Seeking Alpha

Apple rallies post-earnings; Street focuses on margins, iPhone 6

  • "With [gross margins] stabilizing and core demand trends solid, we think investors will want to own Apple (AAPL +3%) stock into bigger-screen iPhone 6 and ecosystem-expanding iWatch/iBand launches," writes Evercore, staying bullish on Apple following its mixed FQ3 results and light FQ4 guidance.
  • Macquarie: "The bottom line is that the iPhone 6 reception is what matters right now." Its target has been raised by $7 to $102. At least 6 other firms have also hiked their PTs today.
  • Citi, which recently launched coverage at Buy, expects 140M iPhone 6 sales over the first 12 months (compares with an iPhone installed base of 300M), and thinks the adoption of installment/early upgrade plans could provide further upside.
  • It's also pleased with Apple's 28% Greater China growth, given fears of tougher competition from local vendors - fast-growing Xiaomi just rolled out a metal-framed flagship phone that goes for $320 unsubsidized.
  • 9to5 Mac reports today Apple is "tentatively" planning to unveil the iPhone 6 in mid-September. Sources state the 4.7" model is set to be shown off, but add a final decision hasn't been made on revealing the 5.5" model at the event. KGI reported last week the 5.5" model could be delayed due to production issues.
  • The site also reports Apple is planning an October event that will likely involve an iWatch/fitness band. Apple is fresh off receiving a patent for a modular smartwatch design that includes a strap with built-in sensors and other circuitry.
  • Prior Apple earnings coverage

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Comments (31)
  • name999
    , contributor
    Comments (173) | Send Message
     
    Sit tight, buckle up. The next stop is $100.
    23 Jul 2014, 11:38 AM Reply Like
  • aardvark3
    , contributor
    Comments (534) | Send Message
     
    This is going to be fun. Patience really does pay off.
    23 Jul 2014, 11:42 AM Reply Like
  • Humble Eagles
    , contributor
    Comments (2112) | Send Message
     
    Senior VP E. Cue on new products, "Later this year, we've got the best product pipeline that I've seen in my 25 years at Apple," and when later challenged on Cue's statement, Cook didn't equivocate, but said he agreed with Cue! I suspect we are looking at some interesting stuff come Sep/Oct. Maybe Apple has changed its ways, and execs now blow smoke, but I doubt it. I think they have some game changers coming soon. The best news is that 9 month earnings are growing over 15% YOY when you use the actual share count at the end of the qtr! The buyback, even with moderate growth, is producing excellent EPS growth. Should they unlock new categories and services, it gets much better.
    23 Jul 2014, 02:12 PM Reply Like
  • thotdoc
    , contributor
    Comments (1826) | Send Message
     
    today is a good day to remember...if you are an average retail investor...do not try to time stocks
    23 Jul 2014, 11:43 AM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9231) | Send Message
     
    The Xiaomi Mi4 is not "all metal".
    23 Jul 2014, 11:45 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (23612) | Send Message
     
    But it's a pretty good phone for the price, that's for sure.
    23 Jul 2014, 11:57 AM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9231) | Send Message
     
    I don't doubt it!
    23 Jul 2014, 11:59 AM Reply Like
  • Davidoff
    , contributor
    Comments (319) | Send Message
     
    It's still a Chinese phone. China is far from having the same image as Japan in the nineties, but it should come pretty soon. No matter what Xiaomi executives say, a high end phone can't worth that cheap to be adopted by snobbish consumers, so it's years away of Apple. Xiaomi is rather a potential thread for Android makers. I know that many people are already ready to purchase a Chinese tech product, but I also know that it's completely unthinkable for most of consumers. In any case, there are a lot of "established" phones that could be purchased for $320 any asp decrease even faster on this highly competitive market.
    23 Jul 2014, 12:13 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (23612) | Send Message
     
    The iPhone is also a Chinese phone. It's built there, and some of the technical design is probably occurring there as well.

     

    The Nexus 5 is not much different from the newer Xiaomi, but it's got slightly worse specs for a bit more $.
    23 Jul 2014, 12:28 PM Reply Like
  • Davidoff
    , contributor
    Comments (319) | Send Message
     
    I'm not saying that you're wrong, but what does matter is the brand recognition. What is inside the phone, who produces it or whose technology is being used doesn't matter to an average Joe. You can make the exact same phone as the iPhone, if it doesn't have the little apple on the back, it won't sell as well.
    23 Jul 2014, 12:34 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (23612) | Send Message
     
    Ah, I agree with that.

     

    But one wonders up until what price difference will AAPL manage to maintain its sales ... right now you're beginning to get phones that are equivalent to the iPhone at 1/2 the price. This is what did the Mac in during the PC wars (first price and volume, then the ecosystem) ...
    23 Jul 2014, 12:43 PM Reply Like
  • gensearch2
    , contributor
    Comments (1513) | Send Message
     
    The android OS is fragmented and their ecosystem is fragmented. You have your Samsung App Store, your Google Play store and now your Amazon App Store.

     

    I think Google made a major strategic error in allowing manufacturers to customize their Android and permit competing app stores.
    23 Jul 2014, 01:16 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (23612) | Send Message
     
    Only Google Play matters, the others are tiny (like 1/100th, 1/1000th the size of Google Play in terms of downloads)...
    23 Jul 2014, 01:28 PM Reply Like
  • Jack Baker
    , contributor
    Comments (946) | Send Message
     
    "equivalent"....hardly. You're talking simply about hardware. Hardware is one piece of the ecosystem and as hardware has become commoditized it more about the software, customer service, retail infrastructure and the entire ecosystem. Android still only has 5,000 native tablet apps that aren't stretched out phone apps compared to iOS's 500,000. And, you can't compare the interoperability of Android devices with iOS devices. Nor can you compare the customer service or retail store base. And, even as hardware goes, iPhone is still the only smartphone with a 64 bit chip in it. So, equivalent....no.
    23 Jul 2014, 02:21 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (23612) | Send Message
     
    We're talking smartphones - regarding apps they're mostly already equivalent as well.
    23 Jul 2014, 02:26 PM Reply Like
  • Humble Eagles
    , contributor
    Comments (2112) | Send Message
     
    Another point a lot of people miss: phones are actually more important to most people than their laptops! They are more likely to go cheap somewhere else. Also, in the US or any place where plans are subsidized, it is only a fraction of the price. If I have to pay $200 for a nice iPhone or $100 for a buggy and unsecure Android phone, I will gladly pay 100 to 200% more for the iPhone!
    23 Jul 2014, 02:26 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (23612) | Send Message
     
    The subsidization is a massive factor, yes.
    23 Jul 2014, 02:31 PM Reply Like
  • faramarz
    , contributor
    Comments (310) | Send Message
     
    There is no such subsidization. It's just 200 downpayment and the rest of the phone's price paid thru contract which will be cheaper if full price of phone paid in advance. Refer to T-mobile prices.
    Career's continue invoicing full contract prices even after the 2 years period. I know many people who continue to pay their contract even after 2 years without changing their phone.
    23 Jul 2014, 05:01 PM Reply Like
  • imvho
    , contributor
    Comments (307) | Send Message
     
    @Paul Santos

     

    There are Rolex clones on eBay for far less than an actual Rolex.

     

    What price will they have to be for affluent and aspirational buyers to prefer them to the real thing?
    23 Jul 2014, 05:26 PM Reply Like
  • DWBowers
    , contributor
    Comments (1281) | Send Message
     
    Phones equivalent to the iPhone are not available for half the price. You don't know what you're talking about.
    23 Jul 2014, 10:23 PM Reply Like
  • benfromchicago2689
    , contributor
    Comments (82) | Send Message
     
    Does Citi have a Apple Bulls department under Jim Suva and Apple Bear department under Glen Yeung? So now it is the bull's department to talk.

     

    Or they just get all the info from SAC?
    23 Jul 2014, 12:40 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4278) | Send Message
     
    Sell into the euphoria. That's how you get the best price! The company's revenue growth rate is slowing.
    23 Jul 2014, 01:04 PM Reply Like
  • gensearch2
    , contributor
    Comments (1513) | Send Message
     
    Holding AAPL until the 6 is released is a bet with good odds.
    23 Jul 2014, 01:23 PM Reply Like
  • iOS7 needs to revolutinize
    , contributor
    Comments (86) | Send Message
     
    Apple still has solid fundamentals with stable margins and ridiculous profits. This is a hold up to $150.
    23 Jul 2014, 01:46 PM Reply Like
  • Humble Eagles
    , contributor
    Comments (2112) | Send Message
     
    The problem is identifying the correct euphoria zenith! Suppose Apple releases fantastic wearables, new TV devices, two large and new iPhones, competitive new Macs, new iPads and new services over the next three months. Does the euphoria happen now or after the January CC sometime at $150? I certainly agree it is always best to sell into euphoria, but we have probably all sold into euphoria before and then wished we hadn't. Time will tell.
    23 Jul 2014, 02:48 PM Reply Like
  • DWBowers
    , contributor
    Comments (1281) | Send Message
     
    Apple is a cash machine that continues to generate cash and return it to investors through stock appreciation, buybacks, and dividends. The company will do fine.
    23 Jul 2014, 10:25 PM Reply Like
  • gensearch2
    , contributor
    Comments (1513) | Send Message
     
    I am having some difficulty with the word "euphoria". Apple was up 2.6% yesterday on earnings. Volume was about double of the average. AAPL has another $3 to go just to get back to where it was almost two years ago.

     

    Is that really "euphoria"?
    24 Jul 2014, 08:20 AM Reply Like
  • ramachan
    , contributor
    Comments (21) | Send Message
     
    It is exciting to watch my portfolio grow, apple being the major driving force. Touch wood, the next six months is going to be fun time
    23 Jul 2014, 01:56 PM Reply Like
  • toshellyw@yahoo.com
    , contributor
    Comments (3) | Send Message
     
    $150 and higher!
    23 Jul 2014, 02:16 PM Reply Like
  • ispank
    , contributor
    Comments (751) | Send Message
     
    I am happy with 134.99.
    23 Jul 2014, 04:31 PM Reply Like
  • lockman
    , contributor
    Comments (294) | Send Message
     
    Macquarie: "The bottom line is that the iPhone 6 reception is what matters right now."

     

    Haha! That IS rich!

     

    I'd buy one if it did (have good reception)...

     

    Really, I hope it does cause the Goog deleted my coveted voice to text on my beloved note 3 for some ungodly reason and is painfully obvious everytime I have to text something.

     

    Might have to pull my ole Nokia 1020 out for temporary "short" haul until the BIG Apple comes out.
    28 Jul 2014, 07:00 PM Reply Like
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