Have I told you about Petrobras?

The Brazilian oil company that’s controlled by the Government of Brazil which has just elected a new President?

Yes

Save your breath – I don’t like companies exposed to Government interference – I can’t forecast political risk

But don’t you own Apple?

Yes, but that’s a US company

I know, but one of the risk factors in their 10K is,

“Substantially all of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in Asia, including China mainland…”

China also recently held an election where they also elected a “new”

Make that, “existing”…President for life

ok, not an “election” in the same sense – I didn’t notice any former Brazilian leaders getting roughly escorted from Congress mid-session…

Well, President Xi isn’t going to interfere with Apple in the same way as President Lula could interfere with Petrobras

Really?

You might want to ask Jack Ma what he thinks about that – if you can find him

Oh, and sweep for bugs first or he really will disappear when he tells you the truth

Don’t you think their COVID lockdowns are tantamount to “interference”?

Because I saw Twitter clips showing Foxconn employees scaling factory fences to escape an imminent Government lockdown

And I don’t recall ever seeing any PBR oil rig workers fleeing the Brazilian Government

Yes well, I can’t forecast the oil price

It’s not easy, but you seem to have faith in your ability to forecast iPhone sales & advertising & earthquakes..

Earthquakes?

“Many of the Company’s operations and facilities, as well as critical business operations of the Company’s suppliers and contract manufacturers, are in locations that are prone to earthquakes &other natural disasters.”

And your ability to forecast the global economy

Risk factor 1

… and adverse economic conditions can materially adversely affect the Company’s business, results of operations & financial condition.

Based on my phone call, I think those “adverse economic conditions” have arrived

huh?

I was cold-called yesterday by an operator offering me an iPhone 14 Pro for £40 pm including:

unlimited calls
unlimited data
unlimited texts

I suggested if they’re discounting iPhone 14 Pros this soon after launch,

there’s “unlimited risk” for shareholders

he didn’t laugh – maybe he owns shares

Well, I’m safe, Apple’s a great company

No, you’re not

They only grew EPS by 4% and 3% of that “growth” was from fewer shares thanks to buybacks

which have depleted their cash pile

In 2017, net cash was $150bn = 20% of their $800bn market cap

That’s now only $36bn, or 1.6% of their $2.2trillion market cap

“Margins” are high and a 4% free cash flow yield means no “safety”