action)..

So numbers sold will drop, prices will keep rising.. and revenues will look ok..  right up to what I now call the Apple Event Horizon…

That’s when the magic dies. Its when folk realise that Apple just aint sexy any more and its just a retailer of rather attractively packaged tech. Even I admit Mac Pros are actually quite difficult, fiddly, and incomprehensible to use compared to a much cheaper and user friendly piece of kit from Dell, HP or whoever else still makes computers.

My new Mac Pro cost £1500 and basically does exactly the same things as a HP costing 30% of that.. Perhaps I won’t buy the next iPhone because the back of my current X is already cracked and its getting temperamental to use.. I really don’t need a £1000 phone when a £300 one will do exactly the same.

That’s the danger Apple faces. That is looses its allure and becomes just an item and no longer a statement. Apple may be the world’s most profitable company today, but it only stands a small sentiment shift from just being another tech company. Letting us see unit sales was enough to convince us uptake was still on an upwards trajectory. Giving us revenues doesn’t.

I’d like to know things like footfall in the stores… when I was in Regent Street recently I got served in moments, meaning it was just about empty. Wouldn’t it be good to know about comparisons – how many folk compared the iPhone to the Samsung and bought the Korean instead? How many other young millennials aren’t buying iPhones – my 20 something kids think they are old fashioned.. (although Jenny has a Mac Air for emailing the Bank of Dad from Australia), and none of my younger nephews and nieces has or wants one.

It’s a bit like cars. Once, Ford was the market leading behemoth. Now its just a rather good car company, but not the most valuable – funnily enough the most valuable is the most fashionable but insignificant in numbers auto maker. I will always buy Land Rovers (or Astons if I get lucky), but that’s because I’m old fashioned. I reckon that’s where Apple is headed.. niche purveryor of tech to dedicated but aging Apple Fans.

I was 30 when I bot my first piece of Apple Kit.. rather not say what I am today..


One of my readers reminded me of my latest Blain’s Trading Mantra – about not looking to hard at the obvious problem, because the real crisis will be erupting somewhere else.

That place could be Germany. Merkel will remain and see out her term as Chancellor if one of her protégées get the CDU leader role she ducked earlier this week. But as Merkel is being blamed for the party’s collapse – that’s looking a risky bet. If she is forced out, then we could face a German triggered Euro crisis. Why?

Germans ae generally pro-Europe, but its possible an intense period of German leadership turmoil might coincide with Trump deciding that’s the perfect time to slap tariffs on German Autos. Ouch – BMW, Volks and Merc will take a spanking. Europe could prove a far tougher proposition re trade for Trump – so he’ll be looking for a period of dislocation to strike.

Guess what Germany is about to give him..

Next week –

The US mid-terms?

Trump makes up with Xi on the phone?

Brexit solution – the noise about an Irish solution seems unlikely to appeal to the Ulster Taliban?

Hi-yield – see the charts and be worried?

Out of time and have a great weekend.

Bill Blain

Shard Capital

0207 186 9902