“Because Apple’s stock is down, financial news outlets are on the prowl for an explanation. There is no good explanation, but the explanation that seems to have stuck is the risk of carriers cutting subsidies,” Jeff Borack writes for Seeking Alpha.
MacDailyNews Take: It’s not really and “explanation” per se, it’s more like the bullshit du jour.
“Carriers might cut subsidies, but Apple is not at risk,” Borack writes. “Let’s assume that carriers worldwide cut subsidies across the board by $30… except for Apple and Samsung, smartphone manufacturers are either not profitable or marginally so. If every manufacturer made $30 less per smartphone, Apple would barely notice and Samsung would survive, but 47% of manufacturers would be wiped out. Apple will show lower profits for perhaps a year, but it should more than make up for lower margins with higher market share, increasing net profit.”
Borack writes, “Reduced subsidies are a threat to every smartphone manufacturer except Apple. Furthermore, Apple stands to benefit more from the possibility of increased subsidization than any other market player.”
Read more in the full article here.