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More from Apple's (AAPL) FQ2 call: Mix shift towards iPhone 4 responsible for iPhone ASP drop;...

More from Apple's (AAPL) FQ2 call: Mix shift towards iPhone 4 responsible for iPhone ASP drop; iPhone channel inventory up 1M Q/Q. Greater China sell-thru growth was 18% Y/Y, above reported (sell-in) 8%. Revenue mix shift towards iPad hurt gross margin, expected to fall to 36%-37% in FQ3 due to lower revenue and mix, partly offset by lower costs. Tim Cook talks of "exciting new product categories" (an iWatch?). While Cook said competitors made tradeoffs to offer ~5" phones, he didn't mention one-handed use (Apple's traditional critique) - is he hinting one will eventually arrive? AAPL -0.3% AH, as investors focus on FQ3 guidance (implies rev. growth of -4% to +2% Y/Y). CRUS -1.9%. (transcript) (previous)
Comments (24)
  • Paulo Santos
    , contributor
    Comments (17737) | Send Message
     
    Mix towards iPhone 4 also means some kind of failure for iPhone 5 ... and that the update cycle is starting to falter. AAPL needs something special for the 5S/6, not easy.
    23 Apr 2013, 08:33 PM Reply Like
  • MajorDude
    , contributor
    Comments (252) | Send Message
     
    Disagree. iPhone 4 is cheaper. Cheaper always sells in greater volume. ALWAYS.

     

    The iphone 5 is a superior product in every way to the iphone 4 - smaller, lighter, faster chip, better screen, bigger screen...but it's pricey.

     

    You can go back to the Mac Classic and see how lower prices on Apple products translate to greater volume. Now, everybody who wants an iPhone can afford one. Not everybody can afford the high end model.

     

    The Mercedes C class outsells the Mercedes S class. That doesn't mean the S class has a problem. In fact, the better the S class, the more C class cars Mercedes sells.
    23 Apr 2013, 09:22 PM Reply Like
  • rheimerl
    , contributor
    Comments (340) | Send Message
     
    paul, i respect your opinion..but disagree on your comment...the main reason the 4 and 4s sell like mad is the "late adaptors ie people like my wife who until a month ago was still using a clam shell phone now owns a 4S.. my 4 still works fine.. but when it breaks i will replace it with a i-phone ?...as most people will... im just hoping i can buy the stock at a 3.5% yield!...$350 ish?? but i doubt it as aapl has a buy back cannon in place
    23 Apr 2013, 09:42 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17737) | Send Message
     
    But up until the 4S the latest model always sold overwhelmingly ... and the 3S and 4 were also available at discounted prices. Something changed.
    23 Apr 2013, 09:45 PM Reply Like
  • Matt-Man
    , contributor
    Comments (515) | Send Message
     
    4S and 5 are too much alike. I think Apples strategy for iPhone updates has come to an end, they need cheaper option together with top of the line model rather than keeping previous generation top model as a economy alternative.
    23 Apr 2013, 09:58 PM Reply Like
  • rrose39
    , contributor
    Comments (645) | Send Message
     
    What changed is Apple made available an acceptable alternative (i.e. the 4 or 4S) to shelling out big bucks for the top of the line.
    23 Apr 2013, 10:14 PM Reply Like
  • scott trader
    , contributor
    Comments (4501) | Send Message
     
    Different price points for different plans. How many phones does samclone make?
    23 Apr 2013, 10:26 PM Reply Like
  • IntelligentInvester
    , contributor
    Comments (17) | Send Message
     
    Great reply. This is also the case with the iPad mini, where Apple is sacrificing gross margins for selling more products. I don't see why people don't factor a lot of these things in and just keep on having enormous expectations for Apple.
    23 Apr 2013, 11:01 PM Reply Like
  • Icbg04
    , contributor
    Comments (3) | Send Message
     
    The issue with aapl is actually quite simple and it’s not valuation metrics or allocation of cash, its Leadership (both in company leadership and in product leadership). 1) Tim Cook doesn't have a vision for the company and if he does he certainly has not been capable of articulating it. That fact that they bowed to pressure for more cash disbursement in the form of dividends and share buy backs just confirms that the management has no clue what to do. 2) Just as worrisome is Cooks inability to sell the market on a product or idea. It seems that he couldn’t sell water in the desert. 3) Cook along with the BOD seems to be in constant denial of the market facts. This was evident since as soon as he started to speak on the earnings call the after hours share price plummeted from around $425 and end at $398(6.3%). 4) If he is the supply chain guru than he has also failed miserably in his core competence. Therefore one needs to ask if it is possible that a non product, non sales and no idea CEO can run a product driven, idea driven company the likes of Apple. The market, despite Einhorns praise of the increased dividends and share buy backs, has clearly weighed in on this question. Let’s see how long it takes the BOD to get out of denial and take action.
    24 Apr 2013, 12:16 AM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    Paulo, a critical mass was reached. The 100th monkey heard about iPhones. The low end of market demand exploded.

     

    The 5 sold overwhelmingly just like previous models. But as an added bonus, others sold also. The others came up, the new phone didn't go down.

     

    Ratios like market share are secondary and derivative. Don't draw primary conclusions from them. Look at the primary numbers instead.
    24 Apr 2013, 01:44 AM Reply Like
  • Keep It Simple
    , contributor
    Comments (470) | Send Message
     
    "But up until the 4S the latest model always sold overwhelmingly ... and the 3S and 4 were also available at discounted prices. Something changed. "

     

    @Paulo Santos

     

    The flaw in your logic is the amount of carriers that sold the 3GS. As of late, there is a massive increase in the amount of carriers that have entered the market with a cheap iPhone 4 w/ cheap service.
    24 Apr 2013, 09:48 AM Reply Like
  • Vitalogy80
    , contributor
    Comments (32) | Send Message
     
    KeepItSimple...

     

    Agree completely with this. Way more carriers now have "free" iPhone 4's. Almost no carriers other than AT&T had free iPhones before.
    24 Apr 2013, 11:31 AM Reply Like
  • sikkabooyah
    , contributor
    Comments (473) | Send Message
     
    In terms of probable market impact and sheer innovation, an iWatch is right up there with the Ford Edsel. The primary distinction lies in the fact that AAPL put its foot in it 53 years later.

     

    Is this the legacy that Steve Jobs intended? I think not. If Job's grave were to be opened and he was found to be right-side up, it's only because he turned over twice.
    23 Apr 2013, 08:50 PM Reply Like
  • MajorDude
    , contributor
    Comments (252) | Send Message
     
    The Ford Edsel failed for a number of reasons:

     

    Style
    Price
    An odd push-button shift
    An alternate dealer strategy not unlike Infiniti (which also failed.)
    Bad PR.

     

    Wearable computing is a new but promising category. Look at the huge success of Nike+.

     

    iTunes was introduced to mobile phones through the Moto ROKR. It was a dog. But it established iTunes as the platform for mobile phones.

     

    An iWatch wouldn't actually be an iWatch - it would be something else.

     

    Ten years ago, who would have thought that a computer company would be selling more music than Tower Records?
    23 Apr 2013, 09:26 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    @MD: True, but now iTunes, iPad, iPhone (and iOS) and iTV all have healthy competition. Appl has had its acceleration period - and others are now eating part of the fruits. This was inevitable, and has repeated itself in the history of innovation - read the original history of AC power systems a'la Tesla/Westinghouse v. GE.

     

    Wearable computing - Goog's glasses won't be available for a year and imho the current version isn't that wearably integrated and "seamless." From a materials and design standpoint, still a challenge.
    23 Apr 2013, 09:43 PM Reply Like
  • SmashFinance
    , contributor
    Comments (34) | Send Message
     
    Jobs is gone... plain and simple... it takes a special kind of person to a.) to be so innovative and b.) keep so many other creative people focused on the details...Cook just ain't that kind of person
    23 Apr 2013, 11:08 PM Reply Like
  • Yokyok
    , contributor
    Comments (325) | Send Message
     
    he sounds almost as out of touch as steve ballmer
    23 Apr 2013, 09:24 PM Reply Like
  • rocback
    , contributor
    Comments (972) | Send Message
     
    A 3% yield is tax equivalent to a 4%+ before tax yield due to tax advantage for dividends. There is no place where you can get that yield on top of a chance to increase stock price (your principal).
    23 Apr 2013, 09:27 PM Reply Like
  • redarrow5150
    , contributor
    Comments (965) | Send Message
     
    Increase in stock price? Like over the last 6 months?
    23 Apr 2013, 10:12 PM Reply Like
  • Icbg04
    , contributor
    Comments (3) | Send Message
     
    Just wait till the stock drops further. the yield could reach 5%.
    24 Apr 2013, 12:15 AM Reply Like
  • justaminute
    , contributor
    Comments (581) | Send Message
     
    Apple is a value trap.
    23 Apr 2013, 10:30 PM Reply Like
  • pangbert
    , contributor
    Comments (21) | Send Message
     
    @redarow

     

    Of course stock holders would appreciate an increase in stock price, but for all practical purposes, the only way to make money out of it would be to sell the stock. A solid dividend, on the other hand, provides you with cash without taking away from your principal investment.

     

    Again, I am not knocking on a price increase, I would sure appreciate it right about now. BUT unless I was to sell the stock, I would not make any money. That AAPL decided to give money back to its investors, just makes it more attractive to hold.

     

    But still at 3% is it quite low....(even if it translates to about 12 dollars per share per year).
    24 Apr 2013, 12:38 AM Reply Like
  • redarrow5150
    , contributor
    Comments (965) | Send Message
     
    I like aapl but clearly there's a period here where new product launches are on the shelf so why be here? Stock continues to fall and the yield isn't that attractive to hang around. Now if you're someone that has held and has a low basis cost then yes stay with it. I'm surprised aapl isn't seeing more of bounce this afternoon as Samsung announced they are delaying rollout of a new phone...I think it was them.
    24 Apr 2013, 02:35 PM Reply Like
  • mmaalb
    , contributor
    Comments (5) | Send Message
     
    The presentation was very realistic and reflects a more matured market for smart phones. Only bad side is the insistence in not making a larger screen iphone model, you should offer products to all market preferences. Do not overlook the hugh success of the ipad mini and the colateral income and benefits it brings for the ecosystem. You can also be sure there are innovations coming and is better to be cautious about their release. The long term is good.
    24 Apr 2013, 07:25 AM Reply Like
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