Cingular's smartphone sales dip ahead of iPhone
Cingular retail stores are already experiencing a slow down in sales of their high-end handsets ahead of iPhone, according to investment research firm PiperJaffray, which on Thursday raised its price target on shares of Apple to a new high of $140.
"We believe that the iPhone will benefit from this pent-up demand," analyst Gene Munster told Apple investors after conferring with fellow analyst Mike Walkley, who covers the mobile space for PiperJaffray.
Munster's checks reveal a robust market for high-end handsets in the above-$300 range. For instance, he said Nokia's N95 model is selling extremely well in Europe for €450 (over $600 US), where Apple remains on track to launch iPhone later this year.
"Therefore, our checks suggest that demand for the iPhone will be high at launch and will continue to grow as Apple expands the product into international markets," the analyst wrote in a report summarizing Apple's stellar March quarter results, announced Wednesday.
According to his analysis, upside potential to Apple's per-share earnings have not yet peaked given that he believes the company is entering "what will be the 3 strongest quarters" in its history. In his note to clients, Munster said iPhone, mid-year product launches, and continued Mac market share gains will combine as catalysts for the expected growth.
"The more important point is that Apple has the pole position as it capitalizes in a shift in computer buying behavior," he wrote. "It is obvious consumers want computing devices that are focused on entertainment and creativity."
Thus far, Munster says his team of analysts have not run across any credible competitive threats to Apple's core markets. For instance, Microsoft's Zune, which was conceived to steal share from the iPod, "is a flop." Similar, Dell and HP have failed to deliver PCs that rival the Mac," he said.
PiperJaffray remains confident that over the next several quarters Apple will hold its massive lead in portable audio and grow share in the personal computer market.
"We believe Apple's performance is sustainable for 3 reasons," Munster wrote. "1) we expect gross margin to stabilize above 30 percent in [the second half of the year] due to favorable component pricing and level product pricing; 2) Apple is entering three of its strongest product cycles ever with the iPhone, Apple TV and Leopard; 3) Apple continues to innovate and we do not expect the pace of innovation to slow."
For these reasons and others, the analyst raised his price target on shares of the Cupertino-based company to $140, up from $123.
"We believe that the iPhone will benefit from this pent-up demand," analyst Gene Munster told Apple investors after conferring with fellow analyst Mike Walkley, who covers the mobile space for PiperJaffray.
Munster's checks reveal a robust market for high-end handsets in the above-$300 range. For instance, he said Nokia's N95 model is selling extremely well in Europe for €450 (over $600 US), where Apple remains on track to launch iPhone later this year.
"Therefore, our checks suggest that demand for the iPhone will be high at launch and will continue to grow as Apple expands the product into international markets," the analyst wrote in a report summarizing Apple's stellar March quarter results, announced Wednesday.
According to his analysis, upside potential to Apple's per-share earnings have not yet peaked given that he believes the company is entering "what will be the 3 strongest quarters" in its history. In his note to clients, Munster said iPhone, mid-year product launches, and continued Mac market share gains will combine as catalysts for the expected growth.
"The more important point is that Apple has the pole position as it capitalizes in a shift in computer buying behavior," he wrote. "It is obvious consumers want computing devices that are focused on entertainment and creativity."
Thus far, Munster says his team of analysts have not run across any credible competitive threats to Apple's core markets. For instance, Microsoft's Zune, which was conceived to steal share from the iPod, "is a flop." Similar, Dell and HP have failed to deliver PCs that rival the Mac," he said.
PiperJaffray remains confident that over the next several quarters Apple will hold its massive lead in portable audio and grow share in the personal computer market.
"We believe Apple's performance is sustainable for 3 reasons," Munster wrote. "1) we expect gross margin to stabilize above 30 percent in [the second half of the year] due to favorable component pricing and level product pricing; 2) Apple is entering three of its strongest product cycles ever with the iPhone, Apple TV and Leopard; 3) Apple continues to innovate and we do not expect the pace of innovation to slow."
For these reasons and others, the analyst raised his price target on shares of the Cupertino-based company to $140, up from $123.
Comments
This is great news. My dad is planning on putting 5000 (his savings) into Apple Stock.
I heard recently that the stock market is like sex in high school. Nobody knows anything about it, but everybody talks about it like they're experts.
So, just to make sure that I'm clear here. If you have 5000 in Apple, bought at 100. It goes up to 200. You now have 10,000 dollars?
Also, if have 5000 bought at 100, that means you have 50 shares. So if the stock splits, and its at 50 dollars, you now have 100 shares?
First!
This is great news. My dad is planning on putting 5000 (his savings) into Apple Stock.
I heard recently that the stock market is like sex in high school. Nobody knows anything about it, but everybody talks about it like they're experts.
So, just to make sure that I'm clear here. If you have 5000 in Apple, bought at 100. It goes up to 200. You now have 10,000 dollars?
Also, if have 5000 bought at 100, that means you have 500 shares. So if the stock splits, and its at 50 dollars, you now have 1000 shares?
Correct, but if Steve Jobs gets into a car accident and dies on his way home from work today, you won't have $5,000, you'll have $50...that's the market for ya! I have 20 or so shares from when I used to work for Apple, and it's nice just to be able to say I'm a shareholder.
Correct, but if Steve Jobs gets into a car accident and dies on his way home from work today, you won't have $5,000, you'll have $50...that's the market for ya! I have 20 or so shares from when I used to work for Apple, and it's nice just to be able to say I'm a shareholder.
Agreed, that's the most unstable thing about owning Apple stock. I'm sure that with Jobs gone the stock would take a major hit. But I think if you stay in the boat and weather the storm, the people at Apple have the ability to move on without Jobs. I mean, you still have enormous talent working there, like Jonathan Ive.
First!
This is great news. My dad is planning on putting 5000 (his savings) into Apple Stock.
I heard recently that the stock market is like sex in high school. Nobody knows anything about it, but everybody talks about it like they're experts.
So, just to make sure that I'm clear here. If you have 5000 in Apple, bought at 100. It goes up to 200. You now have 10,000 dollars?
Also, if have 5000 bought at 100, that means you have 500 shares. So if the stock splits, and its at 50 dollars, you now have 1000 shares?
If you buy 500 Apple Stock at $100, and it goes up to $200, you now have stock that would be worth $10,000 if you can get someone to buy it at that price. Normally, that's easy, but if everyone decides to sell on the same day, the price will drop.
The key to stock is buying it at a low price, and then selling it off at its peaks. For example, if you would have bought stock last week at $90, and sold it off today at $100, you would have made about $500. Now, if the stock keeps climbing, it would have been bad to sell, but if it drops again, you re-buy right before you know it's going to spike up.
Unfortunately, you never really know what's going to happen.
First!
This is great news. My dad is planning on putting 5000 (his savings) into Apple Stock.
I heard recently that the stock market is like sex in high school. Nobody knows anything about it, but everybody talks about it like they're experts.
So, just to make sure that I'm clear here. If you have 5000 in Apple, bought at 100. It goes up to 200. You now have 10,000 dollars?
Also, if have 5000 bought at 100, that means you have 500 shares. So if the stock splits, and its at 50 dollars, you now have 1000 shares?
Your math is off. $5000 at $100/share would buy 50 shares not 500. But the concept is correct. But the profit is on paper only unless you sell it. I bought Apple at $26/share about 7 years ago. It has since split once, so my actual per share cost was about $13 and I now have twice as many shares as my original purchase amount. Now of course I wish I had bought a lot more.
Of course I have also bought a lot of other stock that has since lost as much as 90% of its value. Investing everything one has in one place is not a very good investment strategy.
Mark
If you buy 500 Apple Stock at $100, and it goes up to $200, you now have stock that would be worth $10,000 if you can get someone to buy it at that price. Normally, that's easy, but if everyone decides to sell on the same day, the price will drop.
The key to stock is buying it at a low price, and then selling it off at its peaks. For example, if you would have bought stock last week at $90, and sold it off today at $100, you would have made about $500. Now, if the stock keeps climbing, it would have been bad to sell, but if it drops again, you re-buy right before you know it's going to spike up.
Unfortunately, you never really know what's going to happen.
That's assuming you want to make a quick buck. If I put 1000 dollars in from my savings account right now, by the time I retire at 60 or so I'll be rich. I'm 22 right now. Obviously I'd have to keep an eye on Apple, but I'm doing that anyway, and I'm not even a shareholder.
How many people do you hear saying they wish they had bought from Apple 5 years ago? I don't see Apple going anywhere for the distant future.
Your math is off. $5000 at $100/share would buy 50 shares not 500. But the concept is correct. But the profit is on paper only unless you sell it. I bought Apple at $26/share about 7 years ago. It has since split once, so my actual per share cost was about $13 and I now have twice as many shares as my original purchase amount. Now of course I wish I had bought a lot more.
Of course I have also bought a lot of other stock that has since lost as much as 90% of its value. Investing everything one has in one place is not a very good investment strategy.
Mark
Yah, I just noticed my math error there.
Well, in my dad's case, he's already 60. If he puts in 5000 now, in 5 years, if he chooses to retire. I highly doubt the price will be lower then than it is now. And I'm sure that even if the profit would be small, it's probably better than the interest he would get by leaving it in Savings, (like 2%)
And BTW- He also has a retirement account elsewhere, so it's not *all* his eggs in one basket
That's assuming you want to make a quick buck. If I put 1000 dollars in from my savings account right now, by the time I retire at 60 or so I'll be rich. I'm 22 right now. Obviously I'd have to keep an eye on Apple, but I'm doing that anyway, and I'm not even a shareholder.
How many people do you hear saying they wish they had bought from Apple 5 years ago? I don't see Apple going anywhere for the distant future.
Don't forget inflation. If your savings account offers 4.5%, but inflation is at 2.2% then the growth is only 2.3%. As you have to pay taxes on that interest, depending on your tax rate, you could end with an actual rate of anywhere from 1.5% to 2%, because you also might have state and local income taxes.
Now, if you knew that you wouldn't touch that money, you would do well to put it into an IRA, because you are not taxed until you remove that money later on, and at the lower tax rate that you will probably have after you retire.
You can also invest IRA funds without having to pay taxes. Your gains then go right back into the next purchase.
This article is a little presumptuous IMO. Cingular's dip caused solely by the iPhone?
A pompous remark in my opinion.
-Clive
That's assuming you want to make a quick buck. If I put 1000 dollars in from my savings account right now, by the time I retire at 60 or so I'll be rich. I'm 22 right now. Obviously I'd have to keep an eye on Apple, but I'm doing that anyway, and I'm not even a shareholder.
How many people do you hear saying they wish they had bought from Apple 5 years ago? I don't see Apple going anywhere for the distant future.
Investing in AAPL is likely a good call right now, but if you're 22 and you want to be rich:
Max out your Roth IRA in mutual funds (Assuming a 10% return, your 4,000 will be 181,000 at age 62).
Contribute into a 401(k) - at least up to the match by your employer if not more (free money if available)
Then feel free to dabble in individual stocks, such as apple.
I promise, you will be rich
Don't forget inflation. If your savings account offers 4.5%, but inflation is at 2.2% then the growth is only 2.3%. As you have to pay taxes on that interest, depending on your tax rate, you could end with an actual rate of anywhere from 1.5% to 2%, because you also might have state and local income taxes.
I don't know, I thought that the interest on savings accounts wasn't any better than inflation right now.
Aside from agruing about Apple stock....
This article is a little presumptuous IMO. Cingular's dip caused solely by the iPhone?
A pompous remark in my opinion.
-Clive
They're just saying that the smartphone sale are undergoing a dip because of the anticipation.
That's not much different from people holding off on Mac purchases because of Leopard.
And they're just seeing a dip, not a total halt.
I also don't see why Munster expects that gross margin would stabilize at above 30% when Apple execs say that they don't expect it to remain that high. I hope it's just an issue of long term/short term.
Investing in AAPL is likely a good call right now, but if you're 22 and you want to be rich:
Max out your Roth IRA in mutual funds (Assuming a 10% return, your 4,000 will be 181,000 at age 62).
Contribute into a 401(k) - at least up to the match by your employer if not more (free money if available)
Then feel free to dabble in individual stocks, such as apple.
I promise, you will be rich
i cannot tell you how amazing investing in your Roth IRA is. $2000+time= >$90,000
at 2,000 a year... you can have alot of money
I don't know, I thought that the interest on savings accounts wasn't any better than inflation right now.
I don't remember if it's that high, my wife manages our one savings account, and we mostly use it to pay credit card purchases.
I didn't want to be seen as TOO negative.
They are trying to use the AT&T name now.
I also don't see why Munster expects that gross margin would stabilize at above 30% when Apple execs say that they don't expect it to remain that high. I hope it's just an issue of long term/short term.
I wonder. Apple didn't think it would beeak 30% this quarter, much less 35%. Now they are predicting 32%
Aside from agruing about Apple stock....
This article is a little presumptuous IMO. Cingular's dip caused solely by the iPhone?
A pompous remark in my opinion.
-Clive
I agree that the sentiment is hard to believe... until you actually go into a Cingular store. Blackberries are selling reasonably well-- I saw a couple move in the hour it took me to set up another line. In that hour, six or seven different people mentioned the iPhone (with the underlying intent to buy or plan to buy). The HTC phones were not moving, and I didn't see any interest in the Palm or HP units at all.
Over at Fry's, one sales person was talking to another and a customer about how they should wait for the iPhone; both sales guys indicated that they were going to buy one when it was out. Not sure if they realize they won't be selling them or not, but... there is a lot of interest from many different corners.
There is really a huge pent-up demand for the iPhone. It will be out of stock constantly on launch. People will be fighting to buy them.
Unless Apple releases a wide-screen iPod in the first three months of release based on the same foundation, the iPhone will easily sell 3-5M units before the end of 2007 in the US. If they beat the Christmas rush in Europe, I could imagine them selling another 1-2M units without a problem. (And that is just 10% of iPod unit sales being converted to iPhones!)
Time will tell. I personally am amazed at how much of a window Apple has created here though. International distribution and a solid marketing campaign will do wonders for the sales.
I wonder. Apple didn't think it would beeak 30% this quarter, much less 35%. Now they are predicting 32%
Seems like an indicator of more competitively priced products coming soon. They amortize development costs for Leopard and iPhone, so we wouldn't expect a huge hit on overhead/R&D costs.
Seems like an indicator of more competitively priced products coming soon. They amortize development costs for Leopard and iPhone, so we wouldn't expect a huge hit on overhead/R&D costs.
It depends on where they would want their margins to drop to.
The financial world has continually exhorted Apple to keep their margins at, or over 30%. Now they have been able to do so. So what would they drop it to?
If they dropped it by a couple of points (this quarter (they have estimated 32%), how would that affect product pricing?
Not by much. Perhaps a few percent. That wouldn't change sales at all. The Mac Book might drop from $1099 to $1049. Not much of a difference.
And then what happens when, through supply pricing and other costs, margins then dip to 28-29%? Does Apple raise prices again? Do they let the stock drop?