iPhone 5s demand healthy, margins for 5s and 5c higher than iPhone 5, analyst says

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Comments

  • Reply 21 of 36
    Quote:

    Originally Posted by jragosta View Post





    Based on what?



    The lowest estimates for the 5C are around 2 M units. Keeping in mind that the 5C is essentially last year's phone (with a few minor improvements and a new case). How many previous generation phones have ever sold 2 M in one weekend?



    Heck, other than the iPhones and one or two Galaxy models, I don't think even any newest generation phones sold that many.



    Your post is an example of the kind of ridiculous unrealistic expectations that Apple has to deal with.

     

    Apple has a P/E as I type this of 11.98, Google 26.98.    If Apple's P/E matched Googles, Apple stock would be trading this morning at

    $1079.49.

     

    So, my $980.9 Billion dollar question to you is why is Apple's P/E so low?  

     

    If you can answer this, you'll probably understand why the growth of iPhone sales is important.

  • Reply 22 of 36
    Quote:
    Originally Posted by JamesMac View Post

     

     

    Apple has a P/E as I type this of 11.98, Google 26.98.    If Apple's P/E matched Googles, Apple stock would be trading this morning at

    $1079.49.

     

    So, my $980.9 Billion dollar question to you is why is Apple's P/E so low?  

     

    If you can answer this, you'll probably understand why the growth of iPhone sales is important.


     

    because Apple is caught be tween a old school manufacturer, and a new school 'e-commerce'  potential, and is being seen as the worst of the former (expensive in eventual commodity markets (PCs, Phones, Tablets), thus a governor on long term profits) , and none of the latter (ITMS, App Store, iBooks, in App purchases, iAds, iCloud).  Why, because no business has spanned that before, and the law of large numbers block analysts from seeing past the leverage this technology is bringing to the total economy.

     

    Amazon and Google have relatively low  barriers of entry by their primary products.   They make money and the stuff you're going to do anyway (search, read email, buy a book,)  Apple, you need to decide to buy there thing, and it's  basically $600 (or $2400 over 2 years).

     

    Thusly, apple is valued only for the money it has made and kept. (stock price tracks retained earnings since 2003), where as Google and Amazon are tracked on the money they 'could potentially' earn.

     

    So while iPhone growth is important for short term (especially with ASP remaining high), if the analysts had a clue, they would be measuring Apple Ecosystem Stickiness…  how many credit cards does Apple have on file,and what is the churn of accounts. low churn would mean that Apple is making more and more people customers. for the long game of micro payments (if you get 3Billion people spending $4 a month each, and you get 30% of that… that's ~4Billion a month in profits, without shipping a single device….)

     

     

    I'll take my money in BitCoin… thank you

  • Reply 23 of 36
    Quote:
    Originally Posted by TheOtherGeoff View Post

     

     

    because Apple is caught be tween a old school manufacturer, and a new school 'e-commerce'  potential, and is being seen as the worst of the former (expensive in eventual commodity markets (PCs, Phones, Tablets), thus a governor on long term profits) , and none of the latter (ITMS, App Store, iBooks, in App purchases, iAds, iCloud).  Why, because no business has spanned that before, and the law of large numbers block analysts from seeing past the leverage this technology is bringing to the total economy.

     

    Amazon and Google have relatively low  barriers of entry by their primary products.   They make money and the stuff you're going to do anyway (search, read email, buy a book,)  Apple, you need to decide to buy there thing, and it's  basically $600 (or $2400 over 2 years).

     

    Thusly, apple is valued only for the money it has made and kept. (stock price tracks retained earnings since 2003), where as Google and Amazon are tracked on the money they 'could potentially' earn.

     

    So while iPhone growth is important for short term (especially with ASP remaining high), if the analysts had a clue, they would be measuring Apple Ecosystem Stickiness…  how many credit cards does Apple have on file,and what is the churn of accounts. low churn would mean that Apple is making more and more people customers. for the long game of micro payments (if you get 3Billion people spending $4 a month each, and you get 30% of that… that's ~4Billion a month in profits, without shipping a single device….)

     

     

    I'll take my money in BitCoin… thank you


     

    In my opinion this one of the best explanations I've seen on AI about Apple's stock price. Rather than talk about stock manipulation, you have given the main reason as, basically, transitional confusion between 2nd wave and 3rd wave business.

  • Reply 24 of 36
    Quote:

    Originally Posted by TheOtherGeoff View Post

     

     

    Amazon and Google have relatively low  barriers of entry by their primary products.   They make money and the stuff you're going to do anyway (search, read email, buy a book,)  Apple, you need to decide to buy there thing, and it's  basically $600 (or $2400 over 2 years).

     


    Low barriers of entry? You understand what that means, right? That usually doesn't translate into high P/E ratio. 

  • Reply 25 of 36
    these guys are very smart. the untapped consumer group is mid tier. the 5c price tier will capture these consumers who are still with a non-apple device. Also its a 'comfortable' leap from 4th gen to 5th gen without big damage to pockets. lastly, the big opportunity is china, the 5c will be the most popular product in china making the 5c the core profit engine. I think they did not expect such high demand on 5s as the upgrade in features were small. that just goes to show how loyal consumers are / powerful the brand is. interesting thing is that the premium / power iphone loyals are really waiting on the 6 with bigger screen. then the 5c users will upgrade to 5s. these are some smart people at apple. gotta give it to them.

    PS - also the iwatch, iTV, iPad 5 still expected to come out over the next 6-9months. buy stock now. their innovation pipeline is strong.
  • Reply 26 of 36
    With those sort of increased margins, Apple is doomed for sure. Wall Street is still prefers companies that chase after market share not profit margins. It's definitely terrible news that the iPhone 5s is selling out as fast as it comes in. Wall Street will interpret that as low, low inventory which will prove a major hindrance to high sales. Higher profit margins and now that Apple has top branding will certainly drive down Apple's share price further. Oh, well. Since Wall Street continues to notice that Tim Cook isn't Steve Jobs there doesn't seem to be any hope for the company.
  • Reply 27 of 36

    Can we just round up these analysts and bury them in a chest at the bottom of the ocean?

  • Reply 28 of 36
    jragostajragosta Posts: 10,473member
    jamesmac wrote: »
    Apple has a P/E as I type this of 11.98, Google 26.98.    If Apple's P/E matched Googles, Apple stock would be trading this morning at
    $1079.49.

    So, my $980.9 Billion dollar question to you is why is Apple's P/E so low?  

    If you can answer this, you'll probably understand why the growth of iPhone sales is important.

    None of which has anything to do with your claim that the 5C has not sold well at all.

    So where's your evidence that the 5C hasn't sold well? And what is 'well', keeping in mind what I said about it being last year's phone with minor changes?
  • Reply 29 of 36
    Quote:

    Originally Posted by jragosta View Post





    None of which has anything to do with your claim that the 5C has not sold well at all.



    So where's your evidence that the 5C hasn't sold well? And what is 'well', keeping in mind what I said about it being last year's phone with minor changes?

     

    I'm not sure if it sold well or not but for a phone that is being marketed as a new phone, one should expect it to at least sell better than thr 4s did last year in the same line-up position... and that is one thing we will never know.

     

    In my estimation it should sell much better than the 4s did last year for the sheer fact that it is being advertised.

  • Reply 30 of 36
    Quote:

    Originally Posted by TheOtherGeoff View Post

     

     

    because Apple is caught be tween a old school manufacturer, and a new school 'e-commerce'  potential, and is being seen as the worst of the former (expensive in eventual commodity markets (PCs, Phones, Tablets), thus a governor on long term profits) , and none of the latter (ITMS, App Store, iBooks, in App purchases, iAds, iCloud).  Why, because no business has spanned that before, and the law of large numbers block analysts from seeing past the leverage this technology is bringing to the total economy.

     

    Amazon and Google have relatively low  barriers of entry by their primary products.   They make money and the stuff you're going to do anyway (search, read email, buy a book,)  Apple, you need to decide to buy there thing, and it's  basically $600 (or $2400 over 2 years).

     

    Thusly, apple is valued only for the money it has made and kept. (stock price tracks retained earnings since 2003), where as Google and Amazon are tracked on the money they 'could potentially' earn.

     

    So while iPhone growth is important for short term (especially with ASP remaining high), if the analysts had a clue, they would be measuring Apple Ecosystem Stickiness…  how many credit cards does Apple have on file,and what is the churn of accounts. low churn would mean that Apple is making more and more people customers. for the long game of micro payments (if you get 3Billion people spending $4 a month each, and you get 30% of that… that's ~4Billion a month in profits, without shipping a single device….)

     

     

    I'll take my money in BitCoin… thank you


     

    Interesting post.  Sounds a little like IBM before Lou Gerstner took over and transitioned IBM into a services company (albeit that was primarily business customers not consumers).    Just goes to show that it can be done successfully.

     

    The one tiny little detail that you may have overlooked can be illustrated by the following question:

     

    How much revenue does Apple make from  ITMS, App Store, iBooks, in App purchases, iAds and iCloud from customers using non-Apple hardware?  

     

    If the answer is zero or close to zero, then the whole business will still be predicated on iPhone and iPad sales.  With iPhone sales now at 13% of the smart phone market and declining, even if those customers spend far more than average, it's still going to limit growth versus a competitor who is at 80% and increasing.  

     

    Nasty little side note is that apparently some slimy Apple users have installed Gmail, YouTube and Maps :)

  • Reply 31 of 36
    sennensennen Posts: 1,465member
    Quote:
    Originally Posted by digitalclips View Post





    You do that too? I always have the 'better half's cast off' … so this Christmas i'll have an iPhone 5 at last image

     

    Haha, no, we've moved to staggering our upgrades. I'll hang onto my 4S for one more year, whilst she'll upgrade from her 4 now which is on it's last legs (we got it a couple of months before the 4S was released, couldn't wait). Also, she's not as fastidious with her devices as I am, I wouldn't want her banged up cast-off!  (Not that I said that, mind you!)

  • Reply 32 of 36
    Quote:

    Originally Posted by island hermit View Post

     

     

    In my opinion this one of the best explanations I've seen on AI about Apple's stock price. Rather than talk about stock manipulation, you have given the main reason as, basically, transitional confusion between 2nd wave and 3rd wave business.


     

    I claim no great insight.

     

    Everything I know about Apple Market Economics is from the discussions on Asymco.com, by Horace Dediu.

  • Reply 33 of 36
    Quote:
    Originally Posted by JamesMac View Post

     

     

    Interesting post.  Sounds a little like IBM before Lou Gerstner took over and transitioned IBM into a services company (albeit that was primarily business customers not consumers).    Just goes to show that it can be done successfully.

     

    The one tiny little detail that you may have overlooked can be illustrated by the following question:

     

    How much revenue does Apple make from  ITMS, App Store, iBooks, in App purchases, iAds and iCloud from customers using non-Apple hardware?  

     

    If the answer is zero or close to zero, then the whole business will still be predicated on iPhone and iPad sales.  With iPhone sales now at 13% of the smart phone market and declining, even if those customers spend far more than average, it's still going to limit growth versus a competitor who is at 80% and increasing.  

     

    Nasty little side note is that apparently some slimy Apple users have installed Gmail, YouTube and Maps :)


    last point first.

    last) You apparently confused me with a google hater.  I'm a gmail domain owner.  It's not nasty. 

     

    1) sounds nothing like IBM.  The IBM model is predicated on arbitrage labor rates and holding mainframes hostage, not on building a new delivery model for small and large businesses to implement commerce on their own.

     

    2) razors for razor blades.  You're worrying about why gillette won't support schick razors, while Apple is selling a shaving experience.  

    No one likes to get nicked while shaving.   All numbers lead that more people switch to iOS than away, and the first purchase may be due to economics, or ignorance (never owned a razor before… let's try this 99cent bic).   Once you realize that you're getting a lousy shave, you'll switch, if you can afford to, and if you can't, well, maybe we'll be  less expensive in a couple years, or you'll have more economic means.

     

    The tiny little detail you're ignoring is that 20% of the capita controls 75% of the non-food, non-energy consumer commerce.  

    And if the 'sellers' to those 20% can build a more compelling [consumer delight, lower cost to build, lower cost to operate, more $$ per transaction, less loss, and more return customers] experience with Apple, then all is good.

     

    The detail you think is missing is actually just part of the very long game plan.

    1) build a device that people value

    2) extend that device into app environment developers can exploit

    3) build in services that commerce requires

           - security 

           - frictionless point of purchase ['1-Touch']

           - payment services

           - delivery

           - marketing/advertising

           - loyalty programs

           - credit services

     

    So the long games plays out that Apple can start lowering the price of it's device get the next 5%tile of economic activity, driving more developers and more commerce into supporting the platform, thus driving a better back end profit on the 1-30% of the cost of the transaction (visa model).   All Apple is really doing is providing a vetted customer.  Then they turn the crank again, taking another price cut at the end device, bringing in more of the market.

     

    Apple also has enough money in the bank to become a bank, lowering it's costs even more (no transaction fees to them).

     

    This is a virtuous circle relationship.  The early adopters paid for the developers, who then expanded the value which drove more buyers which attracts sellers to the market.

     

    This eventually ends as the next economic turn of the pricing model will be a wash in profits.

     

    Then it's time to disrupt again. 

  • Reply 34 of 36
    Quote:

    Originally Posted by StruckPaper View Post

     

    Low barriers of entry? You understand what that means, right? That usually doesn't translate into high P/E ratio. 


     

    Consumers have a lower barrier of entry, not competitors.

     

    in the terms of consumers able to become consumers of their model (a username a password a credit card, and I'm cranking transactions), it means a huge P/E ratio.  

     

    And in google's case, they just need you to click.

  • Reply 35 of 36
    You do that too? I always have the 'better half's cast off' … so this Christmas i'll have an iPhone 5 at last :)
    That is hilarious. The biggest reason I was thrilled to see the 5c's colors was so that my wife could pick out a new phone and I'd be able to enjoy a 5 at last! I must say though... It will be tough to say goodbye to my stalwart 4. It has indeed been my trusty sidekick for quite a few years now. "Parting is such sweet sorrow..." Maybe I'll keep it in the truck for music and stuff, just for kicks...
  • Reply 36 of 36

    (post)
     

    This is a pretty insightful post, as was your previous one. Thanks.
    I didn't want to simply give a thumbs up.
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