Market Currents
Apple (AAPL) has slashed prices for three 13" MacBook models. The price of the 13" retina...
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Wednesday, February 13, 9:29 AM ETApple (AAPL) has slashed prices for three 13" MacBook models. The price of the 13" retina MacBook Pro with 128GB SSD has been cut by $200 to $1,499, and the 256GB model by $300 to $1,699. Meanwhile, the 13" MacBook Air with 256GB SSD has been cut by $100 to $1,399. Apple's 15" retina MacBook Pro models remain priced at $2,199 and $2,799, but both have been given faster Intel Core i7 CPUs, and the costlier model now sports twice as much RAM. The moves follow a quarter where Mac shipments fell 22% Y/Y, and revenue 16%. (PR)
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This news story has 48 comments:
So I would place a little of the decline in prices on raw price changes, but another part on accepting lower prices to spur demand. That would increase raw revenues. This is also a somewhat flat time of the year for consumer electronics. Overall the iPhone and iPad are still the greatest revenue drivers for Apple.
It would seem to me that there is good evidence that the incremental cost of the retina display is possibly falling, and Apple is taking advantage of it to spur more demand.
So if we compare that experience with phones to the manufacturing of laptops, the biggest increased in costs are the move to solid state drives and the improvements in the screens. There are less ports on average in the newer laptops, and an all soldered construction to speed up production and reduce some parts expenses. I would think that Apple has reduced costs on laptop assembly, though the rise in prices at launch may simply have been an attempt to test the price levels that the market would bear. We see this amongst some luxury automobiles, so that concept is not unusual. In the next quarterly Apple report we may get more detail in this, if the analysts ask about this on the conference call. My guess is that Apple priced too high initially, and are now correcting that to spur sales. I doubt contracts changed in the middle of production to allow added savings, and I don't see evidence that Apple switched suppliers in the middle of production.
Part of the problem with being a premium product is that there aren't as many premium buyers so when you get as large as AAPL it is a lot harder to grow fast with this segment alone.
It really does look like they are experiencing serious margin compression which does in fact explain the low PE for the stock.
it's totally idiotic way of thinking that people expect Apple to have 80% market share, 80% YoY growth, and yet maintain 40+% GM ?? seriously ?
You clearly did not read what I wrote. AAPL is valued on its historic margins not its margins relative to other manufacturers.
A cut in prices is a pure cut in gross margin and profit. That's a serious decision and unless you make it up in volume it will lead to lower profits in the future.
Do not fall in love with a stock because that definitely clouds your judgment.
A great company such as AAPL isn't always going to be a great stock.
Good luck.
Like most, i would much rather get a non retina screen 15 than a retina 13, and the 15 is just $100 more. And someone willing to spend on the 13 retina probably has money to burn and would splurge a few hundred more on the 15 retina. the 13 retina was awkwardly placed in the line-up, a no man's land in my view.
as for margins, the knee-jerk is that it would be bad, but lets think about this: with the price cut the 13 retina is just $300 more than the 13 non retina, which may prompt quite a few to get that over the non retina. So the effect of this is likely (very likely, now that i think about it) to bring up the average selling prices of the macbooks.
Intuitively i think more people are likely to upgrade from 13 non retina to 13 retina than would have been willing to pay 1700 for the 13 retina before the price cut, so the net result is Apple makes more money.
while i am speculating, so are you. My point is it is far from certain that this will harm margins, it could easily have the opposite effect. When thinking about product price cuts we need to look at the overall priduct mix and think about what the consumer is likely to do with these choices. it seems reasonable to me that this results in a lot more sales at 1499.
did you REALLY expect AAPL to maintain historical margins while selling a $329 iPad mini ?
AAPL's entire product mix has profoundly shifted in the last 10 years (from all Mac plus a bit of iPod to all iOS), so it's obvious that absolute profit is the best measure, not some artificial "gross margin" metric that's meaningless when product mix shifts so drastically.
6 years ago, GOOG generates more profit than AAPL. Today, AAPL's profits are roughly in line with GOOG generates with revenue. Doesn't take a genius to figure out why GOOG is overpriced at P/E of 23 and AAPL is a huge bargain at P/E of 11.
I saw best results with my FB adds that with Goog Search. We will see next round of quarter reports how goog will do.
Market up again and apple is leading the down side on my thinkorswim list of 50 stocks.
http://bit.ly/X96nAh
Hedge funds dumped Apple shares, likely fueling stock drop
As Apple stock dropped like a coin off the Empire State Building observation deck following the arrival of the iPhone 5 last fall, analysts offered a plethora of possible reasons for the quick descent. However, filings arriving this week have shown a likely culprit behind Apple's dip into bear market territory: Large hedge funds selling millions of Apple shares at nearly the same time, flooding the market and driving the price down.
I was very ready to upgrade from my late-2008 15" MBP to the 13" rMBP ... until I saw that unrealistic price tag. I ended up getting an entry level 11" MBA on sale at $699 instead.
Also to those moaning about how the stock fell on this news...it has rebounded and now up around 0.6%
Macs are doing much better then PCs in a weak PC market. The result at the end of the day will be a larger overall Mac share in the worldwide PC market.
These price cuts are just noise. Margins will shrink slightly, but there is no doubt a new product launch in the next year. And, the price cut will drive continued increased sales of Macs relative to PC.
When you look at the ASP of the Macs relative to average PC, and the relative market share, it is surprising they are doing so well. That's a testament to the AAPL brand and loyalty.
Google knows :
who you correspond with
what you say
what you search
what websites you view
what you buy
what you do with their apps
your location
thats some valuable data my friend.
Like that matters. A MacBook wakes before you can fully open the lid.
That stated, I'm really not that impressed with the Samsung Chromebook. I need to accomplish more on a computer than what Google Chrome currently allows one to accomplish. At the price point it is a compelling companion product, but I don't seriously think people weigh the choice between one and a MacBook. People who want that Apple logo on their products will not settle for something else.
As Robert Shiller points out in Irrational Exuberance, companies grow and slow in predictable cycles. Apple has had a long, incredible run.
That the company is entering a new phase can't be blamed on Tim Cook. It's just what happens when companies like Apple and Microsoft and their peers reach maturity. And it's why Apple's PE has been relatively low compared with its growth rate. Everyone knew that it couldn't maintain its growth rate forever.
The question: Will Apple become a Caterpillar and IBM or an Intel, HP, Sony and Microsoft?
(sarcasm intended)
Not a "fanboy," whatever that is. Just an investor who has made a nice profit from this stock.
Usually occurs at the end of the summer.
This is case of way too much inventory. Looks like the herd has figured out that AAPL is an overpriced hardware manufacturer.
I think Apple has at most 12-18 months before margins on iPhones start to come down very seriously.
IMO AAPL has max 12 months before margins on iPhones start to come down very seriously.
AAPL needs CVO urgently.