RBC says iPhone 3G 'Pro' won't boost iPhone momentum

***AppleInsider*** · 03-30-2009, 01:23 PM

The Royal Bank of Canada is maintaining its bearish near-term outlook on shares of Apple, claiming that although consumer interest in a new version of the iPhone remains healthy, sales of the new device are unlikely to provide the company with the same boost seen during the transition from the original iPhone to the iPhone 3G.

In a report to clients Monday, analyst Mike Abramsky laid out some pretty obvious predictions for the future of Apple's smartphone business. Specifically, he believes the company "will announce an updated iPhone 3G 'Pro'" at its annual developers conference slated for June 8-12, with a release to follow in July.

Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G.

A proprietary survey by RBC's ChangeWave market research division conducted this month found "healthy pent-up demand" for a new iPhone, with 20% of the 4,300 respondents saying they'd consider buying a 16GB iPhone 3G 'Pro' (11%) priced at $199 or 32GB iPhone 3G Pro (9%) priced at $299. Another 8 % expressed interest in the current iPhone 3G if it were to be priced at $99.

However, Abramsky told clients the update won't be enough to boost the iPhone's momentum above current levels and is only likely to sustain the touchscreen handset's current market traction. In support of this theory, he cited about a half dozen reasons, namely that the expected jump in internet download speeds is unlikely to be as dramatic as last year's switch from EDGE to 3G.

Although Apple has reportedly been discussing options that would make the next iPhone more affordable (1, 2) for customers during the global recession, Abramsky isn't holding high hopes for these changes either. Instead, he believes pricing will remain relatively the same, which is yet another reason he doesn't expect new models to spark a noticeable increase in consumer demand.

"The prior 3G product cycle coincided with the move to subsidized iPhone pricing (from prior $399/$499), boosting buying intentions est. 50-100%," he wrote.

Among the other factors cited by the analyst as weighing against a surge in momentum are the availability of pre-paid iPhones, pending launches from iPhone rivals, a slowdown in consumer spending, and a lack of new international territories for iPhone expansion.

That said, one international expansion prospect with "big" potential is China, Abramsky told clients. Assuming Apple finalizes a deal with the nation's second-largest wireless provider China Unicom, he believes the company could sell upwards of 1.5 million additional iPhones during the 2009 calendar year.

Abramsky also used his note Monday to quell rumors of an entry-level iPhone that he helped fuel just one month ago.

"Build data and other checks suggest Apple may not launch a lower priced iPhone as soon as generally thought," he wrote. "If so, his would help protect iPhone margins (est 55% at $400 subsidy), but might leave Apple vulnerable to share gains from pending lower-priced competitive alternatives."

The RBC analyst maintained his Underperform rating and bleak $70 price target on shares of Apple.

[ View this article at AppleInsider.com ]

**melgross** · 03-30-2009, 01:54 PM

I pretty much agree with this. Though I don't agree with the last two paragraphs. Unless something drastic happens, which he isn't spelling out, I don't see why the stock would drop that far. I also don't see the competition moving closer anytime soon.

Also, with all the more serious games coming out, it looks to be giving the phone some leading reason why it will be bought in good numbers. I know of some younger people who hadn't considered the phone up to now, but are thinking about buying one because of the new games coming out, the same ones they're playing on their 360's and PS3's.

libertyforall · 03-30-2009, 02:00 PM

An HSDPA phone should be firmware up-datable to HSUPA -- if not, shame on Apple! By the same token, it was sad that the 1st. Gen. iPhone was not up-datable to 3G -- it's called planned obsolescence, and I strongly frown upon it!

Booga · 03-30-2009, 02:08 PM

My guess is that the new iPhone will be the "iPhone HD", and that it will have both a performance and screen update, and that games will be able to be specified as "HD capable".

teckstud · 03-30-2009, 02:14 PM

Quote:

Originally Posted by Booga

My guess is that the new iPhone will be the "iPhone HD", and that it will have both a performance and screen update, and that games will be able to be specified as "HD capable".

Please, I can't even get an iMacHD- what makes you think the iPhone should get HD first?

psychodoughboy · 03-30-2009, 02:16 PM

Quote:

Originally Posted by libertyforall

An HSDPA phone should be firmware up-datable to HSUPA -- if not, shame on Apple! By the same token, it was sad that the 1st. Gen. iPhone was not up-datable to 3G -- it's called planned obsolescence, and I strongly frown upon it!

It's called not putting expensive antenna hardware into a phone that isn't set up to use it.

Nobody tell him about WiMAX or he'll get mad that the iPhone doesn't have an antenna for it yet.

DHKOsta · 03-30-2009, 02:18 PM

I wish Abramsky's reputation for having incorrect and overly bearish predictions about AAPL wasn't so well-known. I have cash and I'm just waiting for a heavy, unsubstantiated pullback.

dreyfus2 · 03-30-2009, 02:22 PM

Apple may not introduce an iPhone "nano", but this was made up by analysts anyhow. But they will certainly not miss out on the opportunity to put more price pressure on the competition (and, as they have highly favorable pricing on Flash RAM, they can). If they simply continue the current model at a lower price point, or introduce an entry-level and one "pro" model, I do not know, but I bet that the iPhone (a full-size one) will be available for less than 199 whenever the new model ships.

hypermark · 03-30-2009, 03:20 PM

I tell you, the biggest issue that I have with guys like Abramsky is that they are so cookie cutter in their analysis; little to no strategic big picture thinking, and Apple is all about strategic big picture combined with a relentless focus on executing the underlying tactics to make the strategy whole.

Case in point, the opening up of the 30-pin connector for third party accessories in iPhone OS 3.0, a move that I believe is destined to lead to all sorts of interesting hardware-software accessory innovations, in the process dwarfing the $2B+ iPod accessories industry, something that I blogged about in:

PC 1.0, iPhone 3.0 and the Woz: Everything Old is New
(http://bit.ly/7hLJY)

Check it out if interested.

Mark

OzzieTheOWl · 03-30-2009, 03:54 PM

"Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G."

Shouldn't that read one tenth of an inch thinner?

2.54 mm != 0.1 mm

bsenka · 03-30-2009, 04:00 PM

I always wonder what RBC's angle is in constantly bashing Apple's future profitability, etc.

Are they simply trying to temporarily deflate the stock price so they can cash in, or are they cow-towing to the wishes of their investors who happen to be Apple or Rogers competitors?

I mean, I'm not shy about voicing my negative opinions of some of the things that Apple does, but I'm coming from the perspective of an Apple customer since 1979 who just wants them to make the best products possible. I'm not out to claim that Apple can't sell 'unit x', only that 'unit x' may not be what I hoped for. I have no doubts whatsoever that Apple can sell as many 'unit x' as they project they will, no matter what that product might be, now and in the future.

matrix42 · 03-30-2009, 04:01 PM

I'm really amazed by these analysts, predicting case sizing down to 1/10th of an inch (or mm). How do they do that.

Yet manage to get so much other basic stuff wrong!

jcsegenmd · 03-30-2009, 04:03 PM

RBC and RImm are in bed with each other; well known,,,of course he's going to bear on aapl and bull about rimm. I'd recommend shorting RIMM before their thursday quarterly; I'd bet Abramsky is making doodie in his breeches; if only these guys had integrity...

More interesting question is what's on for the June launch. My money is on a 10-inch iTablet. I suspect there's a twist to the new product that we've not even considered. What about a 10" completely portable TV which incorporates a Kindle, a bar-code reader for direct service-consumer linking to a company's servers (as in delivery people, Apple stores, doctors' offices, etc. etc), an oversize game platform, not to mention netbook killer, all in a 1.5 pound package with a 10-hour battery using PA semiconductor designed chips

sausage&Onion · 03-30-2009, 04:08 PM

Analysts shouldn't be allowed to be parts of companies that can have such strong biases and self-interests.

I will purchase the new one just to jump from 16Gigs to 32Gigs. I dont even care about the others new hardware features that would be present here, although the possibility of controlling games via a game-dock is extremely enticing.

bsenka · 03-30-2009, 04:08 PM

Quote:

Originally Posted by jcsegenmd

RBC and RImm are in bed with each other; well known,,,of course he's going to bear on aapl and bull about rimm.

RIM! Of course, that makes perfect sense, and perfectly answers my question.

dreamraj · 03-30-2009, 04:14 PM

His price target is $70? Just the $28 billion or so cash that AAPL has is equivalent to $30+/share. So Mike Abramsky feels AAPL is actually worth $40 only? Wow, how is he even employed? No, really!!!!

jcw5002 · 03-30-2009, 04:15 PM

Anyone else feel like this report included some pretty specific details for speculation? I mean... speculating the change in thickness with exact numbers rather than saying "thinner"...

seems to me like somebody might have a pretty good source regarding the phone enhancements. Or maybe thats just me.

VinitaBoy · 03-30-2009, 04:18 PM

This is self-interest at work, folks. It is well known that RBC and RIM scratch either other's backs, partly for financial reasons, partly for nationalist well-wishing. This is clearly FUD and blatant stock manipulation. If AAPL goes down, RIMM benefits, and vice-versa.

Believe nothing Abramsky has to say about Apple, Inc. He's a shill, as is his company, for RIMM.

wizard69 · 03-30-2009, 04:21 PM

First, Apple has the potential to go as low as $50. That is very wishy washy but if the economy recovers quickly there will be a lot of investor interest in stocks that could be very profitable on a strong up tick. There are simply better money making opportunies than Apple stock and I expect that to remain true for a while.

The low cost iPhone is in everybodies pocket already. Really when the "Pro" comes out they will simply lower the price on the current model. Maybe at the same time reworking it for lower costs and slightly better performance. I just don't believe the iPhone costs $250 to produce. So with the contract a sub $100 price ought to be easy and an unlocked price of around $175. Yes I believe iPhone is grossly over priced and the rumors of 40% margins highlight this.

Since we really don't know the specifics of the "Pro" it really isn't possible to project interest. However if we take a stab at a guess we could come up with a machine that would really drive sales. For example give us a machine with three times the CPU performance, twice the RAM and an OpenCL capable GPU and the "Pro" would sell very quickly. A bigger screen would be nice two.

The point is we can't really project demand here until real specs leak. I just look at my iPhone and think about it's short comings and what would cause me to upgrade. CPU performace is certainly an issue and frankly I'd settle for less than 3X. Even a slightly larger screen would also be a huge factor.

Dave

SirROM · 03-30-2009, 04:36 PM

Quote:

Originally Posted by wizard69

The low cost iPhone is in everybodies pocket already. Really when the "Pro" comes out they will simply lower the price on the current model

I think this is wrong. AT&T and Apple both are selling the current iPhone without a contract in an effort to clear the current stock. It makes sense that they are not planning to continue selling the current iPhone after May. That is also why AT&T is selling a refurbished iPhone for $99 here in the USA and some European carriers are reducing the price of the iPhone 3G. They want to eliminate all current stock and possibly build up demand for the new model for 3-4 weeks before the new model is available in June.

Apple will only have 2 models for sale at any one time. As with the current models, the amount of onboard memory storage will be the price/model differentiator, not other hardware features.

Gilliam Bates · 03-30-2009, 04:38 PM

Quote:

Originally Posted by OzzieTheOWl

"Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G."

Shouldn't that read one tenth of an inch thinner?

2.54 mm != 0.1 mm

Yes, you are absolutely right. Only people measuring geometry in equivalent body parts would make such a mistake. The correct value is 2.5 mm thinner, not 100 microns. Quite a difference, I would say!!!

aaarrrgggh · 03-30-2009, 04:38 PM

Quote:

Originally Posted by hypermark

Case in point, the opening up of the 30-pin connector for third party accessories in iPhone OS 3.0, a move that I believe is destined to lead to all sorts of interesting hardware-software accessory innovations, in the process dwarfing the $2B+ iPod accessories industry, something that I blogged about in:

Exactly. This is a huge development which amazingly adds a whole new market for both the Touch and the iPhone. (I just hope they add Bluetooth support as well!) There are so many things where a display and a little processing power can make a dumb device very smart and useful and a "universal" interface makes it really easy to add the extra functionality. Right now, my only alternative is to bring a netbook to a job site.

Shunnabunich · 03-30-2009, 04:42 PM

Yeah, that's it, RBC, give Apple even more reasons to give Canada the cold shoulder. We weren't feeling left out enough.

Aquia33 · 03-30-2009, 04:42 PM

Funny he still has a job. He speculates, is wrong and then criticizes because Apple didn't deliver, then he does it all over again. Every quarter, I can set my clock by it!

I will be getting whatever the new iPhone turns out to be. It is upgrade time for us original 1st Gen. purchasers, then next year my wife's 3G will be 2 years old and also time for an upgrade. I believe I can buy a new iPhone every year for as long as they release upgraded products.

1/10 of a MM thinner than 3G - give me a break, and drink some more Kool Aid.

wwrightstufff · 03-30-2009, 04:43 PM

I think apple will be happy to sustain their current momentum with 17 million units sold in the last two years. How you can be bearish about that kind of volume? Also 1/10th of a mm sounds ridiculous, divide a dime by 10 and thats what they are predicting its new form factor will be. Why not say same form factor.

Also I think they are pushing the phone to appeal to many different audiences, games,music,Internet,e-mail, universal remote,etc. it seems to be taking place of the center of your digital hub giving you access to control anything anywhere.

dak splunder · 03-30-2009, 04:57 PM

Quote:

Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G.

I've been saying for a year now that the iPhone was one-tenth of a millimeter too thick. Finally!!
:d

walshbj · 03-30-2009, 04:58 PM

Abramsky: "Our investment thesis would change if we saw an upturn in forward demand indicators..."

Wow- gutsy outlook. Abramsky is one useful tool.

**melgross** · 03-30-2009, 05:07 PM

Despite what you guys are saying, what he said makes sense.

mdriftmeyer · 03-30-2009, 05:08 PM

A nation where > 30% of their GDP is in the oil industries is prognosticating on the banking aspects of the IT Industry.

Canada: We love you, but your bank is wrong.

Hell, you even needed AT&T "Canada" to even be connected to the rest of the IT backbone.

wwrightstufff · 03-30-2009, 06:05 PM

Quote:

Originally Posted by melgross

Despite what you guys are saying, what he said makes sense.

I think you overestimate people. It always amazes me how many broke ass people have an iPhone and no matter what the current economic situation is I don't foresee people changing their habits on cell phone purchases. That said the only reason it wont boost momentum is due to market availability,not because of specific hardware improvements or current economic situations. The iPhone 3G is already available in 88 countries where the original iPhone wasn't.

**melgross** · 03-30-2009, 06:10 PM

Quote:

Originally Posted by wwrightstufff

I think you overestimate people. It always amazes me how many broke ass people have an iPhone and no matter what the current economic situation is I don't foresee people changing their habits on cell phone purchases. That said the only reason it wont boost momentum is due to market availability,not because of specific hardware improvements or current economic situations. The iPhone 3G is already available in 88 countries where the original iPhone wasn't.

I think that guys here just love having the fun of dumping on these people. While they make mistakes, they usually do a good enough job. And it's always required to remember that what is released in a press package, such as what this article comes from, the real information, and numbers, are in the paid report, or subscription, which is what companies are getting. If they weren't considered to be useful, and accurate enough over time, they would be out of business.

dh87 · 03-30-2009, 06:32 PM

Quote:

Originally Posted by melgross

Despite what you guys are saying, what he said makes sense.

Actually, he is full of baloney. Last quarter, Apple earned about $.78/share in subscription earnings (that is, things that Apple has already sold and put the money in the bank but hasn't accounted for yet), and this number will be higher this quarter, essentially by definition. Apple has about $30B in cash. At a P/E of 15, I get that the subscription earnings plus the cash gives a stock value of $75. Just how much is this analyst expecting Apple to lose on the rest of its businesses this quarter to justify his $70 share price?

e1618978 · 03-30-2009, 06:39 PM

Where did you get the 78 cents? I didn't see an explicit number "carried in" when I looked. My calculations for the upcoming quarter are as follows:

I think that deferred revenue will add 0.995/share in revenue (6.2 B from balance sheet/7 quarters/890 M shares), and my deferred earnings calculation is this:

720 million - difference between last quarter GAAP and non-GAAP earnings. They sold 4.363 million iPhones that quarter, so each million iPhones results in $165 million in deferred earnings, or $23.57 million per quarter spread over 7 quarters.

Apple had sold 17 million iPhones before the current quarter started. Here, I have to make a simplification and assume that deferred earnings/iPhone are the same in the 1st gen, but since they only sold 1m phones, it is probably not important. 165/7x17/890 = 0.45c/share earnings carried into this quarter.

So 3 million iPhones would also result in $23.57*3/890 = 8c /share earnings in the quarter they were sold in.

Deferred Revenue per iPhone = 6.2B/17M = $364, $52.10 recognized per 7 quarters of deferment, and they also recognize 1/7 of that in the current quarter. So 3 million phones would add 17.56 cents in revenue to the quarter.

--

So my earnings prediction is

0.85 legacy product sales down by 15% or so from a year ago +
0.45 carried in +
0.08 iPhone sales rec. in quarter
-----
1.38

**melgross** · 03-30-2009, 06:46 PM

Quote:

Originally Posted by dh87

Actually, he is full of baloney. Last quarter, Apple earned about $.78/share in subscription earnings (that is, things that Apple has already sold and put the money in the bank but hasn't accounted for yet), and this number will be higher this quarter, essentially by definition. Apple has about $30B in cash. At a P/E of 15, I get that the subscription earnings plus the cash gives a stock value of $75. Just how much is this analyst expecting Apple to lose on the rest of its businesses this quarter to justify his $70 share price?

If you read my first post, that was the one thing I disagreed with.

But, your numbers are off as well.

anantksundaram · 03-30-2009, 07:02 PM

So, AI, does his analysis have anything other than iPhone-related prognostications, or is the price target solely based on one Apple product

If the latter, then it does not seem to be particularly useful or compelling. Move along.....

dh87 · 03-30-2009, 07:03 PM

Yes, I rushed through my calculation, and it's wrong. However, the deferred revenue is a big number--on the order of .50 to .75/share. I believe that Apple's own reporting is appr. 0.31/share for sales during the last two quarters (calculated by subtracting GAAP from non-GAAP earnings). Apple doesn't really provide enough information to get this number right, and it might be bigger. Apple's price might fall to $70, but I think that the Dow will be at 5500 if that happens.

LookingUp · 03-30-2009, 07:05 PM

shorting RY seems to be the profitable trade here.

It is the right thing to do.

anantksundaram · 03-30-2009, 07:19 PM

Quote:

Originally Posted by dh87

Apple's price might fall to $70, but I think that the Dow will be at 5500 if that happens.

Excellent point.

monstrosity · 03-30-2009, 07:38 PM

What a complete load of twaddle.

Whatever it is it will sell like hot cakes.

sennen · 03-30-2009, 08:32 PM

Quote:

Originally Posted by libertyforall

An HSDPA phone should be firmware up-datable to HSUPA -- if not, shame on Apple! By the same token, it was sad that the 1st. Gen. iPhone was not up-datable to 3G -- it's called planned obsolescence, and I strongly frown upon it!

do you frown upon all other phone manufacturers? (or manufacturers of any kind, for that matter)

the great thing about the current iPhone is that it won't be rendered completely obsolete by a new model - the new OS will give 3G owners added longevity.

03-30-2009, 01:23 PM	#1
*AppleInsider* Kasper's Automated Slave Join Date: Nov 1997 Posts: 6,151	RBC says iPhone 3G 'Pro' won't boost iPhone momentum The Royal Bank of Canada is maintaining its bearish near-term outlook on shares of Apple, claiming that although consumer interest in a new version of the iPhone remains healthy, sales of the new device are unlikely to provide the company with the same boost seen during the transition from the original iPhone to the iPhone 3G. In a report to clients Monday, analyst Mike Abramsky laid out some pretty obvious predictions for the future of Apple's smartphone business. Specifically, he believes the company "will announce an updated iPhone 3G 'Pro'" at its annual developers conference slated for June 8-12, with a release to follow in July. Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G. A proprietary survey by RBC's ChangeWave market research division conducted this month found "healthy pent-up demand" for a new iPhone, with 20% of the 4,300 respondents saying they'd consider buying a 16GB iPhone 3G 'Pro' (11%) priced at $199 or 32GB iPhone 3G Pro (9%) priced at $299. Another 8 % expressed interest in the current iPhone 3G if it were to be priced at $99. However, Abramsky told clients the update won't be enough to boost the iPhone's momentum above current levels and is only likely to sustain the touchscreen handset's current market traction. In support of this theory, he cited about a half dozen reasons, namely that the expected jump in internet download speeds is unlikely to be as dramatic as last year's switch from EDGE to 3G. Although Apple has reportedly been discussing options that would make the next iPhone more affordable (1, 2) for customers during the global recession, Abramsky isn't holding high hopes for these changes either. Instead, he believes pricing will remain relatively the same, which is yet another reason he doesn't expect new models to spark a noticeable increase in consumer demand. "The prior 3G product cycle coincided with the move to subsidized iPhone pricing (from prior $399/$499), boosting buying intentions est. 50-100%," he wrote. Among the other factors cited by the analyst as weighing against a surge in momentum are the availability of pre-paid iPhones, pending launches from iPhone rivals, a slowdown in consumer spending, and a lack of new international territories for iPhone expansion. That said, one international expansion prospect with "big" potential is China, Abramsky told clients. Assuming Apple finalizes a deal with the nation's second-largest wireless provider China Unicom, he believes the company could sell upwards of 1.5 million additional iPhones during the 2009 calendar year. Abramsky also used his note Monday to quell rumors of an entry-level iPhone that he helped fuel just one month ago. "Build data and other checks suggest Apple may not launch a lower priced iPhone as soon as generally thought," he wrote. "If so, his would help protect iPhone margins (est 55% at $400 subsidy), but might leave Apple vulnerable to share gains from pending lower-priced competitive alternatives." The RBC analyst maintained his Underperform rating and bleak $70 price target on shares of Apple. [ View this article at AppleInsider.com ]

03-30-2009, 02:00 PM	#3
libertyforall Registered User Join Date: Mar 2008 Posts: 77	Planned Obsolescence An HSDPA phone should be firmware up-datable to HSUPA -- if not, shame on Apple! By the same token, it was sad that the 1st. Gen. iPhone was not up-datable to 3G -- it's called planned obsolescence, and I strongly frown upon it!

03-30-2009, 04:03 PM	#13
jcsegenmd Registered User Join Date: Jun 2008 Posts: 30	Sleeping around RBC and RImm are in bed with each other; well known,,,of course he's going to bear on aapl and bull about rimm. I'd recommend shorting RIMM before their thursday quarterly; I'd bet Abramsky is making doodie in his breeches; if only these guys had integrity... More interesting question is what's on for the June launch. My money is on a 10-inch iTablet. I suspect there's a twist to the new product that we've not even considered. What about a 10" completely portable TV which incorporates a Kindle, a bar-code reader for direct service-consumer linking to a company's servers (as in delivery people, Apple stores, doctors' offices, etc. etc), an oversize game platform, not to mention netbook killer, all in a 1.5 pound package with a 10-hour battery using PA semiconductor designed chips

03-30-2009, 04:08 PM	#14
sausage&Onion Registered User Join Date: Apr 2007 Posts: 68	One sale right here Analysts shouldn't be allowed to be parts of companies that can have such strong biases and self-interests. I will purchase the new one just to jump from 16Gigs to 32Gigs. I dont even care about the others new hardware features that would be present here, although the possibility of controlling games via a game-dock is extremely enticing.

03-30-2009, 04:14 PM	#16
dreamraj Registered User Join Date: Jun 2007 Posts: 61	What a fool this Mike Abramsky! His price target is $70? Just the $28 billion or so cash that AAPL has is equivalent to $30+/share. So Mike Abramsky feels AAPL is actually worth $40 only? Wow, how is he even employed? No, really!!!!

03-30-2009, 01:54 PM	#2
melgross Global Moderator Join Date: Sep 2004 Location: NYC Posts: 19,612	I pretty much agree with this. Though I don't agree with the last two paragraphs. Unless something drastic happens, which he isn't spelling out, I don't see why the stock would drop that far. I also don't see the competition moving closer anytime soon. Also, with all the more serious games coming out, it looks to be giving the phone some leading reason why it will be bought in good numbers. I know of some younger people who hadn't considered the phone up to now, but are thinking about buying one because of the new games coming out, the same ones they're playing on their 360's and PS3's.

03-30-2009, 02:08 PM	#4
Booga Registered User Join Date: Jun 2003 Location: Tinton Falls, NJ Posts: 702	My guess is that the new iPhone will be the "iPhone HD", and that it will have both a performance and screen update, and that games will be able to be specified as "HD capable".

03-30-2009, 02:18 PM	#7
DHKOsta Registered User Join Date: Jan 2009 Posts: 88	I wish Abramsky's reputation for having incorrect and overly bearish predictions about AAPL wasn't so well-known. I have cash and I'm just waiting for a heavy, unsubstantiated pullback.

03-30-2009, 02:22 PM	#8
dreyfus2 Registered User Join Date: Jun 2007 Location: Frankfurt, Germany & Bangkok, Thailand Posts: 290	Apple may not introduce an iPhone "nano", but this was made up by analysts anyhow. But they will certainly not miss out on the opportunity to put more price pressure on the competition (and, as they have highly favorable pricing on Flash RAM, they can). If they simply continue the current model at a lower price point, or introduce an entry-level and one "pro" model, I do not know, but I bet that the iPhone (a full-size one) will be available for less than 199 whenever the new model ships.

03-30-2009, 03:20 PM	#9
hypermark Registered User Join Date: Jan 2008 Posts: 119	I tell you, the biggest issue that I have with guys like Abramsky is that they are so cookie cutter in their analysis; little to no strategic big picture thinking, and Apple is all about strategic big picture combined with a relentless focus on executing the underlying tactics to make the strategy whole. Case in point, the opening up of the 30-pin connector for third party accessories in iPhone OS 3.0, a move that I believe is destined to lead to all sorts of interesting hardware-software accessory innovations, in the process dwarfing the $2B+ iPod accessories industry, something that I blogged about in: PC 1.0, iPhone 3.0 and the Woz: Everything Old is New (http://bit.ly/7hLJY) Check it out if interested. Mark

03-30-2009, 03:54 PM	#10
OzzieTheOWl Registered User Join Date: Mar 2007 Posts: 15	"Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G." Shouldn't that read one tenth of an inch thinner? 2.54 mm != 0.1 mm

03-30-2009, 04:00 PM	#11
bsenka Registered User Join Date: May 2007 Posts: 345	I always wonder what RBC's angle is in constantly bashing Apple's future profitability, etc. Are they simply trying to temporarily deflate the stock price so they can cash in, or are they cow-towing to the wishes of their investors who happen to be Apple or Rogers competitors? I mean, I'm not shy about voicing my negative opinions of some of the things that Apple does, but I'm coming from the perspective of an Apple customer since 1979 who just wants them to make the best products possible. I'm not out to claim that Apple can't sell 'unit x', only that 'unit x' may not be what I hoped for. I have no doubts whatsoever that Apple can sell as many 'unit x' as they project they will, no matter what that product might be, now and in the future.

03-30-2009, 04:01 PM	#12
matrix42 Registered User Join Date: Mar 2009 Posts: 2	I'm really amazed by these analysts, predicting case sizing down to 1/10th of an inch (or mm). How do they do that. Yet manage to get so much other basic stuff wrong!

03-30-2009, 04:15 PM	#17
jcw5002 Registered User Join Date: Sep 2007 Location: Raleigh, NC Posts: 31	Hummm.. Anyone else feel like this report included some pretty specific details for speculation? I mean... speculating the change in thickness with exact numbers rather than saying "thinner"... seems to me like somebody might have a pretty good source regarding the phone enhancements. Or maybe thats just me.

03-30-2009, 04:18 PM	#18
VinitaBoy Registered User Join Date: Jul 2007 Posts: 98	This is self-interest at work, folks. It is well known that RBC and RIM scratch either other's backs, partly for financial reasons, partly for nationalist well-wishing. This is clearly FUD and blatant stock manipulation. If AAPL goes down, RIMM benefits, and vice-versa. Believe nothing Abramsky has to say about Apple, Inc. He's a shill, as is his company, for RIMM.

03-30-2009, 04:21 PM	#19
wizard69 Registered User Join Date: Jul 2003 Posts: 2,481	Interesting, I have a slightly different take on this. First, Apple has the potential to go as low as $50. That is very wishy washy but if the economy recovers quickly there will be a lot of investor interest in stocks that could be very profitable on a strong up tick. There are simply better money making opportunies than Apple stock and I expect that to remain true for a while. The low cost iPhone is in everybodies pocket already. Really when the "Pro" comes out they will simply lower the price on the current model. Maybe at the same time reworking it for lower costs and slightly better performance. I just don't believe the iPhone costs $250 to produce. So with the contract a sub $100 price ought to be easy and an unlocked price of around $175. Yes I believe iPhone is grossly over priced and the rumors of 40% margins highlight this. Since we really don't know the specifics of the "Pro" it really isn't possible to project interest. However if we take a stab at a guess we could come up with a machine that would really drive sales. For example give us a machine with three times the CPU performance, twice the RAM and an OpenCL capable GPU and the "Pro" would sell very quickly. A bigger screen would be nice two. The point is we can't really project demand here until real specs leak. I just look at my iPhone and think about it's short comings and what would cause me to upgrade. CPU performace is certainly an issue and frankly I'd settle for less than 3X. Even a slightly larger screen would also be a huge factor. Dave

03-30-2009, 04:42 PM	#23
Shunnabunich Registered User Join Date: Jul 2006 Location: Nova Scotia, Canada Posts: 76	Yeah, that's it, RBC, give Apple even more reasons to give Canada the cold shoulder. We weren't feeling left out enough.

03-30-2009, 04:42 PM	#24
Aquia33 Registered User Join Date: Feb 2006 Posts: 20	This Abramsky has been wrong before Funny he still has a job. He speculates, is wrong and then criticizes because Apple didn't deliver, then he does it all over again. Every quarter, I can set my clock by it! I will be getting whatever the new iPhone turns out to be. It is upgrade time for us original 1st Gen. purchasers, then next year my wife's 3G will be 2 years old and also time for an upgrade. I believe I can buy a new iPhone every year for as long as they release upgraded products. 1/10 of a MM thinner than 3G - give me a break, and drink some more Kool Aid. jgb

03-30-2009, 04:43 PM	#25
wwrightstufff Registered User Join Date: Dec 2001 Posts: 16	I think apple will be happy to sustain their current momentum with 17 million units sold in the last two years. How you can be bearish about that kind of volume? Also 1/10th of a mm sounds ridiculous, divide a dime by 10 and thats what they are predicting its new form factor will be. Why not say same form factor. Also I think they are pushing the phone to appeal to many different audiences, games,music,Internet,e-mail, universal remote,etc. it seems to be taking place of the center of your digital hub giving you access to control anything anywhere.

03-30-2009, 04:58 PM	#27
walshbj Registered User Join Date: Jan 2006 Posts: 502	Abramsky: "Our investment thesis would change if we saw an upturn in forward demand indicators..." Wow- gutsy outlook. Abramsky is one useful tool. File Encryption Tools Built Into Your Mac

03-30-2009, 05:07 PM	#28
melgross Global Moderator Join Date: Sep 2004 Location: NYC Posts: 19,612	Despite what you guys are saying, what he said makes sense.

03-30-2009, 05:08 PM	#29
mdriftmeyer Registered User Join Date: Nov 2004 Location: Northwest Posts: 2,695	Classic A nation where > 30% of their GDP is in the oil industries is prognosticating on the banking aspects of the IT Industry. Canada: We love you, but your bank is wrong. Hell, you even needed AT&T "Canada" to even be connected to the rest of the IT backbone.

03-30-2009, 06:39 PM	#33
e1618978 will burn in the Fiery Pit of Hell. Join Date: Jun 2003 Location: Colorado Posts: 5,317	Where did you get the 78 cents? I didn't see an explicit number "carried in" when I looked. My calculations for the upcoming quarter are as follows: I think that deferred revenue will add 0.995/share in revenue (6.2 B from balance sheet/7 quarters/890 M shares), and my deferred earnings calculation is this: 720 million - difference between last quarter GAAP and non-GAAP earnings. They sold 4.363 million iPhones that quarter, so each million iPhones results in $165 million in deferred earnings, or $23.57 million per quarter spread over 7 quarters. Apple had sold 17 million iPhones before the current quarter started. Here, I have to make a simplification and assume that deferred earnings/iPhone are the same in the 1st gen, but since they only sold 1m phones, it is probably not important. 165/7x17/890 = 0.45c/share earnings carried into this quarter. So 3 million iPhones would also result in $23.57*3/890 = 8c /share earnings in the quarter they were sold in. Deferred Revenue per iPhone = 6.2B/17M = $364, $52.10 recognized per 7 quarters of deferment, and they also recognize 1/7 of that in the current quarter. So 3 million phones would add 17.56 cents in revenue to the quarter. -- So my earnings prediction is 0.85 legacy product sales down by 15% or so from a year ago + 0.45 carried in + 0.08 iPhone sales rec. in quarter ----- 1.38 45 2a3 300b 211 845 833

03-30-2009, 07:02 PM	#35
anantksundaram Registered User Join Date: Sep 2006 Posts: 3,218	So, AI, does his analysis have anything other than iPhone-related prognostications, or is the price target solely based on one Apple product If the latter, then it does not seem to be particularly useful or compelling. Move along.....

03-30-2009, 07:03 PM	#36
dh87 Registered User Join Date: Jun 2003 Location: Somewhere in the Evil East Posts: 58	Yes, I rushed through my calculation, and it's wrong. However, the deferred revenue is a big number--on the order of .50 to .75/share. I believe that Apple's own reporting is appr. 0.31/share for sales during the last two quarters (calculated by subtracting GAAP from non-GAAP earnings). Apple doesn't really provide enough information to get this number right, and it might be bigger. Apple's price might fall to $70, but I think that the Dow will be at 5500 if that happens.

03-30-2009, 07:05 PM	#37
LookingUp Registered User Join Date: Sep 2008 Posts: 9	It's not just logical but shorting RY seems to be the profitable trade here. It is the right thing to do.

03-30-2009, 07:38 PM	#39
monstrosity Registered User Join Date: Feb 2007 Location: England Posts: 557	What a complete load of twaddle. Whatever it is it will sell like hot cakes.

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