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Apple's (AAPL) FQ1 sales could get a bump from Wal-Mart (WMT), which has begun selling the 16GB...

Apple's (AAPL) FQ1 sales could get a bump from Wal-Mart (WMT), which has begun selling the 16GB iPhone 5 at a subsidized $127 at thousands of U.S. stores. The retail giant is also selling the 16GB 3rd-gen iPad for $399 (a $30 iTunes card is thrown in), and the 16GB iPhone 4S for $47. The size of the price cuts, good for the next 4 weeks, are eye-opening in light of Apple's history of limiting retailer discounts. They come as multiple analysts (I, II, III) strike a cautious tone on iPhone sales thanks to supply chain data.
Comments (66)
  • Should do wonders for the margin.
    16 Dec 2012, 04:39 PM Reply Like
  • One side of the coin - the other is that Apple is a disruptive powerhouse that can run others into the ground. Think of the future of Apple as a multi media company and the devices just - as Amazon does - as porters of their content. But people always just think margin etc. and are so narrow minded.
    16 Dec 2012, 04:48 PM Reply Like
  • Still, this will do wonders for the margin in the current quarter and that will drag down the QQQ. I am disgusted with my stupid purchase of TQQQ just when Apple was giving away margin like it is going out of style. Major drag on the Nasdaq.
    16 Dec 2012, 04:53 PM Reply Like
  • Maybe. We don't know if Apple offered discounts to Wal-Mart, or if Wal-Mart is taking a loss on iPhone/iPad sales to get customers in the door during the holiday season (it wouldn't be out of character for them). Or if it's some combination of the two.
    16 Dec 2012, 05:00 PM Reply Like
  • Being an infrequent shopper at Walmart, but a shopper nonetheless, I don't think that Walmart needs a cheaper iPhone as a loss leader to draw customers. I can't imagine what market segment would rush there to buy iPhones and then load up on cheap clothes or blenders.
    16 Dec 2012, 05:58 PM Reply Like
  • Eric, I highly doubt Wal-Mart would create a loss leader from Apple products since they're too expensive to generate strings of future sales. Customers won't go into Wal-Mart, drop $399 for an iPad, and say "Hey, since I'm already here, let me shop some more". Their discretionary income isn't large enough to do so.
    16 Dec 2012, 06:20 PM Reply Like
  • Apple has to be doing something for WMT. even just allowing them to take the loss (and possibly drive traffic). They rarely allow discounts beyond a certain level away from MSRP. That being said, I think I agree with others on this thread and Apple is probably taking some (or all) of the hit here.
    16 Dec 2012, 07:05 PM Reply Like
  • I thought their supply chain couldn't produce the phones fast enough... why are they selling them now at a huge discount?
    16 Dec 2012, 04:56 PM Reply Like
  • Good question. Maybe because the market has been continually spoon fed half-truths and puff pieces by this once great giant.


    My guess iPads will beat forecast, iPhone5 will just scrape north of 40 million
    16 Dec 2012, 05:03 PM Reply Like
  • Despite the denial from AAPL fans that this is simply some loss-leader WMT promotion, the reality is that's not how "Wal-Mart Way" plays. WMT is notorious for squeezing their suppliers for the discount. This smells of an over inventory issue at a key time in the Christmas selling season. It could pull forward some volume at reduced margins, leaving AAPL with a saturated market. Reports from the product launch in China are mixed at best. Samsung has emerged as a worthy competitor.


    From Los Angeles Times Business:


    "Typically, top-of-the-line smartphones start getting discounted if a new version of the device is close to rolling out. But in this case, the iPhone 5 is being marked down more than 35% less than three months after its release -- and in the middle of holiday shopping season. Wal-Mart's Apple-product sale comes shortly after a UBS analyst announced he was lowering his iPhone sales estimates for 2013, saying he expects Apple to sell 5 million fewer phones than his previous estimate for each of the next three quarters."
    16 Dec 2012, 05:06 PM Reply Like
  • why would apple discount to walmart when they wont do it for china mobile and its 700million customer base?


    Also if apple wanted to clear non selling iphone 5's they can price it themselves at 127 online, they dont need walmart to do it...


    also last few weeks ago everyone was talking about a shortage of iphone 5's , this week its the way around???? LOL


    60 bucks on a $2400 2 year expenditure is like 3% discount people!


    Great timing on UBS, the guy has a 780 target and now decides to lower it on friday at 530...good the prop desk is short apple.
    16 Dec 2012, 07:08 PM Reply Like
  • UBS's Milunovich lowered aapl target from $780 to $700 on Friday. Not 530.
    Every shorter had been arguing "market share".
    The world's largest retailer finally made the smart move dumping Amazon and partnering with Apple.
    Now the same dingos are bitching about $40 discount on 4S at Walmart! Margin compression?
    16 Dec 2012, 07:49 PM Reply Like
  • Reports from China are mixed at best? What are people smoking on this board. The reports are stellar!!! The only negative reports are from yellow journalists at Reuters and CNBC that were never trained in how to ask an investigative question.
    16 Dec 2012, 11:52 PM Reply Like
  • 35% less on only the down payment with a 2yr contract. If history is anything to go by, then AAPL would not have offered any discount to WMT. If it was an inventory issue then why not online sales as well? At best AAPL would have promised stock against a big front order from WMT. WMT is also not making a loss here. They are get a lot of free advertisement and many customers into the stores by standing with AAPL. AAPL will be selling more then 50M iphones this quarter. China pre orders were up by 50% and sales in cities were also robust - not at apple stores but at China telcom and unicom as they are subsidizing it.
    17 Dec 2012, 07:03 AM Reply Like
  • I agree with statement. Sales will get a bump. Both Walmart and Apple will benefit. 30 day sale and margin impact will be minimal as additional revenue will offset.


    Besides, what about Samsung Galaxy's for free or buy one get one free? This is a win win for aapl and wmt, in my opinion.
    16 Dec 2012, 05:06 PM Reply Like
  • So this has nothing to do with Wal-marts decision o stop selling Amazon's Kindle? Interesting.
    16 Dec 2012, 05:21 PM Reply Like
  • Correct. Could be some kind of gift for stop selling the products from one big competitor... may be a deal made some weeks ago. Supply chain issues and price reductions donĀ“t fit together.
    17 Dec 2012, 07:08 AM Reply Like
  • It's a loss leader. Take a product lots of people want and sell it at a giveaway price.


    Make up the difference selling everything else.


    By the way, the 16GB iPhone 5 isn't the one you want - the one you want is the 64GB. So...again, you use the low price to bring 'em in, then up-sell them.
    16 Dec 2012, 05:31 PM Reply Like
  • Correction. iPad 3 is discounted at Walmart (and BestBuy). But IPad 4 with A6 chip (up to 2x faster than A5) is $499 for 16gig. So, yes, Apple is allowing discounts for older models, which is a smart way to expand overall sales (variety of price points so virtually anyone can buy). Walnart's deal on IPhone 5 requires 2-yr contract, but still is good deal.
    What kid or parent doesn't want an IPad for Christmas? How many kids or spouses are clamoring for any of the other brands?
    16 Dec 2012, 05:43 PM Reply Like
  • I think that AAPL is simply looking at a new market....lets face it....most AAPL users are middle and upper income......ask LEAP who was trying to sell the IPHONE at retail and then offering a bargain 50 dollars a month unlimited usage with no contract...LEAP found no takers....because this strata of society cannot put up 600 dol up front .....this Walmart deal will hurt margins at AAPL... but vastly extends the AAPL halo....think sales on ITUNE and Apps...last but not least AAPL is gotta fend off Samsung in the battle of market share...Think Coke and Pepsi
    16 Dec 2012, 05:56 PM Reply Like
  • ps ...I am long I feel some pain as well...but I think its a smart move to gain/keep market share...
    16 Dec 2012, 05:57 PM Reply Like
  • They are selling the IPAD3 for $399 not the new ipad 4.

    16 Dec 2012, 06:07 PM Reply Like
  • Yep. It looks like Wal-Mart originally said the discount was for the 4th-gen iPad, then retracted the claim. Edited the post.

    16 Dec 2012, 06:19 PM Reply Like
  • Discounted iPhones lend credence to the argument AAPL has topped out. It also helps to explain the stock action: 700s to 500s... lower coming.


    Going to 300s as they slowly get commoditized - laugh now, cover later for gains imo. Longs already been in denial for -200 off highs.
    16 Dec 2012, 06:51 PM Reply Like
  • so you really think AAPL is going to a PE of 7...?.....never going to happen....the cash on the books prevents that at 120 billion and growing
    16 Dec 2012, 09:02 PM Reply Like
  • The iPhone 5, discounted, so soon? Look out below.
    16 Dec 2012, 07:09 PM Reply Like
  • How do Idiot's like you get on seeking alpha? It the Ipad 2 at Walmart not the 4 and they are selling it at same price Apple is.
    16 Dec 2012, 07:15 PM Reply Like
  • It's the Ipad 3 lol
    16 Dec 2012, 07:28 PM Reply Like
  • So when Samsung reports that the SIII, which is being given away for free by everyone moved ~30 mil units this quarter, Apple stock will take a hit because it will be spun as lost sales/market share for Apple. But when there is a similar play here by Walmart or Apple (no one knows who decided on this discount) ....this is bad news for Apple again...yea this makes sense.
    16 Dec 2012, 07:16 PM Reply Like
  • is that why the price of siii is now free, or buy one get one free?


    I paid $300 with $100 rebate in august this year....


    Why is Samsung stock price not falling like a rock? they're margins are getting hit even more than apple.
    16 Dec 2012, 08:33 PM Reply Like
  • The s3 might be cheaper to make..
    16 Dec 2012, 11:12 PM Reply Like
  • These comments have been a booing or cheering section.


    But, the truth is in there if you read carefully.
    16 Dec 2012, 07:28 PM Reply Like
  • Hero-


    People and pundits have been predicting the end of Apple since 1995. The Apple Death Knell Watch is actually collecting these comments for all of us all to see and bear witness to. Not one of these predictions was right or even close to being right. None of the people or pundits predicting Apple's end was right. Quite the opposite. And amazingly, most of the same pundits and analysts are still working today. You have now joined the chorus of that same 17 year old "end of the world" mantra that has been proven wrong over and over again.
    16 Dec 2012, 07:55 PM Reply Like
  • Citi dummies downgrades AAPL 2 months late, following the rest of the analyst sheep who were calling for 800, 900, 1000 price target back then. Now more dummies and the useless media smearing and getting bearish on AAPL, the better. Muppets please keep listening to this garbage and selling at the lows. Smart money will thank you later for taking the cheap shares I'm sure.


    Last year Jobs died meant end of the world, IP4s was nothing special, sales weren't going to be great and so death of AAPL had begun, until the Jan earning blew everyone's socks off.


    This year AAPL can't compete anymore, IP5 sucks, and people are tired of their products... it's the end of the world again and Jan earning will be crap. Keep selling muppets.
    16 Dec 2012, 07:32 PM Reply Like
  • I'm surprised that no one here has picked up on the stories that China sales were robust.

    16 Dec 2012, 07:40 PM Reply Like
  • This is Citigroup on Dec 11:


    Apple Inc. (NASDAQ:AAPL) is going to be a huge winner as the smartphone market surges in size, according to a new report from Citigroup. Citi expects over 700 mln and over 1.1 bln smartphone shipments in 2012 (+50% y/y) and 2013 (+60% y/y), respectively. Their growth assumption is 30% above the market and based on our view that low end smartphone shipments will surge in 2013 as quality significantly improves and prices erode faster than expected. Through 2015, Citigroup expects smartphone shipment CAGR of 35% versus 57% in the prior 3 years (2010-2012).


    How do I get a job where I can just spew out whatever whenever the wind blows and get paid the money and respect that these people do?
    16 Dec 2012, 07:44 PM Reply Like
  • Money, yes. Respect, No.
    16 Dec 2012, 08:09 PM Reply Like
  • APPL announces sales of over 2 Million in China in the 1st weekend.

    16 Dec 2012, 08:11 PM Reply Like
  • Thanks the update Dean. Great news!
    16 Dec 2012, 08:19 PM Reply Like
  • The AAPL comments are sounding more and more like a Yahoo message board these days, probably a sign the shorts are trying to push their luck a bit much.


    The perceived king has a few issues, too:
    16 Dec 2012, 08:27 PM Reply Like
  • Taiwan says 1 Million
    16 Dec 2012, 08:58 PM Reply Like
  • I have been having an increasing sense that the shorts have had a field day with Apple on this site for a few months. I sit here and wait for February to see the real figures on sales and profits. The confusion in the comments here tell me how much less people here know about Apple than they would ever face and admit.
    I do hope the shorts get hurt because their hidden agendas have led to a lot of misinformation.
    16 Dec 2012, 09:36 PM Reply Like
  • The market is completely rumored by bad news for people shorting Apple. On Friday, we had the news that only one person in front of Apple store in Shanghai for the iPhone 5 launch. Now, Apple's official data said that Apple sold 2 million units in China just for the first three days. If we believe that only one person waiting in front of Apple store in Shanghai, how they can sell 2 million units which is Apple's official data.


    I also checked with a friend of mine who is a senior executive at Foxconn. He said that he couldn't disclose the data, but he did say that the rumor of 45% cut for Q2 iPhone production is absolutely garbage.
    16 Dec 2012, 10:37 PM Reply Like
  • Margin? Are we really worry about Apple's margin? If so, why are we comparing market share between iPhone and Android phone, which we know that Apple has incredible margin and most Android phone lose money. Are we really comparing apple with apple?
    16 Dec 2012, 10:41 PM Reply Like
  • I am comparing past Apple margin to future Apple margin so that I can then project future Apple stock price from current Apple stock price. Android's margin has nothing to do with it. It would if I were to value Google.


    Apple is forecast to have a 2.5% EPS drop year over year for Q1. If the margin mix shifts this EPS drop going forward may increase. A 10% EPS drop for Apple will see the share at 200-300 range, per standard DCF evaluation.


    Margins are important. Apple needs to innovate and sell more high margin products.
    16 Dec 2012, 10:59 PM Reply Like
  • Margin is important but only as a general guideline. On the other hand, EPS is the real key for performance. If the GM dropped, meanwhile much higher unit sale, therefore much higher revenue and EPS, it is a winner.
    17 Dec 2012, 12:02 AM Reply Like
  • The EPS growth is projected at 12%, after growing for 3 years at an average of 40%. Same story with revenue. There's not much room for higher unit sales to make up for lost margin.
    17 Dec 2012, 12:10 AM Reply Like
  • With Apple officially announce that it sold 2Mu in China within three days, and a very positive tone from Tim Cook, I am sure that Apple is comfortable and hinting that the Q4 sales will meet and beat the forecast.
    17 Dec 2012, 12:34 AM Reply Like
  • last minute apple discounts


    It will be a big apple christmas
    17 Dec 2012, 02:12 AM Reply Like
  • the stores are jammed and people of all ages are buying, that's my simple to grand central
    17 Dec 2012, 06:26 AM Reply Like
  • Its not like WMT has *much* choice here. BBUY already offered 50% off early last week. These guys have pledged to meet their competitors' prices.


    An in favor of the loss-leader interpretation: its only available in-store in one of their in-store AAPL stores.
    17 Dec 2012, 06:31 AM Reply Like
  • Work at Walmart so I have some experience with both companies. Apple dictates more than any other vendor terms and supply to Walmart. This pricing action I expect is coming with support from Apple. Most discounts you see at a Walmart store are shared or pushed back to the supplier.
    I'm surprised by the move by both companies, timing, etc.
    As far as the price of Apple shares, great stock to buy 5-10 years ago. At current prices, there is no way to leverage even if it does go up more. Both companies are monsters in their industries, tough to maintain steady meaningful growth numbers when they do the volume both do.
    17 Dec 2012, 06:33 AM Reply Like
  • Apple suffers from "Blacks Leisure Syndrome." The notion that you can keep knocking out a new product every six months, whilst maintaing a high degree of trading up amongst the existing customer base is a false one. The products are simply too good, and, in the end of the day, too expensive for an austerity blighted world. Throw in the fact that the company is a laggard in China, and you have a good reason as to why it is going to keep on missing revenue projections, and why its shares may yet fall another 33%.
    17 Dec 2012, 07:02 AM Reply Like
  • This article needs a correction:


    The discounted item is the iPad 3rd gen wifi, selling for $399 + a $30 walmart gift card
    17 Dec 2012, 07:03 AM Reply Like
  • apple users have been burned by small memory 16 GB. If you put in your music and specially your pictures , you are almost done. Therefore I agree that the iphoen 5 at 16GB is just a bait. Or for someone who was not going to buy an iphone in the first place. That is a smart way to bring in new small budget users. who cares about the margins for the holidays. We are in full sales period
    17 Dec 2012, 07:03 AM Reply Like
  • Strategic move that makes TONS of sense for AAPL. Using Walmart as the portal with which to accomplish this is pure brilliance. Notice that the model of ipad is limited to the 16gig ipad 4 NOT the ipad minis, which are flying off the shelves. This gets purchasers (or recipients), into the apple ecosystem - note the bundling of the $30 itunes gift card - with the end result being another person much more likely to remain an ios devotee. As far as margins are concerned, in this case, I think the massive upside potential for increase in revenues, even with reduced margins for these sales ( even if this is indeed the case, which we do not yet know for sure), should more than compensate for the SHORT TERM (note the duration of only four weeks) price reduction. The LONG TERM effect of this move is obviously a well thought out move to annulate the competition. Go Tim Cook and Sir Jonne!
    17 Dec 2012, 07:04 AM Reply Like
  • Not only is it a win for Walmart it is a win for Apple allowing it to increase market share and saturation. Then do not forget the carriers who will also benefit by the new contracts, and increased data usage.
    17 Dec 2012, 07:06 AM Reply Like
    Walmart had Same discount on iphone4
    So what's the big deal? Why all the spook. Apple made our lives easier and more enjoyable. Why the Apple bashing?
    17 Dec 2012, 07:10 AM Reply Like
  • Walmart had a sale in iPhone 4s last June 2011. What's the big deal?
    17 Dec 2012, 07:11 AM Reply Like
  • Margin Compression


    History ALWAYS repeats itself.
    17 Dec 2012, 07:12 AM Reply Like
  • They should sell the iPhone for subsidized 127$ in China. This would have a huge impact on the market share and would bring Android and WP under pressure...
    17 Dec 2012, 07:12 AM Reply Like
  • In response to comments about Walmart wouldn't create a loss leader from Apple products, the customer wouldn't buy more at Walmart after buying a new iphone5 and that they are middle to upper class customers, etc... That is a wrong statement. You are counting people out who must have Apple products (mostly kids). I have seen a 12 year old buying an iphone with his grandmother repeatedly asking if he was sure he wanted spend all of his savings. Another case I saw was a teenager that had to have the iphone4s in September after her father said to wait a few weeks when the iphone5 was rumored to come out. The kid couldn't wait. My point is, there is still a strong demand for Apple products. Maybe it losing some to the competition, but demand is still very strong for Apple product.
    17 Dec 2012, 11:14 AM Reply Like
  • I think this will be remembered as the day when AAPL started to destroy Samsung and co-horts.
    17 Dec 2012, 11:23 AM Reply Like
  • And why is that?
    17 Dec 2012, 09:39 PM Reply Like
  • Volume at lower margins.
    17 Dec 2012, 09:58 PM Reply Like
  • that's one way to look at it..... the positive way
    17 Dec 2012, 10:46 PM Reply Like
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