“Reports of delays in Apple’s iPhone X production, combined with seemingly weak demand for iPhone 8, have put investors somewhat on edge,” Mark Hibben writes for Seeking Alpha. “The CEO of Rogers Communications (RCI) of Canada called demand for the iPhone 8 series ‘anemic,’ and this seemed to precipitate [yesterday’s] 2.37% drop.”
“A few days ago Reuters also reported that iPhone 7 was outselling iPhone 8 in the US, according to carrier surveys by KeyBanc Capital Markets. John Vinh of KeyBanc was quoted as saying, ‘Many respondents indicated that a meaningful portion of customers are buying iPhone 7 in lieu of the new iPhone 8, given the lack of significant enhancements in the new phone,'” Hibben writes. “I continue to be amazed at the lack of technical sophistication on the part of technology company analysts. As far as analysts like Vinh are concerned, if they don’t see a change in the screen, there is no change. iPhone 8 rolls with the A11 Bionic processor, new faster LTE modems, and first time ever (for iPhone) wireless charging. I would certainly call these significant enhancements.”
MacDailyNews Take: As we wrote on Monday:
KeyBanc analyst John Vinh obviously couldn’t analyze his way out of a wet paper bag.
iPhone 8 offers the A11 Bionic chip, Wireless Qi charging, capacity up to 256GB, True Tone display, Apple’s Neural engine, an embedded M11 motion coprocessor, Portrait Lighting, 24/30/60 fps 4K video recording, Dolby Vision and HDR10 support, and fast-charge capability, to mention ten (10) significant enhancements.
“iPhone 8 was never going to sell as well as the usual Apple flagship, and some demand almost certainly has been siphoned off by iPhone X. This wouldn’t be a problem if people could actually buy iPhone X,” Hibben writes. “TSMC’s Q4 guidance was for revenue of $9.1-9.2 billion, an increase of 10.87% y/y. This is probably bullish for iPhone X, which is still scheduled to start arriving November 3, according to Apple.”
Read more in the full article here.
MacDailyNews Take: Rational people can profit from irrational people.
Be fearful when others are greedy, and be greedy when others are fearful. — Warren Buffett
Once again, given that those who are not waiting for iPhone X (the vast majority of Day One newest-release iPhone buyers are waiting for iPhone X) are much more likely to be price sensitive consumers, it is wholly unsurprising that they are choosing the less expensive options, iPhone 7/Plus. We expect iPhone 6s/Plus units are also selling well downmarket.
SEE ALSO:
Apple stock drops after Rogers CEO says iPhone 8/Plus demand ‘anemic’ – October 19, 2017
Analyst: Apple’s iPhone 7 is outselling iPhone 8 – October 16, 2017
[protected-iframe id=”0b201ef3829c56c1a9cb6a56a24c4b51-17146794-18685410″ info=”//z-na.amazon-adsystem.com/widgets/onejs?MarketPlace=US” ]
Hey, I never claimed to be rational.
Does John Vinh moonlight at Consumer Reports… ?
I’m rational and have chosen not to upgrade therefore I couldn’t care less what Pipeline Timmy does with iPhone 8.
Does anyone know pre-order numbers for iPhone X? That number would tell the real story. Are people really that stupid to sell when Apple just announced two phones? Who would not expect folks to pass on the 8 and wait for the X? I’m one of those who will be getting a 7. People should focus on total number of iPhone sales!
Preorders haven’t been placed yet for the iPhone X.
With the iPhone 7 price drop, it is not surprising that there would be a sales surge from “price-conscious” consumers. And I agree that any iPhone sold is a good iPhone, although Apple makes more money from the higher-priced units.
Personally, I would go for the 8 or even the X given the updates. I have generally found that the middle to high-end road yields the best long term value. But may be because I tend to keep my devices for years and starting off with a higher-performing device provides some margin against the effects of aging.
I wish that I had more margin…
There are 2 kinds of investors/traders: retail and institutional. Institutions buy with a 5 year horizon and ignore the media. Retail investors buy with a 90 day horizon and rely on the media.
Except for the selloff of 2008 and 2013 ALL selloffs in AAPL were fueled by irrational retail accounts responding to spurious media reports that eventually prove baseless.
The stock market does not equal rational. Apple investors don’t appear to be rational, at all.
What’s troubling is that GE appears to be really struggling with profits and rapidly dumping employees. A huge quarterly miss and yet the stock only dropped 1.27%. However, Apple on a RUMOR alone of selling fewer iPhone 8 units dropped the stock 2.37%. I’m not sure how that makes any sense. A rumor against an actual fact hurts Apple more than GE. GE carries a P/E of 26. Apple carries a P/E of 18.
KGI and Kuo should spend more time warning investors to stay away from GE but I don’t think that’s going to happen when they’ve got Apple as a patsy. I’m sure there are plenty of other companies that could use Kuo’s analytical expertise for aiding investors.
Don’t confuse investors with speculators.
Speculators are the ones buying and selling on dodgy rumours. Investors just ride out those short term anomalies.
We often see rumours of that type in the run-up to Apple’s financial results. Apple is obliged to honour a ‘purdah’ in the weeks before their financial announcement, so it’s a golden opportunity to circulate a rumour knowing that Apple can’t reply for a while.
There’s a couple of weeks where there is an open goal and stock manipulators can’t resist using it to their advantage. If you’re one of those who get spooked into selling at times like this, then more fool you.
MacDailyNews Take: As we wrote on Monday:
KeyBanc analyst John Vinh obviously couldn’t analyze his way out of a wet paper bag.
iPhone 8 offers the A11 Bionic chip, Wireless Qi charging, capacity up to 256GB, True Tone display, Apple’s Neural engine, an embedded M11 motion coprocessor, Portrait Lighting, 24/30/60 fps 4K video recording, Dolby Vision and HDR10 support, and fast-charge capability, to mention ten (10) significant enhancements.
————————-
Well, all of that is great,but it’s not Vinh saying there’s not enough in the way of notable upgrades, it’s the potential customers.
Apple is doing a terrible job of advertising the new features of the 8. Pretty commercials with slow-motion iPhone spins don’t sell the specs.
There is a legit concern that Apple is running out of growing room with the iPhone. There are only so many people who are going to buy a smart phone and most cannot afford what Apple makes- aspirational or not- on what they make.
Most of the developed world has become a mature market for high end smart phones and Apple has shown no interest to date at playing in the low end of the market where margins are thin. The last two massive markets are India and China and Apple sales seem to have peaked in China and India is still too early to tell.
So how does Tim Cook satisfy the eternal thirst for growth from Wall Street? Going up-market is the open question the $1000 iPhone X is going to address. Beyond that there is monetization of the iOS platform (data mining and advertising), services and selling other products connected to the ecosystem with the iPhone as a hub.
The Apple of late 2017 is a vastly different company from the one Cook joined from Compaq years ago. The company today has massive overhead from both the labor side and the brick and mortar side- something Apple did not have as a lean, hard charging company years ago. Revenue from the iPhone dwarfs all other parts of the business and is necessary to keep the lights on. Should the iPhone decline or fan from favor, the company would quickly begin to burn cash reserves unless it got rid of a lot of overhead quickly.
Apple does have a lot of cash, but it has also assumed, under Cook, a lot of debt and overhead. The day when other aspects of Apple’s business have to help carry a greater share of the load is coming and that is what many on Wall Street and Main Street, are on the lookout for.
When the iPhone peaks- and it will- Apple will not go away. But when it stops growing, the other businesses and new ones will have to grow fast enough to offset the loss of growth in the cell business. That is what Tim Cook and the Board have to think about every day and with every decision going forward.
Apple has struggled with services for decades and has only limited success in diversification. The iPod was developed to lessen dependency on the Mac- same with the Phone- and the success of the iPhone remade the company from one dependent upon the Mac to one dependent upon the iPhone.
For all the speculation about what Apple is doing and planning, this is what underlies all decision making in Cupertino. The iPhone is maturing as a business fast and anyone taking an honest look at it knows that is the case. The only question is timeline.