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Pacific Crest sees larger $299 iPhone increasing profits, ups Apple price target to $635

post #1 of 67
Thread Starter 
Shares of Apple rose Tuesday morning after Pacific Crest upgraded its rating on the stock to "outperform," citing high expectations for the company's next iPhone, which the firm expects to sport a 4.7-inch display and $299 starting price tag.

iPhone Plus
Mockup of iPhone with 4.94-inch screen, created by Marco Arment.


Analyst Andy Hargreaves issued a note to investors on Tuesday, setting a new price target of $635, or about $100 more than its current trading price. He sees a larger iPhone priced starting at $299 increasing gross profit on replacement sales, and also attracting new customers that would otherwise have opted for an Android handset with a bigger display.

Estimates from Hargreaves suggest that Apple could gain as much as $4 in earnings per share in 2014 if 35 percent of iPhone customers were to opt for the larger display. His projections suggest Apple could capture 10 percent of the existing jumbo-sized phone market, with devices larger than 4 inches currently dominated by Google's Android platform.

Hargreaves is especially encouraged by the fact that Apple's new mid-range iPhone 5c has not had an adverse effect on sales of the high-end iPhone 5s. He takes this as a sign that consumers are willing to pay more for premium products in the smartphone space, and as a result he believes a $299 starting price for a larger iPhone wouldn't deter most buyers.

Currently, Apple's iPhone 5s and iPhone 5c come with screen sizes of 4 inches. Some rumors have claimed that Apple's next-generation handset, sometimes referred to as an "iPhone 6," will sport an even larger display, marking the second time that Apple has increased the size of the iPhone screen.

While some reports have claimed Apple has experimented with iPhone screen sizes approaching 6 inches diagonally, proven insider Ming-Chi Kuo of KGI Securities believes Apple won't exceed 5 inches on a larger iPhone display, citing the company's commitment to an "unwavering principle of one hand use." He expects the next iPhone to have a screen size larger than 4.5 inches, but smaller than 5.
post #2 of 67

So I assume this $299 starting price point is actually on-contract and in reality $100 more than the iPhone 5S? Otherwise, this makes no sense.

post #3 of 67

I presume $299 is the subsidized price?

post #4 of 67
So analysts wants cheaper or more expansive iPhones ?
This just show that they don't have the smallest cue of what is good for such company.
post #5 of 67
Quote:
Originally Posted by jusephe View Post

So analysts wants cheaper or more expansive iPhones ?
This just show that they don't have the smallest cue of what is good for such company.

You have hit a "nail on the head" moment. Last year Apple was hammered for not releasing a cheap iPhone, which would have made it join the race to the bottom like the Android camp. Now analysts who want to pump up Apple's stock price are going to put a positive spin on Apple releasing a more expensive iPhone.

post #6 of 67

I am so sick of seeing that same mock up for every single news story about a new iPhone. Please for the love of God change it up from time to time with new mock ups. 

 

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post #7 of 67
Just think of how low AAPL might get if a larger iPhone is not introduced this year.
post #8 of 67
Sorry, but the is bull. Apple didn't increase the price of the iPhone when it went 4", they won't do it if it goes 4.5" - 4.7". I could maybe see Apple releasing a 128GB model, though I think they should increase storage and make it 32/64/128 standard.
post #9 of 67
Originally Posted by Drunkzombie View Post
Just think of how low AAPL might get if a larger iPhone is not introduced this year.

 

Good. Then Apple can buy up all the stock and keep these imbeciles away from their money. 

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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post #10 of 67
Quote:
Originally Posted by leavingthebigG View Post
 

You have hit a "nail on the head" moment. Last year Apple was hammered for not releasing a cheap iPhone, which would have made it join the race to the bottom like the Android camp. Now analysts who want to pump up Apple's stock price are going to put a positive spin on Apple releasing a more expensive iPhone.

There's different arguments in favour of both. As the article says, a larger iPhone will attract users that might otherwise get an Android phone (I'm actually in this category), but smaller / cheaper iPhones would attract a lot of users and get them entrenched in Apple's ecosystem (as well as seriously damaging Samsung and reducing their ability to compete in Apple's core markets).

post #11 of 67
What proof is there that there is a larger segment of the buying public that is willing to pay for an oversized iPhone versus the currently best-selling size of iPhone? Surely any additional sales would be incremental. Analysts are unworthy of the attention paid to them by AI. Who is in bed with whom on these "reports"?

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GOA

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post #12 of 67
Quote:
Originally Posted by Tallest Skil View Post
 

 

Good. Then Apple can buy up all the stock and keep these imbeciles away from their money. 

Says someone who very likely owns no Apple stock or has the foggiest idea about finance. Many people's retirements and investments are heavily weighted with AAPL. Millions of middle class Americans would suffer and those manipulators will always make money regardless what the price does, so the only people that would suffer would be common shareholders and Apple. 

 

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post #13 of 67
Quote:
Originally Posted by jusephe View Post

So analysts wants cheaper or more expansive iPhones ?
This just show that they don't have the smallest cue of what is good for such company.

Yes, and new products, maintain margins, and "innovations".
post #14 of 67
Presumably if they increase prices at the high end they will reduce em at the lower end. Maintain rather than increase margins.

He's probably right about top end iPhone buyers, or potential buyers of subsidised phones being not very price conscious. The middle unsubsidised smart phone market is pretty price conscious though.

So, continue the 5C selling lower than the 4S now by $100, have a plastic 6C ( or just keep the 5S) selling at the price of the 5C now; and up the price for the 6 by $100.

Margins will stay the same or grow depending on the ratio of sales ( and the no doubt reduced price of the materials for the 5C this year) and sales grow.
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post #15 of 67
Quote:
Originally Posted by Rogifan View Post

Sorry, but the is bull. Apple didn't increase the price of the iPhone when it went 4", they won't do it if it goes 4.5" - 4.7". I could maybe see Apple releasing a 128GB model, though I think they should increase storage and make it 32/64/128 standard.

I think Apple will increase the price for a 5" but only if they release a new 4". Let's call it the iPhone 6 and 6+.
post #16 of 67
Quote:
Originally Posted by SpamSandwich View Post

What proof is there that there is a larger segment of the buying public that is willing to pay for an oversized iPhone versus the currently best-selling size of iPhone?...

I personally know several friends who have already switched to the GS4 purely due to the larger screen. Even with Android's shortcoming and noticeable lag, the larger keyboard and larger browser considerably enhances the experience. I'm looking forward to a larger/wider iPhone.

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post #17 of 67
Quote:
Originally Posted by gwmac View Post
 

I am so sick of seeing that same mock up for every single news story about a new iPhone. Please for the love of God change it up from time to time with new mock ups. 

 

This.  Especially since that mock up is unfavorable to the iPhone.  Its screen size is about the same size as the Samsung phone to the left (S3/S4?), but the physical dimensions are much larger.  If they are going to keep the fingerprint sensor as is they need to remove the top bezel almost entirely and keep at just the height of the speaker.

 

And if the prior article is anything resembling reality, don't have the camera bump out.  Instead make the whole phone a little thicker and include a larger battery.

post #18 of 67
Quote:
Originally Posted by Frood View Post
 

 

This.  Especially since that mock up is unfavorable to the iPhone.  Its screen size is about the same size as the Samsung phone to the left (S3/S4?), but the physical dimensions are much larger.  If they are going to keep the fingerprint sensor as is they need to remove the top bezel almost entirely and keep at just the height of the speaker.

 

And if the prior article is anything resembling reality, don't have the camera bump out.  Instead make the whole phone a little thicker and include a larger battery.

Yeah the mock up iPhone looks ginormous next to the Samsung on the left with the same sized display. A bigger iPhone would definitely need to shave off something from the forehead and possibly even the chin though the home button is the problem there. Unless they go oval no easy way to reduce chin bezel area much.

 

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Never argue with an idiot. They will only bring you down to their level and beat you with experience. 

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post #19 of 67
I don't think anyone's arguing that there should be a 'one size fits all' approach to iPhones. The larger iPhone is generally envisioned as an 'iPhone Pro'-style model while the cheaper one is more of an 'iPhone Mini' - they're not intended to replace the core iPhone line, merely as alternatives to the stock model. Same reason there's multiple sizes of iPad and Macbook - different people have different requirements (hell, I've even seen people on this forum express a preference for the old 3.5" iPhone), and if Apple can't meet their needs they're going to look elsewhere.
post #20 of 67

..Because Apple desperately needs to increase it's profits. Might go in the red any day now. 

post #21 of 67
Quote:
Originally Posted by gwmac View Post
 
..... Americans would suffer and those manipulators will always make money regardless what the price does...

This is the dumbest canard -- always fact-free -- that is thrown around regularly in these forums. If you know this to be the case, give us evidence. And no, anecdotes ('Madoff') don't count.

 

Incidentally, the millions of Americans who have their retirement money in Apple have it through institutional investors, apparently the very same that you think are 'manipulators.' 

 

You can't have it both ways.

post #22 of 67
Quote:
Originally Posted by Slurpy View Post

..Because Apple desperately needs to increase it's profits. Might go in the red any day now. 

It needs to maintain margins.
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post #23 of 67
Quote:
Originally Posted by anantksundaram View Post
 

This is the dumbest canard -- always fact-free -- that is thrown around regularly in these forums. If you know this to be the case, give us evidence. And no, anecdotes ('Madoff') don't count.

 

Incidentally, the millions of Americans who have their retirement money in Apple have it through institutional investors, apparently the very same that you think are 'manipulators.' 

 

You can't have it both ways.

I own over 1,000 shares in Apple that I bought myself that I am hoping will help me in retirement and I am sure there are a lot more like me who buy AAPL directly so you are full of it. I don't even know what point you are trying to make or defend since you didn't even explain what you are trying to say and yours was pretty fact-free yourself. Is your opinion in support of the one I was replying to. I was simply saying a drastic drop in AAPL would hurt a lot of ordinary people and Apple would not privatize even if that happened so exactly where do you disagree. 

 

Never argue with an idiot. They will only bring you down to their level and beat you with experience. 

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post #24 of 67
Originally Posted by gwmac View Post
Millions of middle class Americans would suffer… …the only people that would suffer would be common shareholders and Apple. 

 

I guess they’re the ones in charge of making up crap rumors and manipulating the stock, huh.

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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post #25 of 67
Quote:
Originally Posted by jusephe View Post

So analysts wants cheaper or more expansive iPhones ?
This just show that they don't have the smallest cue of what is good for such company.

That's the subsidized price, if you ask most people how much a 16 GB iPhone 5s costs they'll tell you $199, not $650.
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post #26 of 67
Quote:
Originally Posted by gwmac View Post
 

I own over 1,000 shares in Apple that I bought myself that I am hoping will help me in retirement and I am sure there are a lot more like me who buy AAPL directly so you are full of it.

I hope you have millions of dollars invested in other things too.  Having a meaningful fraction one's money tied up in one particular asset is ... ill advised.

post #27 of 67
Quote:
Originally Posted by Tallest Skil View Post
 

 

I guess they’re the ones in charge of making up crap rumors and manipulating the stock, huh.

Nope but they are the ones who suffer the most by far. Wall street always manages to make money which is why your salivating at a price drop was idiotic because it would hurt ordinary middle class people far more than wall street analysts. 

 

Never argue with an idiot. They will only bring you down to their level and beat you with experience. 

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post #28 of 67
Quote:
Originally Posted by malax View Post
 

I hope you have millions of dollars invested in other things too.  Having a meaningful fraction one's money tied up in one particular asset is ... ill advised.

Exactly where did I say that was the only stock I owned? or my one and only retirement plan? I will be sure to PM you if I want your advice. I bought my stocks in AAPL when they were around $10 bucks a share and then my 500 shares doubled with a split so it was not a huge amount of cash since you are so interested. 

 

Never argue with an idiot. They will only bring you down to their level and beat you with experience. 

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post #29 of 67
Quote:
Originally Posted by gwmac View Post
 
I own over 1,000 shares in Apple that I bought myself that I am hoping will help me in retirement and I am sure there are a lot more like me who buy AAPL directly so you are full of it. I don't even know what point you are trying to make or defend since you didn't even explain what you are trying to say and yours was pretty fact-free yourself. Is your opinion in support of the one I was replying to. I was simply saying a drastic drop in AAPL would hurt a lot of ordinary people and Apple would not privatize even if that happened so exactly where do you disagree. 

First, you ≠ all retirees with portfolios. And, your portfolio of Apple as retirement retirement portfolios of millions of Americans.

 

Second, it is not my job to give you any investment advice, but if your 1,000 shares of Apple are what you're counting for retirement, all I can say is that you're violating every basic rule on how to build a sensible retirement portfolio.

 

If you choose to be undiversified, that's your problem, not the market's. And to blame some phantom 'market manipulators' does not help solve your problem.

 

I sincerely recommend that you start to read up a bit about diversification/indexing, dollar-cost averaging, and developing a long-horizon point of view in making retirement-related investment decisions. (See, e.g., -- no, I don't work for any of these companies -- http://bit.ly/1qtjri0).

post #30 of 67
Quote:
Originally Posted by TheUnfetteredMind View Post
 

So I assume this $299 starting price point is actually on-contract and in reality $100 more than the iPhone 5S? Otherwise, this makes no sense.

If they can pull off a $300 unlock phone and still get decent margins it will be a masterpiece play.  They will have something for both the emerging markets and the unlock market and market shares will skyrocket. 

 

But, in the article, i think they mean the bigger screen phone will sell at a $100 premium of the current 5s prices. So $299 w/contract indeed. imo thats is a huge mistake if true, rising the price of high-end phones in a declining market would be dumb beyond belief.


Edited by herbapou - 3/11/14 at 11:28am
post #31 of 67
Quote:
Originally Posted by anantksundaram View Post
 

First, you ≠ all retirees with portfolios. And, your portfolio of Apple as retirement retirement portfolios of millions of Americans.

 

Second, it is not my job to give you any investment advice, but if your 1,000 shares of Apple are what you're counting for retirement, all I can say is that you're violating every basic rule on how to build a sensible retirement portfolio.

 

If you choose to be undiversified, that's your problem, not the market's. And to blame some phantom 'market manipulators' does not help solve your problem.

 

I sincerely recommend that you start to read up a bit about diversification/indexing, dollar-cost averaging, and developing a long-horizon point of view in making retirement-related investment decisions. (See, e.g., -- no, I don't work for any of these companies -- http://bit.ly/1qtjri0).

Can you read? Who and what are you even arguing. I wasn't blaming analysts or manipulators. You should be arguing with Tallest Skil not me since he was the one that said that. And again I never said Apple was my only stock and you would be the last person I would ever ask for any financial or indeed any advice on anything since you seem to have a rage problem and also lack basic reading comprehension skills. I own stocks in over 50 companies and have many other investments like real estate and many others less risky than stocks. Next time you throw a hissy fit you might want to make sure you are venting your rage at the right person and also stop arguing with straw men since you sure seem to like to make a lot of assumptions. 

 

Never argue with an idiot. They will only bring you down to their level and beat you with experience. 

Reply

 

Never argue with an idiot. They will only bring you down to their level and beat you with experience. 

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post #32 of 67
Quote:
Originally Posted by Tallest Skil View Post
 

 

Good. Then Apple can buy up all the stock and keep these imbeciles away from their money. 

 

maybe, but I do want a bigger phone regarless of how the stock reacts to it.  I am not gonna keep that 4s forever. I have wait yet another year to upgrade on bigger phone rumors that seems more serious this time.


Edited by herbapou - 3/11/14 at 11:15am
post #33 of 67
Quote:
Originally Posted by leavingthebigG View Post
 

You have hit a "nail on the head" moment. Last year Apple was hammered for not releasing a cheap iPhone, which would have made it join the race to the bottom like the Android camp. Now analysts who want to pump up Apple's stock price are going to put a positive spin on Apple releasing a more expensive iPhone.

 

no, they want a low price phone AND good margins.  Its doable, the margins will be the "apple premium" of the low price phone. Customers could roll the dice and buy a randon android cheap phone at $300 or get an iphone for the same price knowing it will be well balance and of good build quality.  The $300 android phones will have better specs because they sell with low margins, but they will still be more risky than getting an iphone.

 

or, if you like, the android phones with the spec of the $300 iphone will probably sell for $100 less.

 

That being said, Apple have volume and good engineers, they could come up with a way to produce a low price phone and pull out 30% gross margins and be so efficient at it that competition will match them up with spec equivalent phones with almost no margins. This would be a master piece play if they can pull something like that.


Edited by herbapou - 3/11/14 at 11:23am
post #34 of 67

I've been following Apple for a long time (as have most of you, of course) and I think we're due for one for their periodic releases where it's surprising in terms of features and price--in a good way.  Given component prices, I expect that Apple can (and will) deliver a phone with a larger screen with more storage at either the same price or $100 less (while maintaining margins).

post #35 of 67
Quote:
Originally Posted by malax View Post

I hope you have millions of dollars invested in other things too.  Having a meaningful fraction one's money tied up in one particular asset is ... ill advised.

Pretty sure if a person has managed to accumulate this much stock they don't need a lecture on how to manage their money.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #36 of 67
Quote:
Originally Posted by gwmac View Post
 

Exactly where did I say that was the only stock I owned? or my one and only retirement plan? I will be sure to PM you if I want your advice. I bought my stocks in AAPL when they were around $10 bucks a share and then my 500 shares doubled with a split so it was not a huge amount of cash since you are so interested.

Sorry for offending you somehow.  I wasn't implying anything.  I just said I hope that you don't have all your eggs in one AAPL basket (and you just confirmed that you don't).  I have no idea why you decided to tell us that you have over half a million dollars invested in Apple.  Maybe you shouldn't have mentioned it if it wasn't fair game to comment on.

post #37 of 67
Quote:
Originally Posted by gwmac View Post

Exactly where did I say that was the only stock I owned? or my one and only retirement plan? I will be sure to PM you if I want your advice. I bought my stocks in AAPL when they were around $10 bucks a share and then my 500 shares doubled with a split so it was not a huge amount of cash since you are so interested. 

Hats off to you. Not just buying at the right time but not selling when the stock started to take off. I did the former but was greedy way before I needed to be and sold at $32 pre split. Biggest regret ever.
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post #38 of 67
Quote:
Originally Posted by SpamSandwich View Post


Pretty sure if a person has managed to accumulate this much stock they don't need a lecture on how to manage their money.

Perhaps or perhaps not.  Good thing I wasn't giving a lecture.

post #39 of 67
Quote:
Originally Posted by gwmac View Post

Can you read? Who and what are you even arguing. I wasn't blaming analysts or manipulators. You should be arguing with Tallest Skil not me since he was the one that said that. And again I never said Apple was my only stock and you would be the last person I would ever ask for any financial or indeed any advice on anything since you seem to have a rage problem and also lack basic reading comprehension skills. I own stocks in over 50 companies and have many other investments like real estate and many others less risky than stocks. Next time you throw a hissy fit you might want to make sure you are venting your rage at the right person and also stop arguing with straw men since you sure seem to like to make a lot of assumptions. 

Wow, you sure put him in his place. I don't think I would seek out financial advice on an Internet forum either, but I think what he said is very solid advice. By the sounds of your portfolio, however, you seem to be doing quite well. I don't think you need to worry about your retirement. But I did find your remarks about having a hissy fit quite odd. After reading all these comments, I would say you're the one having a hissy fit. As for your original statement, if there is anyone who's retirement is going to be adversely affected by the price of AAPL, they need to get some professional advice ASAP.
post #40 of 67
Quote:
Originally Posted by asdasd View Post


Hats off to you. Not just buying at the right time but not selling when the stock started to take off. I did the former but was greedy way before I needed to be and sold at $32 pre split. Biggest regret ever.

Ouch.  On the other hand selling some of my shares when it hit $700 would have been a nice move.  Of course then I'd be kicking myself if it were over $1000 today (which was what plenty of people were predicting).

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