Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?


Will Any Amount of iPhone Sales Placate the Apple Pessimists?

  +Follow September 24, 2013 9:27AM
Tickers Mentioned:

On Sept 23 Apple Inc. (AAPL) announced that they had comfortably beaten analyst expectations of opening weekend 5C and 5S  sales, moving 9 million iPhones, or 3 million more than the consensus. Even taking into account this year's inclusion of China into the intial launch, the number was an imporvement on both the 4S and 5 launches. Concomitant with this year's lauch weekend sales beat, Apple reported that they would hit the top end of revenue projections for the quarter ending Sept. 28, meaning they were looking to hit at around $37 billion in sales.

Not everyone is convinced the new iPhone sales are worth celebrating, however. Even though the sales outpaced analyst consensus by 33 percent is of no concern to Apple bears. What is of concern is that the company has lost its edge.

The “iStone” that is Sinking Apple With its Burdensome Profits

CBS News pointed out the fact that the company did not provide separate sales figures for the 5S and 5C, assuming that means the 5C has underperformed. TechCrunch criticized the decision to even market the iPhone 5C, saying a cheap phone dilutes Apple’s chi-chi brand appeal. Societe Generale responded to the iPhone sales numbers by actually downgrading the stock, ratcheting the company down from a “Buy” to a “Hold.”

Whether the 5C succeeded or failed, though, is not the true crux of the Apple pessimist’s argument. The main gripe concerning Apple is that the company has run out of ideas. They’re just doing an imitation of themselves, and have been since Steve Jobs died, regardless of the cash generated from their flagship product.

ABC’s Sandy Cannold summed up this sentiment when she called the product the “iStone” and wrote that the “era of innovation has given way to an age of incremental change... Steve Jobs wouldn’t have been satisfied to only pocket billions upon billions on tweaked products alone.”  

Apple Needs a New Product, Steve Jobs Needs to Come Back From the Dead, or Preferably Both

The success of the iPhone is irrelevant. The problem is that, no matter the sales numbers, it simply isn’t a revolutionary product, and you can thank leadership not named Steve Jobs for that.

New CEO Tim Cook, by the virtue of not having released a radically new product in his year and a half tenure, is already perceived as a failure, money be damned.

Because there’s a lot of money, just so much money. Last quarter Apple rang in $35.3 billion in revenue, and this quarter can expect to easily top that.  Notably, the company also topped iPhone estimates by 5 million units.

Despite losing half their value from Oct. 2012 to April 2013, the company has rebounded by virtue of improving earnings and forecasts, and is once again the most valuable company on the planet. In terms of having the capital to fund innovation, Apple has more than anyone. This summer the company engaged in stock buybacks and doled out a $2.77 billion dividend distribution yet will still likely end the year with a cash hoard of $170 billion.

What do they Want? Revolutionary Innovation! When Do They Want it? All the Time!

But the problem fopr the bears isn’t that Apple has the money to do whatever they please. It’s that they’re not totally upending the market with a new product now. Apple was moribund as soon as they threw their mettle behind another iPhone. The iPhone 5C and 5S were inherent disappointments, because they are, unfortunately, still iPhones.

But the iPhone line, regardless of its supposed stale reputation, still accounts for the majority of Apple's revenue. And as stated earlier, that’s a whole lot of revenue. The question then is: if not to generate revenue and profits, what’s the point of the company?

Ostensibly, its innovation. It’s a new product like the rumored iWatch, Apple TV, or the iPad. Anything that is exciting, anything that says “We are a tech company and we make sexy new toys.” Something like a sports car that can run for 400 miles on an electric battery. You know, like Tesla Motors (TSLA) .

That sexy innovation explains why a company like Tesla can trade at around 98 times forward earnings while Apple trades closer to 11. It’s the rosy promises new products can bring.

But for Apple, new products just don’t sell like the iPhone, which does, in bundles. While the concept of the iPad is far fresher, last quarter Apple still sold twice as many phones as tablets, and is expected to move 90 million units of the “iStone” by year’s end.

The iPhone, simply put, is the cash cow. Once they finish milking it (and the sales show they haven’t) Apple can throw down on whatever innovation they see fit. Innovative companies like the $22 billion market-capTesla? With their war chest, Apple could buy seven of them.

But until they quit getting everything they can out of the iPhone, the pessimists will remain unconvinced, no matter how many units they move or how dead Steve Jobs remains.  


(image of Apple's Cupertino, Ca. headquarters courtesy of Wikimedia Commons)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

Signup for our daily newsletter and get our best articles emailed right to you!

Results for aapl
Alysia Sarkisian
2 Oct 14 01:26:39
RT @SeekingAlpha: One More Thing About Apple And Microsoft - The COO-To-CEO Evolution http://t.co/H4Mfy2TrOG $AAPL #APPLE $MSFT
2 Oct 14 01:25:26
Who remember, what pre-payed #ss have said that iPhone 6 delays in China till 2015?! Stock was down about 4% on this fake rumor. $AAPL
2 Oct 14 01:21:27
RT @Tstrarup: $AAPL 2 million preorder in 6 hrs China, orders direct from $AAPL Oct 10th, good news 4 stock that stays stuck @ $100. needs…
2 Oct 14 01:21:20
RT @DeidreZune: China preorders 2 Milln new iPhones in 6 hours vs 4 M global in 24hrs http://t.co/mGLhBdVzew …. @coffeygrinds @rfaloona @op…
Quantpost Cnsmr Good
2 Oct 14 01:21:10
$AAPL News Alert: http://t.co/IqIAXojkoh Updated options view: https://t.co/sL11dRcA5c All options views: https://t.co/dUHzbxOXOr
Guerilla Prophet
2 Oct 14 01:20:56
RT @ForTraders: Apple : EU says Ireland swapped Apple tax deal for jobs http://t.co/8R3HCJPG6O $AAPL
Seeking Alpha
2 Oct 14 01:20:36
One More Thing About Apple And Microsoft - The COO-To-CEO Evolution http://t.co/H4Mfy2TrOG $AAPL #APPLE $MSFT
2 Oct 14 01:20:03
Apple : 'Apple remains in good hands' http://t.co/oRlbjO2yqk $AAPL
2 Oct 14 01:20:02
Gadgets http://t.co/dtJNwZkZnU $002502 $0992 $VUZI $AAPL
2 Oct 14 01:19:14
RT @DeidreZune: China preorders 2 million new iPhones in six hours http://t.co/mGLhBdVzew $AAPL #HUGE
2 Oct 14 01:19:11
RT @DeidreZune: Preorders @ 3 China carriers+distributors Suning Appliance & D. Phone could exceed 2 Million iPhones in 6 hours http://t.co…
2 Oct 14 01:19:01
RT @DougKass: MacDailyNews: China regulator approves Apple’s iPhone 6/Plus for sale in China http://t.co/o3joE7DdK7 $AAPL
Anonymous N. Ireland
2 Oct 14 01:18:03
RT @ForTraders: Apple : EU says Ireland swapped Apple tax deal for jobs http://t.co/8R3HCJPG6O $AAPL
2 Oct 14 01:15:04
Apple : EU says Ireland swapped Apple tax deal for jobs http://t.co/8R3HCJPG6O $AAPL
2 Oct 14 00:59:08
RT @DeidreZune: China preorders 2 million new iPhones in six hours http://t.co/mGLhBdVzew $AAPL #HUGE
Laura Ennis
2 Oct 14 00:54:24
RT @FortuneMagazine: Is Apple Pay the reason eBay is spinning off PayPal? http://t.co/pznVOXtjBP $AAPL
Alexander Hramov
2 Oct 14 00:37:08
2 Oct 14 00:29:57
#Apple Set To Lose Billions In EU State Aid Case $AAPL http://t.co/6t8mf7eUjS
Forex Trading Unlock
2 Oct 14 00:24:56
$AAPL stock content, charts, analysis, & more - Free - http://t.co/zcPXVAZA6x
Apple News $AAPL
1 Oct 14 23:51:23
$AAPL Pro-democracy protesters targeted with malware on iOS, Android http://t.co/M132n0GryD @MaximumPenny
1 Oct 14 23:49:00
RT @DeidreZune: China preorders 2 million new iPhones in six hours http://t.co/mGLhBdVzew $AAPL #HUGE
Nacho Suárez
1 Oct 14 23:39:42
RT @craigbuj: Smartphone sales data via Kantar $AAPL $GOOG $MSFT http://t.co/rKadSiNCyF
1 Oct 14 23:38:15
1st 6 hours of $aapl iphone 6 pre orders in China worth 1million units (2mn if incl distribs) cc @AppleholicAnon
Heather Renee
1 Oct 14 23:33:03
RT @MisterMainSt: “@aztecs99: Evercore raises AAPL target to 115 from 100, overweight -- @Stephanie_Link @jimcramer @DougKass” $AAPL #bulli…
1 Oct 14 23:30:39
$AAPL 苹果宣布20日将公布Q4财报 http://t.co/Dhws7FJZCT
Andres Llorente
1 Oct 14 23:29:21
Apple seduciendo a nuevos clientes: La revista "Vogue" entrevista a Jony Ive http://t.co/z9ligCNt9j $AAPL http://t.co/Tyz17MiuKI
Anthony Verias
1 Oct 14 23:23:29
If you want quick customer service in $AAPL store follow these steps: 1) Start recording 2) Say #BendGate https://t.co/ZmtzRZgmMe #rbnews
Parag Kalra
1 Oct 14 23:16:59
If there is one #Apple device which badly needs #TouchID then it has to be all $AAPL laptops. Tired of typing corporate LDAP passwords. <3 
Kai Adam Osborne
1 Oct 14 23:13:47
RT @DanielEran: Happy October : $AAPL iPhone 6 Plus http://t.co/svI0nCRsu0
Stephen s
1 Oct 14 22:54:04
RT @LMLLL7: Tommorw morning last time to get under 80s before run MMS accumulating more load up $MINE $AAPL $BABA $CNET $MYEC
Andrew Hong-li
1 Oct 14 22:53:08
RT @WSJAsia: China iPhone 6 sales to start Oct. 17 http://t.co/W6xT4co473 $AAPL http://t.co/IwzAdCDjYN
Harshil Shah
1 Oct 14 22:50:44
RT @craigbuj: China preorders 2 million new iPhones in 6 hours via carriers $AAPL $CHL $CHU $CHA http://t.co/FLK7wVljE6
1 Oct 14 22:49:17
RT @craigbuj: China preorders 2 million new iPhones in 6 hours via carriers $AAPL $CHL $CHU $CHA http://t.co/FLK7wVljE6
Bob Rein
1 Oct 14 22:45:28
RT @DanielEran: Apple's iPhone 6 A8 GPU destroys Galaxy S5, HTC One M8, Moto X & Nexus 5 /w fewer, slower cores & much less RAM $AAPL http:…
Johnny Bleiss
1 Oct 14 22:42:22
More #CNBC bashing of $AAPL; Here's your play http://t.co/kUHm9lM2IH
Daniel Eran Dilger
1 Oct 14 22:37:53
Happy October : $AAPL iPhone 6 Plus http://t.co/svI0nCRsu0
Eugene Borukhovich
1 Oct 14 22:35:53
RT @ChrisJBergstrom: Here's What Happened When An Employee Told #SteveJobs Something Couldn't Be Done http://t.co/C5JEY1JaG6 #nolimits $aapl
Apple News $AAPL
1 Oct 14 22:33:51
$AAPL Find My iPhone web page lets users check on Activation Lock status http://t.co/xnheOYijIT @MaximumPenny
1 Oct 14 22:33:40
$aapl strong buy before big china sales number.
1 Oct 14 22:28:06
Chris Bergstrom
1 Oct 14 22:24:56
Here's What Happened When An Employee Told #SteveJobs Something Couldn't Be Done http://t.co/C5JEY1JaG6 #nolimits $aapl
1 Oct 14 22:20:55
AAPL 99.18 Stock Charts $AAPL Apple Inc. (NASDAQ) Last Updated: 10/02/2014 00:20:53 AAPL Stock Chart - 1 Month http://t.co/rqLnVjflQb
TV_Trading Ideas
1 Oct 14 22:14:07
AAPL $AAPL http://t.co/2iIt37HiFU
Kylan Hodson
1 Oct 14 22:13:57
I Might Go To The $LAKE For An Early Water Ski. Make Sure To Follow The Up Trend Here: http://t.co/dai7tflELu $AAPL $RADA $NETE $TAN $TWTR
Stock Wire
1 Oct 14 22:11:40
App Updates Begin Supporting Apple Inc.'s HealthKit $AAPL http://t.co/jfDxYp9RXn
BUZZ Just-In
1 Oct 14 22:10:48
Tickers trending on TWTR in last 1 hour EURJPY EUR/USD AUDUSD USD/JPY $AAPL http://t.co/gCylufvxHL
1 Oct 14 22:08:06
$AAPL Genius Designer Marc Newson Is Only Working At Apple Part Time http://t.co/s8cqiC4yCA
1 Oct 14 22:02:03
"Jony Ive Discusses Steve Jobs and Apple Watch in Vogue Interview" $AAPL http://t.co/xBfHmCB4bm
1 Oct 14 22:00:58
"Apple releases iCloud tool to check device Activation Lock status" $AAPL http://t.co/9QQUAcFLPc
chris eardley
1 Oct 14 22:00:42
RT @DeidreZune: iOS-connected Hexoskin fitness tracking smart shirt now available http://t.co/EOIRVSwmcc #iWant $AAPL
  +Follow September 24, 2013 9:27AM



blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.