Apple's Q1 Earnings Results

1 Infinite Loop: The Mothership

Apple's upcoming Q1 earnings results, ending December 2017, have my attention. There is no shortage of pessimistic speculation that the iPhone X is selling worse than expected. That has driven down the stock price from its all time high of $180/share to the mid-$160s. That represents about a $75B reduction in Apple's market cap.

Some of the headlines sound alarming mentioning that Apple is cutting iPhone X production. Regardless of how well the iPhone X sold over the Holidays, Apple would still cut production for this quarter since it's not Christmas. But, at this point, that's speculative rationalization on my part. 

I read this article comparing one naysayer's prediction to previous articles forecasting doom and gloom.

Today, I saw a series of tweets from Ryan Jones who seemed to put iPhone X estimates in perspective (prefaced with my own notes).

Dec 2017 EPS Avg:3.78 High:3.88 Low:3.68

Currently, the Street is expecting Apple to sell 61 million iPhones in the second quarter, but Piecyk believes it will be closer to be 53 million.

I miss talking about iPhone units sales. :) It used to be my jam.

My Q1 2018 guess is 83M units (up 7%) at $825 ASP (up 19%).

= Total $68.5 BIIIILLION. Just from iPhone. Previous record $54.5B.

🔥 Up 26% on the biggest product ever. Oh and it's 10 years old. 🔥

Weak iPhone X demand:

WSJ says iPhone X Q2 cut was from 40M planned to 20M.

History: Q2 sales for the last two years were 51.1M and 50.8M. So 40M seems idiotic for just iPhone X.

80% of sales (40M) for the most expensive iPhone? No way.

40% of sales (20M)? Sounds bout right.

Let's just us our brains...iPhone X is probably 33-50% of all iPhone sales.

Recent Q2 sales were 61M, 51M, 50M.

If Apple forecasted 40M iPhone X, that would be 65-80% of sales to the highest end model. In Q2

Nope.

20M would be 33-40% iPhone X.

Yep. Sounds bout right.

Personally, I think the new UI, with no home button, is great. I found it simple to get used to and I love having a screen that's bigger than the iPhone 7+/8+, in the same form factor as the iPhone 7/8. Face ID works much better than I expected, too. There's no doubt that Apple will incorporate these two key features into all iPhones if the component costs are reasonable.

Here's Wall Street's earning forecast:

Gravity & Time

When we study how the universe behaves, we observe four forces (interactions): electromagnetic force, gravity, strong nuclear force, and the weak nuclear force.

Strong & Weak Nuclear Forces

The strong and weak nuclear forces are not directly observable by us since they operate on the atomic and sub-atomic scale, respectively.

The strong nuclear force is the strongest of the four forces and it's the force that holds matter together. It is approximately 137 times stronger than electromagnetism, a million times stronger than the weak nuclear force, and 1,038 times stronger than gravitation.

The weak nuclear force takes place over a distance of less than the diameter of a proton. It is the mechanism of interaction between sub-atomic particles.

Electromagnetism

Electromagnetism is a universal force we interact with and manipulate. This force travels as wave-particles (photons) and it includes light, heat, microwaves, x-rays, radio waves, etc. Since one of its properties is that it travels as waves, we can constructively and destructively interfere with it. Magnetism, which is part of this force, provides a great example of how this force works when playing with magnets. A north pole and south pole are attracted to each other, while like poles repel each other.

Being able to attract and repel electromagnetism, along with the ability to block it, is a key principle of this force. We pull down a window shade to block out light; we look into a mirror and it reflects (repels) light back at us.

Gravity & Time

Gravity is simply a force that brings all matter together. What prevents the entire universe from lumping together into one big ball of matter is gravity's interaction with the other forces. When climbing a tree and sitting on a limb, I can fell gravity pulling me down while the other forces overcome gravity's pull and keep me (and the tree limb) from falling to the ground.

Time, on the other hand, isn't an actual force. Rather, it's a dimension which can be measured, along with the three spatial dimensions (length, width, and height). Specifically, time is measured by the passage of events. But, on an absolute scale, time can vary which is clearly observed when traveling at speeds close to the speed of light. When a person travels at close to the speed of light, their immediate perception of events seems normal, but their surroundings will be sped up, like watching a time lapse movie. This isn't an illusion. The twin paradox is a thought-experment that illustrates the differences in the passage of time. If one identical twin travels on a rocket at close to the speed of light, they will return to find that their twin, who remained on Earth, has aged more. This phenomenon has been verified by flying a highly accurate atomic clock on an airplane and noticing the time difference when it has returned.

While time slows down as matter approaches the speed of light, there's an asymptote where matter can never reach the speed of light without requiring an infinite amount of energy. Light, on the other hand, is massless and it always travels at the speed of light which, in theory, means time has stopped for a photon of light.

What's interesting about gravity, as well at time, is it only acts in one direction or dimension. There seems to be no anti-gravity at any level. This makes it hard to measure since it can't directly react or be absorbed with a measurement device like, say, a light meter that measures brightness. While we can measure the passage of time, we can't measure its force, especially because that depends of its frame of reference. 

In other words, there's no way to block gravity or travel through time. Perhaps neither one truly exists as a fundamental quality, but rather as a consequence?

Sodomy, the UCMJ, and Jury Nullification

Summary: My experience with the crime of sodomy in the military and jury nullification.

There are a lot of similarities between civilian courts and arbitration in the U.S. compared to the U.S. military courts system.

Civilian vs. Military Courts (roughly speaking)

• Criminal trial = Military court-martial
• Jury = Members (of the court-martial)
• Jury foreperson = President (of the court-martial)
• Grand jury (Preliminary hearing) = Article 32 hearing
• "Judge Judy" =  Non-judicial punishment, Article 15 
• Misdemeanor = Summary court-martial
• State court = Special court-martial
• Federal court = General court-martial
• Civilian court (suing) = No military equivalent

There isn't a perfect equivalent between civilian and military courts. The determination regarding which court-martial level is appropriate is made by the convening authority who factors in what level of punishment is appropriate. A key point is that the military courts-martial system does not handle civilian cases (only criminal). Military members can pursue civil cases in civil court.

Jury Nullification and Sodomy 

Jury nullification is a concept where members of a trial jury can vote a defendant not guilty if they do not support a government's law, do not believe it is constitutional or humane, or do not support a possible punishment for breaking a government's law.

In 1996, I was the president of a special court-martial where a married Marine sergeant in my battalion was charged with adultery and a lesser specification of sodomy (specifically, oral sex). Adultery and oral sex were both criminal military offenses under the UCMJ, even if the latter was performed between a married, heterosexual, couple.

As we, the members of the court-martial (jury), deliberated, we effectively ignored the sodomy charge since it was consensual. At the time, I had no idea we had implicitly invoked jury nullification. Looking back, I'm sure we all would have felt a bit hypocritical had we found the sergeant guilty of the crime of consensual oral sex, even though his lover (a married civilian woman), has testified against him through her confession.

We found the sergeant guilty of adultery. We thought we'd be dismissed at that point, but then the judge ordered us to return the next day so we, the members, could determine the punishment and pass the sentence. I don't recall the specifics of the sentencing other than we were given a list of appropriate punishments and we voted on them, from the least to the most severe, until enough of us agreed. The beauty of the courts and Constitution is that their objective is to favor the defendant as much as possible.

Consensual Sodomy Today

"Don't ask, don't tell" (DADT) was the official military policy from 1994 – 2011 whereby closeted gay military members were allowed to serve in the Armed Forces. The irony, before and after DADT, is that consensual sodomy, even between married, heterosexual, couples, was illegal.

Fortunately, the National Defense Authorization Act for Fiscal Year 2014 decriminalized consensual oral sex and sodomy.