Analyst cuts AAPL rating on iPhone subsidy backlash, estimates $1B earnings miss

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Comments

  • Reply 21 of 94
    slurpyslurpy Posts: 5,328member
    Quote:
    Originally Posted by eksodos View Post


    Troubling news.



    Yeah, because history has shown us that analysts know their heads from their asses when it comes to Apple, right?



    Wrong. They've been wrong about.. pretty much everything, all the time, everytime.
  • Reply 22 of 94
    plovellplovell Posts: 818member
    This fellow's a clown.



    1. the time at which you could get an upgrade (without paying full price or ETF) was LENGTHENED and is now 20 months. That's AT&T - no-one else has had iPhone long enough. That's "lengthened", not "shortened".



    2. T-Mobile recently said that its competitive position was weakened by NOT having iPhone



    3. I'm sure any carrier that wishes can decide to no longer sell/support iPhone. I don't think we'll see a queue for the exit, will we?
  • Reply 23 of 94
    SpamSandwichSpamSandwich Posts: 33,408member
    Since AI refuses to provide the proper context behind these anaylsts who shoot off their mouths without regard for the truth, don't forget about this article. Kinda takes the heat away from all that hot air...



    http://tech.fortune.cnn.com/2012/04/...e-under-water/
  • Reply 24 of 94
    charlitunacharlituna Posts: 7,217member
    Quote:
    Originally Posted by Satorical View Post


    If dude wants to give me his stock, I'll be glad to take it. AAPL hasn't even begun to rock China. As for carriers refusing to play ball on subsidies, that is years away at the soonest. As long as the iPhone is a must-have, customers will want it, and carriers will have to provide it at a discount in the US, 'cause that's how this market works.




    Or they won't and they will find that folks are fine with buying full priced unlocked phones and going to regionals like Simplemobile for way cheaper service
  • Reply 25 of 94
    They had this guy on CNBC this morning.

    He pretty much thinks that the telcos will stop subsidizing JUST the iPhone no other handsets.

    It was a whole bunch of if, if, if, if... then, when asked about the future ITV or Apple TV set, he said that he couldn't count on that since there isn't any evidence from Apple that says they are going to make TVs.

    WHERE'S THE EVIDENCE THAT THE CELL COMPANIES ARE GOING TO STOP SUBSIDIZING THE IPHONE!?!?!?!?

    Analyst.



    Oh, and wasn't he the guy that was saying Qualcomm was going to hit $1000/share in the late 90's early 00's? How do people that get it wrong so much get to keep their jobs and bonuses?



    Sorry, rant off.
  • Reply 26 of 94
    granmastakgranmastak Posts: 298member
    Ya know, I wish this fool made a difference so I can pick up some more AAPL but no such luck. Nice try though!
  • Reply 27 of 94
    core2core2 Posts: 49member
    What no one bothers talking about is the fact that the high end androids carry as high a subsidy if not more when the carriers have to drop them to 0 dollars to get rid of them.



    Analysts don't have a clue how subsidies work with phones. For the record, it was the carriers that started doing this to attract more customers to generate more revenue, not the manufacturers so stop bitching when they manufacturers are charging more than 0 dollars to purchase phones. It is the only industry where the customer purchases a product below cost to get connected to the carriers network.



    This was the north american model, other areas in the world, I agree, subsidization is a relatively new thing but in North America it started with the 49.00 startac 3000 ....
  • Reply 28 of 94
    tundraboytundraboy Posts: 1,786member
    The analyst makes it sound like the carriers have the option not to offer hefty subsidies. Has he never heard of this thing called 'competition'? Well, yes a carrier has the option not to offer the iPhone subsidies, as long as it's willing to have customers desert them for one who does.



    Of course, the carriers can all simultaneously drop their iPhone subsidies and thus avoid customer defections. But they'll have very interesting conversations with the DoJ soon after that.
  • Reply 29 of 94
    b9botb9bot Posts: 238member
    Quote:
    Originally Posted by AppleInsider View Post


    BITG Research's Walter Piecyk cut his rating of AAPL stock from "buy" to "neutral" in a note to investors on Monday, saying that telecoms are growing weary of paying high subsidies for the iPhone with returns that don't match Apple's high margins from the handset.



    An AAPL downgrade hasn't been seen in quite some time as some analysts say the company will become world's first trillion-dollar corporation by the end 2014, but Piecyk asserts that wireless operators are looking to make changes that may lead to a drop in iPhone shipments next quarter.



    Piecyk asserts that after raising average revenue per user (ARPU) by churning customers with subsidies, telecoms are going to begin contracting in subsidy payouts which will leave Apple with less iPhone sales in its third fiscal quarter.



    "Operators, unwilling to stall the pace of ARPU growth, offered generous upgrade policies including some that enabled a fully subsidized phone upgrade only one year in to a two year contract," explains Piecyk. "We expect those policies to change as the faster upgrade rate of smartphones compared to legacy feature phones has been a costly surprise to post-paid and pre-paid operators, alike."



    At issue are the "aggressive" upgrade policies instituted by the world's carriers. For example, with the latest iPhone 4S launch, some carriers offered upgrade subsidies for customers who were only about one year into a two-year contract.



    Piecyk notes that AT&T is looking to adopt stricter upgrade policies to up margins and stop hemorrhaging cash in subsidy costs. If other major carriers follow suit, iPhone shipments may be affected as consumers may not be willing to pay full price for the handset. The carrier's margins are currently at a six-year low.



    ?We expect post-paid wireless operators to remain firm in their plan to stunt the pace of phone upgrades in 2012 and we expect to see some initial evidence of their success in the current quarter,? Piecyk says.



    In regard to how greatly this will affect Apple, Piecyk expects that "in the United States, we expect iPhone sales to decline 4 million sequentially to 9 million with the largest impact coming from AT&T, Apple?s largest customer." This would relate to a worldwide drop in sales of 27.5 million units in Apple's fiscal quarter third quarter, "resulting in a revenue estimate that is $1 billion below consensus.?





    AAPL stock closed up 2.55 points on Monday. | Source: Google





    Wireless companies are no doubt taking an upfront hit when subsidizing the iPhone, however data has shown that they are willing to take a short-term loss for longterm gains. Sprint, for example, is planning on surpassing the purchase terms of an already costly $15.5 billion contract with Apple as it expects to make back the loss on subscriber revenue.



    Adding to his iPhone assertions, Piecyk dismisses the rumors of an Apple HDTV launch in 2012 and downplays the Chinese iPad market citing the tablet's high price point.



    Piecyk qualifies his bold statements by saying that Apple is likely to announce another great quarter when the company holds its earnings call on April 6 from strong iPhone sales in China.



    "Of course, our thesis will not be supported in the current quarter as the pent up demand in China and the launch of the iPhone in 30 additional markets is likely to drive strong sales that will offset the sequential declines in other markets," Piecyk says.



    [ View article on AppleInsider ]



    Mind you this is 1 analyst out of many. He's been saying this for over a year now and look how far Apple's stock has climbed. Over $300 a share climb while he's still predicting some kind of doom and gloom. I'm sorry but Apple's products are doing quite well and the popularity isn't going away anytime soon if at all. Everyone thought the new iPad would do ho hum, instead it has sold better than even the first two.
  • Reply 30 of 94
    michael scripmichael scrip Posts: 1,915member
    I wasn't aware the carriers were supposed to make money from selling the phones. The carriers sell services... which is what they charge a monthly fee for.



    I'm an American... so I only know subsidies. My 16GB iPhone only cost me $200 because Verizon subsidized it. Basically... Verizon then wrote a check to Apple for the remaining $450.



    But Verizon does that because they will make it up by me paying a monthly fee over the life of my contract... or at least that's what's supposed to happen.



    If that's not working anymore... the carriers need to fix it.



    I could certainly afford paying the full $650 for an iPhone.... but not if I'll be paying the same monthly fee as a subsidized customer.



    Subsidized:

    $200 phone + $90 a month



    Unsubsidized:

    $650 phone + $90 a month (?)



    That doesn't make any sense at all...



    If the carriers aren't gonna "finance" new phone sales anymore... then it's back to the drawing board...
  • Reply 31 of 94
    anantksundaramanantksundaram Posts: 20,250member
    Quote:
    Originally Posted by eksodos View Post


    Troubling news.



    Sell! Sell!! Sell!!!
  • Reply 32 of 94
    kent909kent909 Posts: 730member
    Any day now. Just you watch. Waiting...waiting....!



    If it was not for AI nice interface i would never come to this site.
  • Reply 33 of 94
    anantksundaramanantksundaram Posts: 20,250member
    Quote:
    Originally Posted by SpamSandwich View Post


    ... sad clowns ....



    Ah, a good synonym for 'analysts'
  • Reply 34 of 94
    In other news, BITG Research's Walter Piecyk was just fired.
  • Reply 35 of 94
    Honestly this is right where apple wants us the consumer to be. I can't think of a time people were dedicated to the device rather than the carrier. No longer is it about reception rather than the device your using. Apple is gaining power in this arena. I know it's slightly exaggerating but I really believe this is just the beginning of the I influence they'll have. I personally am no longer married to any telco. They all are the se where I live so it's about the device for me. I'm loyal to apple, not AT&T.
  • Reply 36 of 94
    songemusongemu Posts: 11member
    If they're losing so much money, maybe they shouldn't be selling the Lumia 900 at such a blatant loss. There's your first mistake. Let the handset stand up on its own, not a $150 million ad campaign.
  • Reply 37 of 94
    We seem to have lost track of the reason why major carriers practice subsidizing phones in the first place - to lure customers in who might not necessarily afford/care to pay high prices for smartphones UPFRONT, but can tolerate higher fees on a monthly basis. If it has become too costly for them to subsidize, they can always raise the monthly fees which is a more tolerable option than to stop subsidizing which will most likely drive customers away. These CEOs are not stupid and I'm sure they learned their lessons from Netflix.



    I think the analyst took a calculated risk in making such a bold move, and in doing so, guarantee to be covered by all news media and got his 15 minutes of fame.
  • Reply 38 of 94
    Quote:
    Originally Posted by Slurpy View Post


    Yeah, because history has shown us that analysts know their heads from their asses when it comes to Apple, right?



    Wrong. They've been wrong about.. pretty much everything, all the time, everytime.



    The analysts have been right one quarter out off the last ten years. Even a monkey throwing darts at a random chart could do better than that.
  • Reply 39 of 94
    bushman4bushman4 Posts: 835member
    Heres an Anal-ist (no Mispelling) trying to tank the stock 10-20 points so that he can create a buying opportunity for himself



    OLD TRICK ...........Thats why he's at the firm he's at.
  • Reply 40 of 94
    mdriftmeyermdriftmeyer Posts: 7,503member
    Paid shill for the Telcos lowers Apple's rating. Very transparent.
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