Wall Street encouraged by Apple's strong iPhone sales & positive guidance, still awaiting new produc
Market watchers were impressed by the results for Apple's June quarter, as iPhone sales came in higher than expectations and guidance for the September quarter was positive. But investors are still pinning their hopes on Apple's anticipated next-generation iPhones and iPads to be blockbuster hits.
Following Apple's quarterly results on Tuesday, analysts offered their mostly positive responses to the fact that the company sold a June quarterly record 31.2 million iPhones. Here, AppleInsider offers a rundown of their reactions.
"We believe more favorable component pricing (NAND, HDD, LCD) and improved iPhone mix are tailwinds that help offset currency volatility and product transition costs in the September quarter," she wrote.
As for the stronger-than-expected iPhone results, she noted that Apple's 20 percent year-over-year growth came in spite of a channel inventory reduction. In addition, the U.S., Japan, and the U.K. all grew iPhone sales north of 50 percent.
The weak spot for Apple's June quarter was the iPad, which saw its first-ever sales decline. Huberty expects that demand will return when the company debuts a fifth-generation iPad in the near future.
Issues for the company, according to Moskowitz, are a slowdown in China, and soft iPad sales. But he expects near-term growth from anticipated iPhone launches in September and a new iPad mini in October.
"In such a case, we think any temporary pressure on gross margin related to new products is likely deferred to (the December quarter)," he said. "This dynamic could pressure gross margin, but we think that the offset is higher revenue growth."
A key question for Moskowitz is whether Apple will stagger its new product launches this fall. He cited shortages seen by Apple last year that potentially cost the company "customer conversions."
"After a whirlwind of new product introductions in the fall of 2012, Apple has been virtually silent on the product introduction front for nine months," he said. "That should change beginning in September/October with the launch of the next-generation iPhone and iPad."
While he sees updates to Apple's best-selling products on the horizon, Wolf does not anticipate that the company will introduce products in new categories this year. Rumors have suggested Apple is working on both wearable technology, such as a so-called "iWatch," as well as a full-fledged television set.
"These initiatives suggest that Apple should once again be able to enter new product categories in 2014, although it is difficult to imagine that they will be the revenue producers that the iPhone and iPad have turned out to be," he said.
For now, the risk for Apple is whether the company can continue to innovate at the same pace without legendary co-founder Steve Jobs at the helm.
"We are approaching a point when an answer might be forthcoming," he said.
Following Tuesday's results, Munster admitted that the iPhone franchise is in better shape than he previously believed. He estimates that average selling prices on the iPhone 5 and iPhone 4S were unchanged, while price cuts on the iPhone 4 in emerging markets likely made the low-end handset's average selling price drop 15 percent.
Apple currently finds itself in "transitional quarters," he said. But that's anticipated to change over the next six quarters, when he sees a range of new products debuting, beginning with a cheaper, plastic iPhone model this fall.
Munster has been a longtime vocal proponent for an Apple television, and he continues to believe that the company will introduce such a product late this year. He expects Apple will also unveil an "iWatch" in 2014.
"We find it curious that flattish revenue guidance implies there may not be any greater pause ahead of the new iPhone this year than there was last year, despite Apple effectively previewing a launch timeframe ? particularly interesting given the lowering of iPhone channel inventory, presumably to manage the transition and limit price protection," he said.
Potential reasons for this may have been strong demand in July, or greater confidence for a bigger initial launch in late September.
As for the iPad, shipments were down 14 percent year over year, but when adjusting for reductions in channel inventory, the true drop-off was just 3 percent. Um believes iPad sales were likely soft in the U.S. and Europe, as Apple highlighted double-digit growth in China, Japan, Canada, Russia, Latin America, the Middle East, and India.
For investors, he believes there will be "no clarity until new products arrive," as he noted that Apple refused to say whether or not the September quarter would include a significant product transition.
"In fact, the better-than-expected margin guidance gives rise to concerns that the new iPhones could come either at the very end of the September quarter (and have no material impact in September) or is pushed to the December quarter," he said.
Daryanani believes Apple's guidance for the next quarter implies that an "iPhone 5S" will go on sale in either the second or third week of September.
He also noted that Apple's "blended" average selling price for the iPhone was at $581, representing a 17 percent quarter-over-quarter decline. That suggests to him that sales of the legacy iPhone 4 and iPhone 4S were more robust when compared to the iPhone 5.
He expects that an iPhone with a screen size at about 5 inches could be a catalyst for the company over the next 3 to 9 months. He also anticipated a new iPad mini, and potential new product category announcements, such as a television or smart watch.
JMP Securities has maintained its "market perform" rating for AAPL stock. Gauna said he's hoping to see "better visibility or confidence in new earnings growth drivers" before he's willing to view Apple as a good buy for investors.
Following Apple's quarterly results on Tuesday, analysts offered their mostly positive responses to the fact that the company sold a June quarterly record 31.2 million iPhones. Here, AppleInsider offers a rundown of their reactions.
Morgan Stanley
Apple's guidance for the September quarter projects gross margin of between 36 and 37 percent, which was a surprise to analyst Katy Huberty. She, like many others, expects new products to debut in the quarter, and product transitions usually negatively affect margins."We believe more favorable component pricing (NAND, HDD, LCD) and improved iPhone mix are tailwinds that help offset currency volatility and product transition costs in the September quarter," she wrote.
As for the stronger-than-expected iPhone results, she noted that Apple's 20 percent year-over-year growth came in spite of a channel inventory reduction. In addition, the U.S., Japan, and the U.K. all grew iPhone sales north of 50 percent.
The weak spot for Apple's June quarter was the iPad, which saw its first-ever sales decline. Huberty expects that demand will return when the company debuts a fifth-generation iPad in the near future.
JP Morgan
Apple's June quarter results were "not too bad," analyst Mark Moskowitz said. He expects the stock price to react favorably due to strong iPhone sales and a gross margin outlook that's better than many investors anticipated.Issues for the company, according to Moskowitz, are a slowdown in China, and soft iPad sales. But he expects near-term growth from anticipated iPhone launches in September and a new iPad mini in October.
"In such a case, we think any temporary pressure on gross margin related to new products is likely deferred to (the December quarter)," he said. "This dynamic could pressure gross margin, but we think that the offset is higher revenue growth."
A key question for Moskowitz is whether Apple will stagger its new product launches this fall. He cited shortages seen by Apple last year that potentially cost the company "customer conversions."
Needham & Company
Apple's fourth fiscal quarter guidance suggests to analyst Charlie Wolf that Apple might introduce a next-generation "iPhone 5S" before the end of the quarter. But for now, he said the story for Apple among investors is, "What have you done for me lately?"Can Apple innovate at the same pace without Steve Jobs? Analyst Charlie Wolf believes the answer is forthcoming.
"After a whirlwind of new product introductions in the fall of 2012, Apple has been virtually silent on the product introduction front for nine months," he said. "That should change beginning in September/October with the launch of the next-generation iPhone and iPad."
While he sees updates to Apple's best-selling products on the horizon, Wolf does not anticipate that the company will introduce products in new categories this year. Rumors have suggested Apple is working on both wearable technology, such as a so-called "iWatch," as well as a full-fledged television set.
"These initiatives suggest that Apple should once again be able to enter new product categories in 2014, although it is difficult to imagine that they will be the revenue producers that the iPhone and iPad have turned out to be," he said.
For now, the risk for Apple is whether the company can continue to innovate at the same pace without legendary co-founder Steve Jobs at the helm.
"We are approaching a point when an answer might be forthcoming," he said.
Piper Jaffray
Analyst Gene Munster is encouraged by iPhone demand, which he believes was pushed higher by a price cut on the iPhone 4 in emerging markets. That pushed iPhone sales 18 percent higher than expected, but also led to a 5 percent decline quarter over quarter in the iPhone lineup's average selling price.Apple is weathering its current "transitional quarters" well, Gene Munster believes, but anticipation is growing for the company's next big thing.
Following Tuesday's results, Munster admitted that the iPhone franchise is in better shape than he previously believed. He estimates that average selling prices on the iPhone 5 and iPhone 4S were unchanged, while price cuts on the iPhone 4 in emerging markets likely made the low-end handset's average selling price drop 15 percent.
Apple currently finds itself in "transitional quarters," he said. But that's anticipated to change over the next six quarters, when he sees a range of new products debuting, beginning with a cheaper, plastic iPhone model this fall.
Munster has been a longtime vocal proponent for an Apple television, and he continues to believe that the company will introduce such a product late this year. He expects Apple will also unveil an "iWatch" in 2014.
Wells Fargo
With Apple admitting that new products will launch in the fall, and analyst Maynard Um expecting a late September iPhone launch, he views Friday, Sept. 27 as a likely date for a new product to debut. Fall officially runs from Sept. 22 to Dec. 21."We find it curious that flattish revenue guidance implies there may not be any greater pause ahead of the new iPhone this year than there was last year, despite Apple effectively previewing a launch timeframe ? particularly interesting given the lowering of iPhone channel inventory, presumably to manage the transition and limit price protection," he said.
Potential reasons for this may have been strong demand in July, or greater confidence for a bigger initial launch in late September.
As for the iPad, shipments were down 14 percent year over year, but when adjusting for reductions in channel inventory, the true drop-off was just 3 percent. Um believes iPad sales were likely soft in the U.S. and Europe, as Apple highlighted double-digit growth in China, Japan, Canada, Russia, Latin America, the Middle East, and India.
Deutsche Bank
Chris Whitmore viewed Apple's June quarter as a mixed bag: He was encouraged by iPhone sales, margins, and earnings per share upside, but views declining iPhone average selling prices, soft iPad and Mac sales, and slowdown in China as negatives for the company.For investors, he believes there will be "no clarity until new products arrive," as he noted that Apple refused to say whether or not the September quarter would include a significant product transition.
"In fact, the better-than-expected margin guidance gives rise to concerns that the new iPhones could come either at the very end of the September quarter (and have no material impact in September) or is pushed to the December quarter," he said.
RBC Capital Markets
Apple's June quarter was better than analyst Amit Daryanani feared it might be, but he believes the focus will remain on Apple's product cycle and anticipated updates to the iPhone and iPad lineup. He also believes investors will keep an eye on Apple's long-term gross margins.Daryanani believes Apple's guidance for the next quarter implies that an "iPhone 5S" will go on sale in either the second or third week of September.
He also noted that Apple's "blended" average selling price for the iPhone was at $581, representing a 17 percent quarter-over-quarter decline. That suggests to him that sales of the legacy iPhone 4 and iPhone 4S were more robust when compared to the iPhone 5.
ISI Group
Analyst Brian Marshall believes Apple has an "urgent need" for an iPhone with a larger display. But while the "iPhone 5S" is expected to have the same 4-inch display as the iPhone 5, he believes the "extreme makeover" of iOS 7 may satisfy loyal Apple fans, giving them "enough reason to wait for a larger-display iPhone model."He expects that an iPhone with a screen size at about 5 inches could be a catalyst for the company over the next 3 to 9 months. He also anticipated a new iPad mini, and potential new product category announcements, such as a television or smart watch.
JMP Securities
Longtime Apple bear Alex Gauna viewed the company's June quarter as "an encouraging step in the right direction after the disappointment last quarter." However, he said the results were not strong enough to convince him that Apple is "out of the competitive and gross margin squeeze woods yet."JMP Securities has maintained its "market perform" rating for AAPL stock. Gauna said he's hoping to see "better visibility or confidence in new earnings growth drivers" before he's willing to view Apple as a good buy for investors.
Comments
Such a fickle bunch.
I'm glad none of them mentioned the necessity of a cheap iPhone to sell in emerging markets. The 2 year old iPhone 4 sold like crazy even though everyone said people in emerging markets weren't interested in a 2 year old phone.
Apple is TRULY doomed.
Quote:
Originally Posted by blackbook
Such a fickle bunch.
I'm glad none of them mentioned the necessity of a cheap iPhone to sell in emerging markets. The 2 year old iPhone 4 sold like crazy even though everyone said people in emerging markets weren't interested in a 2 year old phone.
Well, not everyone. Only the crazy haters are always saying stuff like that. For them Apple is perpetually on the verge of bankruptcy, none of their products sell well, etc. You know, the usual talking points by that crowd (see recent comments by Constable Odo) for example.
http://www.cbsnews.com/8301-505125_162-57594484/why-apple-is-a-dead-company-walking/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CBSNewsPCAnswer+(PC+Answer%3A+CBSNews.com)
I don't want to see Apple branch out into too many new product categories, it won't be possible for the brightest guys like Ive to give attention to much more than they currently make. They should stick with focusing on making the best products in the markets they are in now. There is lots of room for growth in the TV market.
Lol. That's to keep the great unwashed -- who are likely CBS's demographic -- amused. Similar to how knocking celebrities off a pedestal somehow supposedly increases one's perceived sense of self-worth.
Quote:
Originally Posted by anantksundaram
Lol. That's to keep the great unwashed -- who are likely CBS's demographic -- amused. Similar to how knocking celebrities off a pedestal somehow supposedly increases one's perceived sense of self-worth.
We'll see when the "new" products come out.
I'm still not sold on Cook.
I think Apple will become quite a different company than it was under Steve.
The haters want Apple to sell more stuff, now? The increasing mix of the older phones in the sales figures tells us the top end is saturated. A lower cost phone is needed and inevitable.
Quote:
Originally Posted by techguy911
I don't want to see Apple branch out into too many new product categories, it won't be possible for the brightest guys like Ive to give attention to much more than they currently make. They should stick with focusing on making the best products in the markets they are in now. There is lots of room for growth in the TV market.
Seeing as how iPods contribute only 2% to Apple's overall numbers I could see them scaling back or even retiring the line once the iWatch and wearables come out.
I don't think we'll see senseless expansion of products. Tim Cook seems to be a very wise businessman and he has done an amazing job of keeping "Apple", Apple. They will always do a few things amazingly well.
Quote:
Originally Posted by island hermit
We'll see when the "new" products come out.
I'm still not sold on Cook.
I think Apple will become quite a different company than it was under Steve.
Which isn't necessarily a bad thing. Steve wasn't the end all of master decision makers at Apple. He didn't always have the best ideas.
Of course Apple might be slightly different now than it was under Steve, but so what?
Apple can still continue to be very succesful. Apple without Steve is still a billion times better than anybody else.
Quote:
Originally Posted by Apple ][
Of course Apple might be slightly different now than it was under Steve, but so what?
Aple can still continue to be very succesful. Apple without Steve is still a billion times better than anybody else.
For how long.
Quote:
Originally Posted by macxpress
Which isn't necessarily a bad thing. Steve wasn't the end all of master decision makers at Apple. He didn't always have the best ideas.
LOLOLOLOLOLOLOLOLOLOLOL!
Oh, boy.... some people just don't get it.
Quote:
Originally Posted by asdasd
The haters want Apple to sell more stuff, now? The increasing mix of the older phones in the sales figures tells us the top end is saturated. A lower cost phone is needed and inevitable.
I think there may be a low cost replacement for the 4S, but it won't be because of necessity or because Apple is afraid of the high end market saturating.
They'll do it because they want to make the 16:9 4 inch screen, lightning connector, and likely LTE standard across the lineup.
The notion Apple is going low end to get more buyers or save themselves from extinction was proven wrong buy their numbers and results yesterday.
Quote:
Originally Posted by island hermit
We'll see when the "new" products come out.
I'm still not sold on Cook.
I think Apple will become quite a different company than it was under Steve.
Tim has done well so far.
I haven't seen any glaring mistakes that would convince me Apple will be "quite a different company" under Tim versus Steve. Tim has the balls to make bold decisions much like Steve. He didn't hesitate to overhaul the largest OS in company history when he saw it was getting long-in-the-tooth. That's a move Steve would make, and Tim has been on top of things very closely ever since taking over.
Is Tim perfect? No, but he's made more wise decisions than foolish ones. He definitely is the man for the job rather than Forstall, as some had suggested a few years ago.
I have been saying that Apple didn't really need a new product just yet, because the iPad is still quite new and still has a long way to grow, so I am really taken aback by the YoY iPad decline.
Perhaps MS was right all along and the tablet is just another form factor of PC (albeit an ultra modern kind of PC for the 2010s). In which case the market is already saturated, and the big growth spurt we were seeing was not a new, empty market being populated, but instead people dumping crappy old PCs (Pentiums, etc), and from now on we must compete with more modern PCs.
And notebooks are starting to "fight back" with the iPad anyway (well, Apple ones are at least). The best things about the iPad are:
- all day battery life (but Haswell notebooks have that now, e.g. 2013 Macbook Air)
- safe app store where you can install stuff willy-nilly and not worry about your system crapping out (Mac has that now, provided you install exclusively from the Mac App Store, and only apps that were uploaded after June 2012, when the Sandbox became compulsory)
- touchscreen. Mac laptops still don't have this, but the touchpads are larger than they used to be and support many of the same gestures, such as pinch-to-zoom.
Steve Jobs said that tablets would take over 90% of computing needs and computers would just be the "trucks" for getting serious work done (paraphrasing). But maybe instead laptops will steal many of the best aspects of tablets and as a result it will become more of a 50/50 split.