Caution over Apple despite sweet sales
IPhone maker faces analysts amid souring relations with network
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Sunday 22 April 2012
Apple's souring relations with the world's biggest phone
companies are expected to be brought into focus when the iPhone
maker faces the analyst community this week.
Apple shares have swung wildly in recent trading as bulls and bears tussle, but both expect the company's chief executive, Tim Cook, to report another set of soaring sales figures on Tuesday night. There are different views on what he will hint about future profitability of the iPhone.
In the US in particular, mobile carriers are trying to screw down the price they pay to handset makers. The iPhone has been heavily subsidised by the carriers in order to attract gadget-savvy customers to their network, but now the companies are trying to promote alternative phones that run on Android and Windows operating systems, where they pay less.
Concern about this change was one of the reasons for the sudden reversal in Apple shares earlier this month, after the research firm BTIG abandoned its buy rating on the stock. The firm said that, while Apple says it has sold about 33 million iPhones in the first quarter of the year, it may hint at a drop to 27 million next quarter.
In all, the forecast is for Apple to report revenues of $40bn for the three months to the end of March, juiced by sales of the new iPad 3 tablet. Kevin Dede, analyst at Auriga, said: "Feedback has clearly been positive, and we suspect that expanded global distribution of the new model should help bolster sales rates while offering the iPad 2 at lower price points should contribute to the expansion of Apple's tablet franchise."
Apple's shares have surged far and fast in 2012, from $400 at New Year, to $500 in February and peaking at $636 on 9 April. For a short period the next day, Apple was valued at $600bn, only the second company in history to hit that figure (after Microsoft at the peak of the dotcom bubble).
As well as the iPhone and iPad, Apple is winning market share in laptops and has also excited investors with plans, so far under wraps, to move into televisions. Bullish analysts point to Apple's lowly price-earnings multiple to suggest that the shares can go much higher still, perhaps eventually above $1,000.
BTIG, though, wrote: "Investors should take a breather and take a moment to consider the changing dynamics in the post-paid wireless industry, which has seen margins squeezed by the frequent upgrade activity of iPhone customers, and the sustainability of a $600 iPhone and possible need for a price cut."
Look beyond the usual shows for the best festive telly
Geoffrey Macnab does not like the comedian's big screen debut
The battle for control of Stieg Larsson's £30m legacy
French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
David Cameron takes his biggest gamble yet as he gets tough on Europe over immigration
Two PAs cleared of fraud - and Nigella Lawson left reeling at 'ridiculous sideshow' of drug allegations and public dissection of her marriage to Charles Saatchi
Burglar steals video tapes of child abuse, hands them into police
Paul Walker's daughter Meadow attends Justin Bieber Believe premiere
- 1 Tim Sherwood challenges Daniel Levy to set out vision for Tottenham Hotspur’s future
- 2 French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
- 3 Sun will 'flip upside down' within weeks, says Nasa
- 4 #Teamnigella: It’s the only side to be on
- 5 Christmas comes early: Justin Bieber is 'retiring from music'
- < Previous
- Next >
iJobs Money & Business
£59999 - £80001 per annum + Benefits: Pro-Recruitment Group: A Top 10 firm in ...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Project Manage...
£60000 - £90000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£Negotiable: Citifocus: High calibre individual with institutional client serv...