AT&T stores recommending RIM over the iPhone
In resuming its coverage of Apple, JMP Securities has issued a note warning of slower growth due to global economic factors and indicating that AT&T retail stores were quick to recommend RIM BlackBerry phones over the iPhone 3G, particularly for email.
Little room for upside surprises
The firm assigned Apple a Market Perform rating, citing new product cycles for the iPhone 3G and new iPods released this week but also noting a deceleration in year over year growth and warning that margins "appear to be near peak levels."
In a summary that referenced the slow selling Lisa from the early 80s and the Newton from the mid 90s, JMP stated, "Our concern with AAPL stock is that we believe there is little room for upside surprises."
The note also reported, "For the last 11 quarters management has given forward revenue guidance, Wall Street?s consensus has always been above that guidance, and for the most part the company has reported slightly above that consensus estimate."
Retail store reports
The firm performed checks at 31 Apple, 8 Best Buy, and 11 AT&T retail stores. Apple retail employees reported a "a slowdown from the initial frenzy" in iPhone 3G sales, with only 10% of stores remaining sold out of inventory. Best Buy reported steady sales with normal inventory levels.
At eleven AT&T stores it visited, JMP found that employees were twice as likely to initially recommend a BlackBerry Curve or Pearl over the iPhone when asked to suggest a "phone to access the Internet and check email."
When asked specifically about email, employees would consistently suggest a BlackBerry first. When browsing the web was mentioned, AT&T stores would always recommend the iPhone first.
Year over year performance
While Apple has seen accelerating its year over year revenue growth in every quarter from the March 2007 quarter (21% growth) through March 2008 quarter (43%), JMP notes that the latest June quarter saw only 38% growth over the previous year ago quarter. The firm sees revenue growth slowing again in the September quarter, and is modeling for 31% growth over last year's record revenues.
JMP also warned that in terms of operating margins, Apple's year over year growth has fallen or remained flat, although margins over the last year have stayed in a tight range from 17.2% to 19.2%, excluding the December 2007 quarter, which saw 21.1% operating margins.
Product lineup
"Apple has done an exceptional job of gaining [Mac] market share over the last several years," JMP noted, although it continued by saying, "Given the deteriorating macroeconomic environment, we believe it is unlikely that Apple will be able to match the 2007 feat in 2008."
Among iPods, the report highlighted that Apple's year over year average sales growth over the last four quarters have slowed to "a leisurely 9%, well below the double-and triple-digit growth enjoyed a few years ago." The firm noted that high end iPod sales are being replaced by iPhones, "leaving a skew to lower-end shuffle and nano products."
JMP called the iPhone a "hit product" that caught Nokia, RIM, Motorola, Palm and Samsung "flat-footed," but noted competitors are working to make "notable changes in strategy to deal with the iPhone."
"Samsung and LG have started to roll out iPhone 'clones' with touch screens, like the Samsung Instinct and LG Dare. While we believe these phones are not as good as the iPhone, we believe they have caused pricing issues," the report stated.
Apple in the overall economy
JMP also warned that Apple's stock is looking expensive in comparison with other large-capitalization technology stocks, stating, "We note that Apple has been growing much faster than its comparable companies, though many have higher margins."
The firm also stated "Because Apple has invested heavily in its own chain of retail stores, an overall economic slowdown or slowing demand for the company's products will not only affect sales growth but also impact profit margins due to the fixed-cost nature of the retail stores."
It further warned "As iPods and other music sales become a greater percentage of sales, Apple may experience pressure on overall gross margins because those products carry a lower gross margin." In its own earning reports, Apple noted that rapidly growing sales in the iTunes Store were getting large enough to have a downward impact on the company's overall margins, as it runs the music store primarily to make content available to its users, rather than to claim huge profits.
Little room for upside surprises
The firm assigned Apple a Market Perform rating, citing new product cycles for the iPhone 3G and new iPods released this week but also noting a deceleration in year over year growth and warning that margins "appear to be near peak levels."
In a summary that referenced the slow selling Lisa from the early 80s and the Newton from the mid 90s, JMP stated, "Our concern with AAPL stock is that we believe there is little room for upside surprises."
The note also reported, "For the last 11 quarters management has given forward revenue guidance, Wall Street?s consensus has always been above that guidance, and for the most part the company has reported slightly above that consensus estimate."
Retail store reports
The firm performed checks at 31 Apple, 8 Best Buy, and 11 AT&T retail stores. Apple retail employees reported a "a slowdown from the initial frenzy" in iPhone 3G sales, with only 10% of stores remaining sold out of inventory. Best Buy reported steady sales with normal inventory levels.
At eleven AT&T stores it visited, JMP found that employees were twice as likely to initially recommend a BlackBerry Curve or Pearl over the iPhone when asked to suggest a "phone to access the Internet and check email."
When asked specifically about email, employees would consistently suggest a BlackBerry first. When browsing the web was mentioned, AT&T stores would always recommend the iPhone first.
Year over year performance
While Apple has seen accelerating its year over year revenue growth in every quarter from the March 2007 quarter (21% growth) through March 2008 quarter (43%), JMP notes that the latest June quarter saw only 38% growth over the previous year ago quarter. The firm sees revenue growth slowing again in the September quarter, and is modeling for 31% growth over last year's record revenues.
JMP also warned that in terms of operating margins, Apple's year over year growth has fallen or remained flat, although margins over the last year have stayed in a tight range from 17.2% to 19.2%, excluding the December 2007 quarter, which saw 21.1% operating margins.
Product lineup
"Apple has done an exceptional job of gaining [Mac] market share over the last several years," JMP noted, although it continued by saying, "Given the deteriorating macroeconomic environment, we believe it is unlikely that Apple will be able to match the 2007 feat in 2008."
Among iPods, the report highlighted that Apple's year over year average sales growth over the last four quarters have slowed to "a leisurely 9%, well below the double-and triple-digit growth enjoyed a few years ago." The firm noted that high end iPod sales are being replaced by iPhones, "leaving a skew to lower-end shuffle and nano products."
JMP called the iPhone a "hit product" that caught Nokia, RIM, Motorola, Palm and Samsung "flat-footed," but noted competitors are working to make "notable changes in strategy to deal with the iPhone."
"Samsung and LG have started to roll out iPhone 'clones' with touch screens, like the Samsung Instinct and LG Dare. While we believe these phones are not as good as the iPhone, we believe they have caused pricing issues," the report stated.
Apple in the overall economy
JMP also warned that Apple's stock is looking expensive in comparison with other large-capitalization technology stocks, stating, "We note that Apple has been growing much faster than its comparable companies, though many have higher margins."
The firm also stated "Because Apple has invested heavily in its own chain of retail stores, an overall economic slowdown or slowing demand for the company's products will not only affect sales growth but also impact profit margins due to the fixed-cost nature of the retail stores."
It further warned "As iPods and other music sales become a greater percentage of sales, Apple may experience pressure on overall gross margins because those products carry a lower gross margin." In its own earning reports, Apple noted that rapidly growing sales in the iTunes Store were getting large enough to have a downward impact on the company's overall margins, as it runs the music store primarily to make content available to its users, rather than to claim huge profits.
Comments
That just doesn't sound right. Apple would be pretty stupid to enter into an agreement with a partner who can put their product on the back burner. They've done stupid things before, but I'd be hard pressed to believe that they would enter into such a dumb agreement.
I think that many American customers would be thrilled to get an iPhone from a service provider they actually like (or hate the least
Business Majors should not be allowed anywhere near tech.
If AT&T is steering customers away from the iPhone, does Apple have to keep the exclusivity (monopoly) arrangement with them?
That just doesn't sound right. Apple would be pretty stupid to enter into an agreement with a partner who can put their product on the back burner. They've done stupid things before, but I'd be hard pressed to believe that they would enter into such a dumb agreement.
I think that many American customers would be thrilled to get an iPhone from a service provider they actually like (or hate the least
More than likely the AT&T Reps aren't trying to talk anyone out of an iPhone, likely what is going on is someone asks a question about which handles email better....blah blah, and so AT&T reps just make the recommendation, right now with the Mobile Me issues, the RIM mail solution is just more reliable at this time. Mail on the iPhone is fine for what I do, but ther are a lot of features that some may want that right now is something handled better on a Blackberry, just from the network standpoint.
and on another note.
I've seen the word "Monopoly" thrown around a lot in the last few months and am frustrated because most of what people are talking about would not at all fit the textbook definition of Monopoly. Besides that, Monopolies are NOT illegal, anti-trust practices are.
So, may as well offer the person a BlackBerry first. If they take it, that's a sale, AND they can still sell the iPhone to someone else.
Now, that availability balance may be settling with time, but so far, I bet AT&T's actions haven't reduced iPhone total sales much if it all.
If AT&T is steering customers away from the iPhone, does Apple have to keep the exclusivity (monopoly) arrangement with them?
That just doesn't sound right. Apple would be pretty stupid to enter into an agreement with a partner who can put their product on the back burner. They've done stupid things before, but I'd be hard pressed to believe that they would enter into such a dumb agreement.
I think that many American customers would be thrilled to get an iPhone from a service provider they actually like (or hate the least
AT&T does not HAVE to push the iPhone on everybody. They have contracts with other companies, such as RIM, Samsung, LG, etc. No, these other companies are not exclusive, but they do bring revenue into AT&T just like Apple does. Being an iPhone fan, if I were working at an AT&T store I would certainly show customers the benefits of the phone, but if there is a salesman that prefers a Blackberry or a Windows Mobile phone over an iPhone, he/she is most likely going to recommend those to customers. Unless I'm mistaken, there is nothing in the contract explicitly stating that AT&T must push the iPhone, but they shoud recommend it at least as often as their other phones in order to be a good business partner, and the fact that they recommend it hands down for web browsing sounds like they are at least putting it out there as often as Blackberries and other phones. I understand your wishful thinking of trying to get the iPhone on other carriers, I'd rather deal with anybody other than AT&T too, but AT&T is not doing anything wrong, and they have every right to recommend a Blackberry to someone they think would rather have a Blackberry.
If AT&T is steering customers away from the iPhone, does Apple have to keep the exclusivity (monopoly) arrangement with them?
That just doesn't sound right. Apple would be pretty stupid to enter into an agreement with a partner who can put their product on the back burner. They've done stupid things before, but I'd be hard pressed to believe that they would enter into such a dumb agreement.
I think that many American customers would be thrilled to get an iPhone from a service provider they actually like (or hate the least
I'm glad AT&T is being honest with their customers. I'm an iPhone 3G (and iPod Touch) owner, and have a BlackBerry through work. No question that the interface is better on the iPhone, but the overall email experience is still better on the BlackBerry. (Just as there's absolutely no question that browsing is vastly better on the iPhone.) If I had to give one up it would be the BlackBerry in an instant, but if email were my #1 priority by any significant margin that might not be true.
AT&T
If you ask to browse the web, they recommend the iPhone.
If you ask to do email, they recommend Blackberry.
For these two parts.... who is surprised?
If you ask about both, you get some ratio of sometimes iPhone and sometimes Blackberry.
Who is surprised.
Gawd....... do you actually expect AT&T would NEVER recommend one or the other?
You could leave the entire story the same, and not change a single word, but change the title to:
AT&T stores recommend the iPhone over RIM
Gee, I wonder why they did it this way, just trying to tease the monkey?
"Our concern with AAPL stock is that we believe there is little room for upside surprises."
And then following them up with data like:
"While Apple has seen accelerating its year over year revenue growth in every quarter from the March 2007 quarter (21% growth) through March 2008 quarter (43%), JMP notes that the latest June quarter saw only 38% growth over the previous year ago quarter. The firm sees revenue growth slowing again in the September quarter, and is modeling for 31% growth over last year's record revenues."
That's right, he said "ONLY 38% GROWTH."
How in Holy Fuckdom do you call yourself a "Securities Firm" whilst perpetrating such ass-hattery?
Tell me how many publicly-traded companies can project a 31% increase in profits YOY with 99% certainty, and become shat upon by these stinky-fingered dinks?
They are a bunch of idiot-ass-munching market-manipulating sons-of-whores and should all have their asses removed.
As an example, at the end, it saysMeanwhile earlier it complained that ipod sales were stalling. So how can you have it both ways. iPods are greater percentage of sales, yet iPod sales it slowing?
Everyone knows Mac sales are exploding.
Great news is cast in a negative light,Did they really expect the "initial frenzy" to continue? 10% of the stores remain sold out?! Thats either great because it shows incredible sustained high demand, or still great because they've improved their supply channel to keep up with demand.
Etc. etc. I always wonder why analysts love to bash apple. I wish there was reporting that was less colored one way of the other. Just facts without so much commentary.
If AT&T is steering customers away from the iPhone, does Apple have to keep the exclusivity (monopoly) arrangement with them?
That just doesn't sound right. Apple would be pretty stupid to enter into an agreement with a partner who can put their product on the back burner. They've done stupid things before, but I'd be hard pressed to believe that they would enter into such a dumb agreement.
I think that many American customers would be thrilled to get an iPhone from a service provider they actually like (or hate the least
From the quoted sentence below it doesn't really sound like they are shunning the iPhone.
When asked specifically about email, employees would consistently suggest a BlackBerry first. When browsing the web was mentioned, AT&T stores would always recommend the iPhone first
.
Though I don't necessarily agree with recommending the recommending a BB just because someone says email. If it's Exchange, sure, but with more and more people going into smartphones there is more of a likelihood that they need a phone with a good web browser. Hotmail/MSN and Yahoo customers all check their email from the web, unless the they have paid accounts which allow for POP access. Many of these people also use other web-based email services, like Facebook and MySpace, for daily correspondence.
It's also possible that AT&T supply is still quite strained so that there is no stock immediately available for purchase or that it's rampant popularity means that they don't have to push the device like the do other smartphones. It could mean that the people doing these survey are simply coming in business attire which is giving the CSR an impression of what they think the customer might want. If we do the some survey with a bunch of teenagers I'd think the results would be quite different.
I will never understand how some f-Tard wall street Face-Rapist gets away with dumping all over AAPL and nobody kicks him in the taint for making statements like:
And then following them up with data like:
That's right, he said "ONLY 38% GROWTH."
How in Holy Fuckdom do you call yourself a "Securities Firm" whilst perpetrating such ass-hattery?
Tell me how many publicly-traded companies can project a 31% increase in profits YOY with 99% certainty, and become shat upon by these stinky-fingered dinks?
They are a bunch of idiot-ass-munching market-manipulating sons-of-whores and should all have their asses removed.
Said with the proper amount of dignity required in the current situation.
I will never understand how some f-Tard wall street Face-Rapist gets away with dumping all over AAPL...
But what do you really think about it?
Isn't that going to be largely subjective upon the sales person? Of course AT&T is going to recommend the Blackberry. The service costs more (59.99 IIRC). -- If I am wrong, I am wrong.. but it makes sense from a business standpoint. Whether it's right or not is a different matter.
Is that just for BB service, as in no voice? I pay 69.99, not counting "taxes" and "fees".
If AT&T is steering customers away from the iPhone, does Apple have to keep the exclusivity (monopoly) arrangement with them?
If that's monopoly, then every carrier is guilty of it. Every carrier gets exclusive versions, even if it's an exclusive color. Instinct is exclusive to Sprint, are you not going to complain about that, or is it just a double standard on your part?
Also, it's not in any legal definition of monopoly, I wish people would with throwing the word out as it actually applies to the situation in any non-retarted sense.
I think that many American customers would be thrilled to get an iPhone from a service provider they actually like (or hate the least
There are only two carriers in the US of any significance that offer GSM service.
Isn't that going to be largely subjective upon the sales person? Of course AT&T is going to recommend the Blackberry. The service costs more (59.99 IIRC). -- If I am wrong, I am wrong.. but it makes sense from a business standpoint. Whether it's right or not is a different matter.
Has anyone had any luck with actually setting up an exchange account on your iPhone? The apple tutorial really sucks. No doubt setting up Exchange email is a big issue for corporate users.
In a summary that referenced the slow selling Lisa from the early 80s and the Newton from the mid 90s, JMP stated, "Our concern with AAPL stock is that we believe there is little room for upside surprises."
This type of statement is necessary to indoctrinate investors with the idea that AAPL
will not have upside surprises. After a period of indoctrination, it is much more
likely that people will be able to actually be surprised by good results. This factor,
along with new products and the alleged short positions of some hedge funds, could
set the stage for an explosive rally later this year. (took my pangloss pills this morning
No wonder they recommend something they have in stock!