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Shares of Apple slide, analysts cut targets in disappointment over iPhone 5c pricing

post #1 of 297
Thread Starter 
Market watchers hoping for Apple to introduce a radically cheaper iPhone model this week came away disappointed, as the company opted to maintain its smartphone pricing strategy rather than aggressively cutting margins.

iPhone


Shares of Apple were off nearly $30, or close to 6 percent, in morning trading on Wednesday as investors reacted to the announcement of the iPhone 5s and iPhone 5c. Negative sentiment surrounding the company mostly revolved around the iPhone 5c, which some market watchers hoped would be priced around $400 without a contract subsidy.

Instead, the entry-level 16-gigabyte iPhone 5c will run $549 unsubsidized in the U.S., while the same model can be had for $99 with a new two-year service contract. A high-end 32-gigabyte model will cost $649, or the same as a 16-gigabyte iPhone 5s.

Most notably, Credit Suisse, Bank of America Merrill Lynch, and UBS all cut their ratings on AAPL stock from "buy" to "neutral." Longtime Apple bear Alex Gauna of JMP Securities also maintained his "market perform" rating, saying he feels the iPhone 5c will especially be too expensive in China, which is a key emerging market.

iPhone


Though market reaction was mostly negative following Apple's iPhone unveiling, not all analysts were inclined to cut their targets. David Evanson of Canaccord Genuity actually increased his price target from $530 to $550, citing technical advantages of the iPhone 5s over Android-based competitors, including the new Touch ID fingerprint sensor, M7 motion coprocessor, and 64-bit A7 CPU.

"We believe new capabilities in iOS 7 available Sept. 18 along with the features and new colors for the 5s and 5c should drive strong sales, particularly to Apple's large iOS base, Evanson said.

Timothy Arcuri of Cowen and Company said in a note to investors Wednesday that Apple "took the high road" with this week's iPhone 5c announcement, opting for profits over market share. He has maintained his "outperform" rating for AAPL stock, saying that Wall Street estimates for 2014 look "very beatable."

iphone-5c-color-lineup.jpg


Gene Munster also maintained his "overweight" rating for AAPL, but admitted he was "wrong and disappointed" with the pricing of the iPhone 5c. Munster was also hopeful that Apple would announce a deal with China Mobile, but the iPhone is not expected to debut on the world's largest carrier until later this year.

Munster was expecting Apple to sell 50 million $300 iPhones in 2014, growing to 100 million in 2015, with 15 percent gross margin. Those projected sales have now been removed from his targets.

Amit Daryanani of RBC Capital Markets, meanwhile, showed optimism regarding the relatively high profit margins he expects Apple to achieve with the iPhone 5c. But he did admit that the $549 entry price of the iPhone 5c came in as a "slight negative," in his view, especially considering that the iPhone 4S remains as Apple's free-on-contract handset.
post #2 of 297

Yet they will sell millions and millions of these things and set new records.

 

I set a target that analysts will get it wrong again.  How about they investigate the holdings these companies have in Apple.  How nice to drive down the price in the week before it is released and buy cheap just to have it bounce back up when it sells "better than expected."

post #3 of 297
I think someone else said it as well: the strategy is a little elusive. If it were for the colour alone, the could have made the iP-C more like the existing iPod, which are simply gorgeous with their aluminium colours. It's a bit strange they chose plastic instead of coloured aluminium.
post #4 of 297
One thing I have to say is Apple probably know better than anyone else what a consumer is willing to pay for a phone. It sounds like the stock is down because analysis do not think people will pay the price.

Again it the ideal of sell at next to no margins so the total unit numbers are high. These analysis only look at one thing unit shipment, they forget that Apple bank account is the largest in the world. verse the guys trying to sell cheap can barely keep the doors open.
post #5 of 297

Could just ONE analyst be fired for incompetence, please? One of them. Start small. I need some validation that the entire market isn't now completely full of idiots.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #6 of 297
ANALyst are idiots. the 5C brings last year 5 with the usual $100 reduction, but with a much easier to manufacture (even if it is still very complex so costly) process.

That means that margins will be better, both from usual repeat orders downcosts & new process. They will probably make more margin on the 5C than on the 5S. On a phone guaranteed to be a success.

With the addition of docomo & china mobile to add this is big.
post #7 of 297
They set themselves up perfectly for next year.

Next year the iPhone 5C becomes $449.
The iPhone 5S becomes $549 and $649
and the iPhone 6 with a 4.5 inch screen becomes $649 upward.

Really a beautiful move.

- 5C = reworked from the iPhone 5 because of the iPhone 5's scratch problems and I think they wanted to change internals (China Mobile band?)

- 5S = Needed to keep the same form factor because of accessories and equipment that make these phones. Lots of innovation otherwise. Fingerprint sensor will be awesome.

- China Mobile = will come; they will ease into it

Only one thing lacking in iPhone innovation, the screen-size. That's it. Otherwise they did a fantastic job. None of this is easy.
post #8 of 297
Quote:
Originally Posted by Maestro64 View Post

One thing I have to say is Apple probably know better than anyone else what a consumer is willing to pay for a phone. It sounds like the stock is down because analysis do not think people will pay the price.

Again it the ideal of sell at next to no margins so the total unit numbers are high. These analysis only look at one thing unit shipment, they forget that Apple bank account is the largest in the world. verse the guys trying to sell cheap can barely keep the doors open.

It's because of a few factors:

- No TV

- Mac Pro rumored to cost $8,000

- No vision for the future

post #9 of 297

Munster was expecting Apple to sell 50 million $300 iPhones in 2014, growing to 100 million in 2015, with 15 percent gross margin.

 

Oh its so rich! Instead, Apple will:

 

Sell 40 million $550 iPhones, growing to 90 million in 2015, with a 40% percent gross margin.

 

AKA, Apple makes a crap load more money than the idiot's prediction, and sells almost as many phones.

post #10 of 297

The street always give the wrong reason of why a stock goes up or down.  AAPL began dropping yesterday after 11AM PT when the show was over.  The price of 3C was announced much earlier.  It seems the investors was waiting for the one last thing that is a 5 inch iPhone.  Apple has missed a huge market which is every bigger than iPhone.  The combined sales of larger smartphones are bigger than iPhone.  With a bigger iPhone Apple can resume growth. 

post #11 of 297
This pricing seems very shortsighted. They seem to want to maintain their extremely high profit margins at the cost of losing market share and customers. I didn't agree with some idiot analysts that suggested it should sell around $300 but I do think they could have still made a very hefty profit at $459 unlocked. There is a big middle ground between $300 and $549. That is not cheap by any means but would at least have been more attainable to tens of millions more consumers than the $549 here in the U.S. or the $733 price it will be sold at unlocked in China. They made absolutely no concession in pricing and just repeated the previous pricing model and stuck last years phone in a plastic shell. As a stockholder I really hope I am proven wrong and it sells beyond the wildest expectations in BRIC type countries and in the 1st world as well but I just don't see that many Chinese paying $733 for this iPhone. The ones on China Mobile that desperately want an iPhone will now likely just pay a little more to get the 5S instead. People worried that the 5C would cannibalize sales. The reality id it appears the 5S will cannibalize sales from the 5C since they are priced so close.

But like 2 previous posters said I think this pricing might have been necessary because this is a transition year. next year they will be able to offer the 5C for $449 along with a full sized iPhone model addition. A larger iPhone along with a cheaper one that also offers LTE will allow Apple to grow. The question is whether they waited too late and now so many people are locked into the Android ecosystem if these people can be pulled in or not. Switching ecosystems is not an easy process especially for many games which will not transfer progress for example.
Edited by gwmac - 9/11/13 at 9:19am
post #12 of 297
I am a bit surprised on the pricing but I am sure they will sell millions. it is worth it to see Gene eat crow.

Having said that, I want everyone who doubted Ming to apologize. The guy is well connected and proved 100% accurate. I'm waiting... and I told you so.
post #13 of 297
If IPhone is cheap , those sons of a bitches will worry the profit gross will be affected .
post #14 of 297
As with the PC wars now largely concluded, the mobile wars will eventually resolve to a more nuanced analysis. The value of the software that Apple now provides for free should be a significant factor in any cost/benefit analysis. There are other factors as well. However, the unwashed bi-peds of the forest are unable to consider more than one variable at a time. These are not customers that Apple wants or needs.
post #15 of 297
I think the analysts are missing the entire concept of Apple not going after the $150 or less market. That market segment makes ZERO profits.

I would be getting excited that Apple is transitioning to 64 bit far ahead of anyone else.
post #16 of 297
Who cares about what Wall Street thinks. They're the ones who thought Apple was going to fail the past decades. Apple does what it needs to do because it knows what it's doing.
post #17 of 297
AAPL, under Cook & Co, can't get a darn thing right! He is the Steve Balmer/Jerry Yang of Apple. And what the hell is with those yucky colors? Is Jony Ives color blind? Here we are back in the mid $400s and sinking thanks to Cook's management.
post #18 of 297
Quote:
Originally Posted by Tallest Skil View Post

Could just ONE analyst be fired for incompetence, please? One of them. Start small. I need some validation that the entire market isn't now completely full of idiots.

No you don't. They ARE idiots. So just quit reading them.

Daniel Swanson

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Daniel Swanson

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post #19 of 297

Apple will never ever be anything that resembles a full range smartphone manufacturer.  Analysts have to get this in their stubborn heads.  BMW doesn't sell to middle income third worlders.  Rolex doesn't sell to middle income third worlders.  Why do they demand that Apple sell to middle income third worlders?  Apple is an aspirational brand, that's how they make their money and they will never do anything that imperils their aspirational status.  Any growth for Apple will not come from reaching down to the lower end of markets, it will come from coming up with new aspirational products.  And only an idiot doesn't know that they are coming.

post #20 of 297
It's not the phone- it's the covers!
 
Where's the new Apple TV?
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Where's the new Apple TV?
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post #21 of 297

The one thing the Analysts are overlooking is that this isn't the true low cost phone for emerging markets. That will be all of the refurbished trade-ins phones. I am pretty sure that Apple has looked at how many phones will be coming off of contract this year. There then is probably a significant percentage of iPhones 4s coming off contract,  which then could  be traded in, at Apple stores,  to get cash for the upgrade to the new phones.  People in the emerging markets can get a higher end iPhone for either the cost or slightly higher then the cost of the lower end smartphones that is typically purchased in those countries from Samsung and others. Not sure what the pricing may be in China for the new devices. Analysts can only speculate but that is the largest possible new market for Apple as well.   As time goes on the upgrade cycle continues. The 5c and 5S of today will be in those markets within 2 years. Once stickiness is created with the used 4S's, people may then choose to upgrade to these phones then.  Apple is controlling the markets where these used phones will go and is a good play to reduce th stranglehold that cheap android phones have in these markets. 

post #22 of 297
Those that can, do. Those that cannot, analyze stocks.
post #23 of 297
Quote:
Originally Posted by MJ Web View Post

AAPL, under Cook & Co, can't get a darn thing right! He is the Steve Balmer/Jerry Yang of Apple. And what the hell is with those yucky colors? Is Jony Ives color blind? Here we are back in the mid $400s and sinking thanks to Cook's management.

 

I am sooooo tired of hauling this out but here it is:

 

Apple II 1977

Mac 1984

PowerBook 1991

Newton 1993

iPod 2001

iPhone 2007

iPad 2010

 

Average interval between major new product introductions:  5.5 years.  My advice is, if you only started paying attention when iPhone first came out, then be patient.  A 3 year gap is at the low end of the range.  Even if we limit the numbers to the Steve Jobs era.


Edited by tundraboy - 9/11/13 at 9:26am
post #24 of 297
Apple clearly doesn't care about market share or share price.

They want to make tons of money selling niche products.

Don't like it? Change the leadership.
post #25 of 297
I think Apple is right on to not sacrifice their brand for a few percentages of market share. Apple is a premium brand and will maintain that. Sure they have come down in price a little, but they are not willing to race to the bottom like Android devices. They simply won't. Good things cost money. If you want a cheap phone with no support, gobs or malware, terrible battery life, etc.... that's your call. Go and buy whatever cheap phone you want. I know tons of teens who are excited about the 5C. Sure it's not free, but it's in range. They are upgrading from free/cheap Android POS and getting something that has a quality camera (it's not all about the megapixels people), quality apps and music... and is just plain a fashion statement.

I think the analysts are wrong. I think this will sell like hotcakes in China, even at the higher price. I think Apple will sell everyone they can make and are able to support on their infrastructure. I see no point in trying to break the laws of supply and demand to satisfy some analyst's wet dream.
post #26 of 297
Originally Posted by DanielSW View Post
No you don't. They ARE idiots. So just quit reading them.

 

No, that's not a valid option. I already don't read them. That's not good enough. They need PUNISHED for their LIES. Should anyone in any occupation be allowed to just lie for a living? No jokes here, please.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #27 of 297
I am happy that Apple didn't bend over to the analyst, wall street or marketshare seeker, all these people want a quick $$$$,
Maybe Apple will sell more iPhones if they cut their margin to nothing, but nothing good will come out of that, you can ask Dell, HP and other PC manufacturer.
Did any of these analysts ask himself why Apple still standing when all it's old rivals slowly turning to dust?
Business is simple, make a product, but a good profit margin and sell. All other economical and business tricks give us nothing but fragile economy.
Selling at loss, cost or unsustainable margin should be illegal.
English is not my native language so feel free to correct me.
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English is not my native language so feel free to correct me.
Reply
post #28 of 297
They're disappointed the price wasnt lower.. If Apple lowered the price, their margin goes down, and that will disappoint Wall Street.. It's a no win scenario for Apple.
post #29 of 297
The stock is way down today because of 3 downgrades from Wall Street firms. People should remember this though:

apple-shifts.jpg
post #30 of 297
Quote:
Originally Posted by jkichline View Post

I think Apple is right on to not sacrifice their brand for a few percentages of market share. Apple is a premium brand and will maintain that. Sure they have come down in price a little, but they are not willing to race to the bottom like Android devices. They simply won't. Good things cost money. If you want a cheap phone with no support, gobs or malware, terrible battery life, etc.... that's your call. Go and buy whatever cheap phone you want. I know tons of teens who are excited about the 5C. Sure it's not free, but it's in range. They are upgrading from free/cheap Android POS and getting something that has a quality camera (it's not all about the megapixels people), quality apps and music... and is just plain a fashion statement.

I think the analysts are wrong. I think this will sell like hotcakes in China, even at the higher price. I think Apple will sell everyone they can make and are able to support on their infrastructure. I see no point in trying to break the laws of supply and demand to satisfy some analyst's wet dream.

 

Except they didn't come down in price even one dime. Do you honestly think the 16GB is actually worth the $733 price tag people will have to pay for it unlocked in China? It is a nice phone and I actually like it. It is not for me but I can appreciate the appeal but I certainly do not think a plastic phone is worth $733. At the very least they could have thrown consumers a bone by including a free case but even that will cost $30. The 5S at least gives you a lot more bang for your bucks with several new features. 

post #31 of 297

I think all the 5C and the 5S series are just gorgeous.

I feel tempted to buy one of each. But probably end up with the steel grey of the 5S series.

Anyway all these phones are worth every penny!!

Those analysts got it so backwards, which they did again and again in the past.

 

But I don't care. As long as Apple keeps on it's track and doesn't start to listen to those whiners.I am perfectly happy.

post #32 of 297
Quote:
Originally Posted by MJ Web View Post

AAPL, under Cook & Co, can't get a darn thing right! He is the Steve Balmer/Jerry Yang of Apple. And what the hell is with those yucky colors? Is Jony Ives color blind? Here we are back in the mid $400s and sinking thanks to Cook's management.

Cook & Co. Are doing great. The new phones will sell like hot cakes. Apple has earned its prosperity by producing and selling for a profit great products which factually improve people's lives. It's too bad that more companies and individuals aren't inspired to do likewise with their own enterprises. Instead, too many merely fantasize about "getting rich" by winning the lottery or by playing the stock market. It's no surprise to hear about all the disappoint such strategies produce.

Daniel Swanson

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Daniel Swanson

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post #33 of 297
The way I see it, saying Apple is missing on the 5+ inch smartphone market is like saying Apple is missing the dishwasher market.
Different products, different customers, different margins.

Apple is focusing on doing 1 thing right on every segment it is currently working on.

They won't have a product on each possible tech market, that's just not Apple.
post #34 of 297

One Analyst on TV earlier said that Apple disappointed by not innovating. When asked what Apple could've done to innovate the Analyst said "make the 5c even cheaper".

 

Crazy how some people view innovation :-(

post #35 of 297
Quote:
Originally Posted by 512ke View Post

Apple clearly doesn't care about market share or share price.

They want to make tons of money selling niche products.

Don't like it? Change the leadership.

I wish I could respond to the trolls but I'll take a stab at this one. Since when is selling the #1 (and perhaps #2) phone model a niche?

Analysts are clueless. They will ding Apple for maintaining margins at the C's price point and yet would ding Apple if the margins drop if the C had a lower price point.

Apple can't win with these fools. Both the 5s will sell millions with growth from the largest carriers in Japan and china.
post #36 of 297
Quote:
Originally Posted by grayum View Post

One Analyst on TV earlier said that Apple disappointed by not innovating. When asked what Apple could've done to innovate the Analyst said "make the 5c even cheaper".

Crazy how some people view innovation :-(

Just goes to show you that analysts never ran a biz or had an original idea ever. Innovation isn't something you schedule.
post #37 of 297

Hmmmm... everyone declaring that Apple is going to sell millions and millions of phones... as if it's a given. Absolutely no doubt.

 

For the first time ever, I'm on the fence about sales of iPhones in the holiday quarter.

 

Will be interesting.

na na na na na...
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na na na na na...
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post #38 of 297

What is really crazy is: if they were to sell the ipone 5c for $399, after selling millions and reports reduced profits we would be right back to $400... I'm sorry this is screwed up! They can't win for losing.

post #39 of 297
Quote:
Originally Posted by pmz View Post

Munster was expecting Apple to sell 50 million $300 iPhones in 2014, growing to 100 million in 2015, with 15 percent gross margin.

Oh its so rich! Instead, Apple will:

Sell 40 million $550 iPhones, growing to 90 million in 2015, with a 40% percent gross margin.

AKA, Apple makes a crap load more money than the idiot's prediction, and sells almost as many phones.

Munster is a moron, plain and simple. Had the phone been priced at $300 it would surely have moved more units than 50 million in the span of 2014. They sell twice that many with the uber high prices they charge, surely a lower cost of entry would increase, not decrease, volume. Why is that guy still employed. And suddenly Apple was going to drop their profit margin from 40% to 15% just to sell half as many phones? Wow! Just wow!
post #40 of 297
Quote:
Originally Posted by rain View Post

This makes no sense whatsoever.

Tallest Skill and the other frothing cultists have declared yesterday the single most important moment in all humanity - the greatest innovation of all collective human experience and knowledge was rolled out in a plastic phone...

how... how can this be?


This is why...
http://www.theonion.com/articles/apple-unveils-panicked-ideafree-man-at-launch-even,33814/
We see trolls like u every now and then. Why not stick to ur inferior devices ?
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