10M iPhone Target Is a Non Issue

Kris Tuttle submits: Every week we have to endure news stories about whether Apple (AAPL) will or will not make their 10M iPhone target this year.

The answer is simple. They will definitely make it. However that’s not really the question. The question is how and at what margin? Carriers and consumers all want the iPhone so it’s not a question of demand. If Apple has to they will enhance the terms they offer carriers around the world to get the distribution they need.

Thanks to lower component costs and typical scale benefits, Apple will also have price as a weapon later in the year as well, probably without hurting margins.

It’s fine to continue to track units, carrier plans, prices and margins but the focus on the 10M phone target is not the ball to keep an eye on.

Growth, market share, margins, product cycles, cash flow, returns on invested capital anyone?

Comments

[Robcal:]

Beautifully stated Kris. I couldn't agree more. Keep up the good writing.

2008 Feb 28 03:44 PM

[stacked up:]

The pros are just beating the hell out of us day traders with APPL planted stories every day! Ad nausuem !!.. ..What else is new ??? By the way: FCX gets 2 downgrades in 1 day this week and does nothing but go up ?? Who's roiling this market ? George Soros ? Is it any wonder 99% of day traders crap out ? Merciless! Why I think casinos are "sanctified" compared to the "snake pit" ...Mercy !!!!

2008 Feb 28 04:23 PM

[mrtaxx:]

Useless article, after the fact. This should have been published prior to Apple reaffirming that it had no problems with the 10 million iPhones.

2008 Feb 28 04:56 PM

[Ranchrfl:]

Are we seeing an old fashion short squeeze here?
My basis is a split adjusted $8.00 so today alone I got my investment back. The shorts may scare a nubie to APPL but I just enjoy watching the Wall Street roulette junkies bet black or red and that's why they can't scare us old investors out:)

2008 Feb 28 05:22 PM

[Socialism c...:]

Hey, "stacked up"...I feel your pain...but you have to understand that this market is not about fundamentals right now. In AAPL's case...the fundy's were fine all along...the fear got in the way --> classic oversell. Now, it's swinging back...the stories are not "plants"...just people coming to the realization of the situation. Also, you're right about FCX (or others like it)...it's not what the analysts think that matters...you have to move with (or before) the big money! You can try to outsmart the big movers...or...you can do what I'm doing until the fundies again drive things - stick with a few that are oversold and have nice dividends (BP, VZ, DOW - ag play anyone?, and ED).

2008 Feb 28 05:37 PM

[stanmule:]

4.xx$ per share split adjusted purchased at 12 years old... I'm not worried, I got 40 more years to S.S.

2008 Feb 28 06:32 PM

[TA:]

$4 purchased at 12? Why the hell didn't you sell it after Steve Jobs left the company? It was a horrible stock to hold for a long time. You would have made a lot more money elsewhere.

2008 Feb 28 06:51 PM

[rajsekar:]

Great analysis. To begin with, how did Steve Jobs arrive at 10 million iPhone sales forecast in one year? I would say that he was either drunk or missed a decimal in forecasting sales. Steve Jobs took cell phone users for granted and of course his great fan(atics) base who will shell out anything for a product if Apple logo is embossed. Steve Jobs knew his blunder after just two weeks of iPhone sales and rushed to reduce the price. Now Apple has to meet their promised target and we can expect another round of price cuts for iPhone before next quarterly results. In conclusion, will 10 million iPhones make any difference to Apple's growth - less likely? It's a recession year and consumers will hesitate to spend money on luxury items which Apple churns out. How many Macs and Air Notebooks can Apple sell in next two quarters? Apple fans will have to keep in mind that all Apple products are premium segment and growth potential is limited in coming years for this segment.

2008 Mar 03 11:29 AM

[JW.PhD:]

On 2008 Mar 03 11:29 AM rajsekar wrote:
> Great analysis. To begin with, how did Steve Jobs arrive at 10 million
> iPhone sales forecast in one year? I would say that he was either
> drunk or missed a decimal in forecasting sales. Steve Jobs took cell
> phone users for granted and of course his great fan(atics) base who
> will shell out anything for a product if Apple logo is embossed.
> Steve Jobs knew his blunder after just two weeks of iPhone sales
> and rushed to reduce the price. Now Apple has to meet their promised
> target and we can expect another round of price cuts for iPhone before
> next quarterly results. In conclusion, will 10 million iPhones make
> any difference to Apple's growth - less likely? It's a recession
> year and consumers will hesitate to spend money on luxury items which
> Apple churns out. How many Macs and Air Notebooks can Apple sell
> in next two quarters? Apple fans will have to keep in mind that all
> Apple products are premium segment and growth potential is limited
> in coming years for this segment.

Wow. Could you have been any more WRONG?

Apple blew past all their numbers. We know that hurts all you dedicated bashers. Suffer.

Jun 13 02:11 AM