Why analysts and the media were wrong about Apple’s iPhone 5 in China

“On Dec. 14, Apple’s stock dropped about 4% on reports that Chinese consumers wouldn’t be lined up for the release of the iPhone 5,” Chris Neiger writes for The Motley Fool.

“Media reports over the weekend showed Apple stores minus the traditionally long lines of customers — yet the weekend saw the sale of 2 million iPhone 5s in China,” Neiger writes. “Let’s take a quick look at why some thought the iPhone 5 launch would fizzle in China, and what Apple’s prospects look like in the country. When the iPhone 4S launched in China back in January, demand was so high that many Apple stores sold out of the phone. One store in Beijing couldn’t open because too many people were waiting outside. To make matters worse, Apple suspended phone sales in stores because of scalpers, leaving customers with an online-only purchase option.”

Neiger writes, “Contrast this with media reports over last weekend, which showed barren Apple stores. Early stories speculated that iPhone 5s weren’t flying off the shelves. To be fair, those reports were partly correct. Chinese customers typically buy no-contract phones, and no-contract iPhone 5s weren’t selling like hotcakes. But these articles missed the real story: the number of iPhone 5s being sold with a carrier contract.”

Read more in the full article here.

MacDailyNews Take: Some of the analysts and media were wrong, not all.

Related articles:
2+ million iPhone 5 units sold in China in first weekend: Apple bears need new thesis – December 17, 2012
What the analysts are saying about Apple’s 2+ million iPhone 5 sales in China last weekend – December 17, 2012
Apple sells over two million iPhone 5 units in first weekend in China – December 17, 2012
Why there were no long lines for iPhone 5′s China launch – December 14, 2012
Apple stock falls as some misinterpret demand for iPhone 5 in China – December 14, 2012

37 Comments

  1. What’s even more funny…RIM went from $200 something million to around $14 million in sales in one year…and their stock went up after the devastating news.. Time to call people out.

  2. Perhaps Wall Street would have preferred all out riots at the China Apple Stores with casualties and fatalities. Is stock trading now an extension of the entertainment industry? Record sales, profit numbers and market domination apparently are no longer enough to impress the day traders. It’s like dealing with spoiled little brat children. 😯

  3. Wall Street would prefer a China Mobile deal. Nokia has their phone on China Mobile. Wall Street would like to see Apple do something positive with that huge pile of cash. Apple hardly dominates the market in cell phone sales. Record sales is what the Street expects from Apple if they are to continue to support Apple as in the past. It’s funny how short ones memory can be when things don’t go the way they want it to. The Street has supported AAPL unbelievably during their huge run up but it’s business. And in business there’s no room for sentiment. That’s for fanboys. Grown-ups (adults) don’t spend their time defending a company! Who does that? And why? Is it your sister? Grow up. Get a life. Apple has not had good earnings reports the last 2 quarters. That’s not analysts high expectations that’s simply facts. If you think the stock should keep going straight up after that then you don’t understand business. Apple reached its all time high in September. It was due for a pull back. Then you had people taking their profits. What they should do at a high point. It was common sense investors reaping their rewards. Those who did not are the ones doing all the crying now. Buy and hold. How’s it look now? Then the big shareholders ( mutual funds,hedge funds etc.) took their profit and funds did year end rebalancing and the stock went down. Funds were overweight in AAPL. THAT is why it went so high. Not just great performance by Apple. Funds have to rebalance every year. It’s not a plot. So many had so much AAPL that their selling greatly affected the share price. It did (buying) going up. That’s why it hit $706. And of course it has to (selling ) going down. Nothing manipulative just simple economics. Now add the fiscal cliff and it goes down even further. It’s not a conspiracy. AAPL will probably have a stellar earnings report in January for the first quarter. It should go back up . Should. But there is competition out there or the iPhone would own the market. It doesn’t. I own my 3rd iPhone. I don’t want an Android phone but plenty do. Matters not whether its good or a copy. It sells. That’s all that matters. There is a clear skepticism around AAPL that wasn’t there before. It won’t go away. I think AAPL will do well but not like before. It just can’t keep that up. I am a Mac guy. Make my living with Macs. But im not a fanboy. And if im not why would anybody be a fanboy? I invest in Apple. Have done very well. But I’m not a buy and hold guy. It isn’t practical or profitable. Learn to collect your profit at appropriate,obvious times. Looks like a good time to put all tha money you have had since you pulled it out at or near $706 back to work. Damn! nearly $200 per share extra. sweet! Or have that kick in the stomach feeling every day.Your choice! And enjoy all that Apple makes. Especially the iPad Mini!

      1. But that’s the whole point. Amazon’s continuing run-up can’t be measured by anything concrete. A balance sheet with lots of red and minuses absolutely should not help raise a company’s share price. One would think that’s a sign of a company with a poor financial model. A company losing money shouldn’t be able to be worth more to investors.

        I find it absolutely ridiculous how a company can be worth more to investors when it’s losing money. I realize that money is going into the infrastructure of Amazon’s expansion. But if that’s the case, why is Apple’s retail expansion not worth anything? It should be at least worth as much as Amazon’s expansion. Instead, Apple’s increased store openings are still met with a falling stock. Nothing Apple is doing is helping to raise the share price. Things that would usually raise the share price for most companies simply are not working for Apple. Apple’s share price seems to be measured only for one thing and that’s slowing growth. Not negative growth, but slowing growth projected three years from now. That’s insane. No one can accurately predict a company’s growth that far out. All predictions about Apple are always pessimistic and that makes no sense at all. Despite Apple doing well quarter after quarter, Wall Street remains pessimistic. The way I see it, no matter how much money Apple currently makes, if the pessimism remains, then the share price doesn’t move up.

        Isn’t there any way at all for Apple to change that pessimism into optimism like Google and Amazon have? Why is the future seen as so dim for Apple when it has the most money to change nearly everything about itself?

        1. Google and Amazon do many things and continually expand the things they are doing, so there’s a wonderful mysteriousness about where they are going, an absolute uncertainty that investors seem to adore, whereas Apple only puts out a few devices and so give the illusion that their future is much more predictable (only 20% yr/yr growth, the horrors!!), which apparently investors hate.

      2. I didnt mention AMZN. Where did you get that? How about PCLN? C? HON? GOOG? Ok AMZN : high multiple. Doesn’t release Kindle numbers. But it’s growth is undeniable. It owns retail online and soon retail completely. There is no competition. Apple does not own “their space”. Apple has had,does and will always have competition. AMZN is unique in that respect. Circuit City and soon Best Buy are victims. Radio Shack is on life support. Fry’s may be next? Blockbuster owes a lot of its demise to AMZN. Borders,Barnes and Noble,Waldenbooks etc. also have been crushed by AMZN. And countless other retailers have evaporated over the years unable to compete with AMZN. AMZN is the king. It is valued by many on that basis. Ruling your space and everyone else’s space is hard to argue against. It’s stock price has reflected it’s continued conquering of the retail space. I suppose it may have its fanboys too. I’m not one of them although I have made really good money over the last 12-14 years on AMZN. But again, I take my profit when appropriate. So to “make my points” for AMZN? Why? Why should I ? I don’t run AMZN. I don’t fawn over AMZN. I don’t make excuses for or try to defend AMZN. And I really don’t care if it runs up or down. Same for AAPL. But I guess I did actually give you enough common sense legitimate reasons AMZN is where it is. But I actually couldn’t care less. AAPL,AMZN : they’re companies. They’re not your family. Do you understand that? No really, do you understand that?

        1. “AMZN : high multiple. Doesn’t release Kindle numbers. But it’s growth is undeniable”

          eh did you notice amazon last quarter it had a net LOSS while apple made 8.2 billion?
          there’s undeniable growth when it’s losing money?

          (the quarter before Amazon DID make money, an astounding 7 million while apple made 8800 million.!)

          “Apple has not had good earnings reports the last 2”

          eh… how were aapl’s last two quarters not stellar?
          any tech companies that made as much net profit as apple?
          because it did not missed analysis estimates (not it’s own) it’s bad? and it only missed analyst’s by 200 million or so out of billions in profit.

          1. Totally agree .. When one’s comments get so wild and in your face, it’s easy to miss the details of what one says.

            I don’t know why the market is doing what it is but I do know that Apple is worth much much more than Amazon. Period.

            Just a thought.
            En

      1. A rant, no matter how intelligent, is always a single, run-on paragraph. Elmer Gantry doesn’t do paragraphs. Paragraphs give one a moment to digest; not what’s intended in a stomach-punch. A very good technique, when done well. Victor Hugo has a single sentence of 823 words in Les Miserables.

    1. That’s not relevant here and actually I’m not sure if grown-ups, as you say, would spend the time you took to write all that. What that makes you I’m not sure.

      The problem here is that all the stupid negative reports of “poor sales in China” – when it couldn’t be farther from the truth – didn’t help the stock.

      That’s an undeniable issue and something that needs to be addressed in someway.

    2. “The Street has supported AAPL unbelievably during their huge run up but it’s business.”

      False. The street never had Apple’s PE ratio very high, it has never been above Google’s in the past few years. The Street has been very standoffish and hesitant to support Apple near the level that is justified, and the rock bottom current PE ratio is crazy sauce with a cherry on top.

    3. GM wrote: “Apple has not had good earnings reports the last 2 quarters.”
      Explain that will you please? Specifically address how “not good” is a quarterly YoY revenue growth of 27% and how “not good” is quarterly YoY earnings growth of 24%.

      Also then explain the business side of GOOG: quarterly YoY revenue growth of 45% but quarterly YoY earnings growth of -20%.

      And if Apple’s 27% YoY quarterly revenue growth is “not good” then why are you so excited about Amazon, with their 26.9% YoY quarterly revenue growth.

      Without such explanations, or the other factors you consider more important, it’s hard to accept your assignment of folks who are defending Apple as fanboys or not grown up.

  4. One problem is that the bozo anal-lusts (oops spell check again…supposed to be Analysts) can’t get their minds around the fact that Apple thrives off of “quality” products with one of the best margins in the tech sector. They make huge profits as a consequence.

    Everytime Apple blows the roof off, they keep saying…”Apple had the best quarter BUT it must be a ONE OFF. They cannot repeat this going forward. The only way is down. Sell now”. A quarter later they are saying the same thing.

    With Amazon or Google they have the opposite reaction. They will say things like…”Google/Amazon (or insert your other favourite crappy company) had a LOSS and margins are down but we like that because they cannot do any worse going forward. Buy all you can”. This happens Q after Q.

    Apple loses because it wins. Google/Amazon wins because they continually lose. It’s called winning by losing.

  5. As if Apple needed Wall Street’s support. That’s ridiculous. Wall Street doesn’t understand Apple any better than it did 10 years ago. Wall Street is not something “grown ups” understand, unless they buy into the “crap of the moment” being spewed by those on Wall Street who think they know something. Wall Street has demonstrated its monumental stupidity and its slavish devotion to the “common wisdom” for decades. People who pretend that one must be somehow sophisticated to understand the machinations of investing on Wall Street make me laugh.

    Apple’s last two quarters beat Apple’s own guidance. IT’s not Apple’s fault that analysts on Wall Street live in an insular bubble and subscribe to business as usual methods. Analyzing Apple using techniques that work for Microsoft or Dell are just plain ignorant and silly.

    The drop in Apple stock price since September is mostly due to people taking profits under a lower tax structure than they will face next year. It’s as simple as that. It’s because people who bought and held in 2003 have something like $500 per share profit to deal with, and the difference between paying $75 per share sold today, and $150 per share for shares sold next year is immense. Buy and hold? How’s it look now? Actually, not bad, considering that my basis is $7.49 per share.

    That large funds have to rebalance according to their short-sighted rules is comical. What their self-imposed rules do is force them to sell a winner like Apple and keep a loser like Microsoft or Nokia in order not to be overweighted in Apple. Silliness prevails and all of the “experts” nod their heads and try to explain why such nonsense somehow makes sense.

    Apple doesn’t need more market share than it has. It doesn’t need the hipsters living in mom’s basement on their $30 per week allowance when they are between barista jobs. Let Android cater to them. They have the time to sit and fiddle with their OS and don’t have anything to lose by disclosing their pitiful personal buying habits and financial information to Google. Potential Apple customers’ time is too valuable to spend it tweaking cheap, free OS powered pieces of plastic crap to save $20.

    As for selling at peaks, my what novel advice! I’d never considered buying low and selling high. The only drawback with your strategy of selling peaks that are recognizable 3 months later is that it’s hard to see them at the time. People who try to time the market with Apple repeatedly get bitten and end up understanding that the best course really is buy and hold, and sell when you need the money for something else, like paying off your mortgage, or your university tuition.

    Yes, school us please, us poor fan boys.

      1. Totally agree. The big key is “investors” buy for the longer term. They cannot or do not want to ” play the market.

        “Market players” spend much of their time trying to find peaks and valleys and buy low and sell high. I would venture the we do not hear them brag about the ” ooppppsssss” that they make.

        Either method is great for Apple. Just remember that they are two different things.

        Just a thought.
        En

  6. Why were analysts and popular media wrong about Apple? Because they are mostly clueless when it comes to Apple. They are supposedly “industry experts” which explains why they are so consistently wrong when it comes to anything Apple-related. Apple goes out of its way NOT to follow industry rules and expectations, so the so-called experts generally demonstrate zero expertise.

  7. Apple had Revenues in 2008 of $32.479 Billion. This year 2012, Apple had Revenues of $155.971. That is a gain in sales of merely $123.492 billion

    For Comparison, GOOG had Sales in 2008 –$21.628 Billion. this year 2012, GOOG reached sales of $37.862 Billion. Which is an increase in sales of 16 Billion.

    So Apple increases sales by $123.492 billion, Google increases sales by $16 Billion during the same period. In plain old English, Apple is pounding Google a new one. And Apple is clearly having a smokin’ hot quarter. I am long Apple and I would buy more if I had the money.

    1. I agree with your conclusion but your math is wrong. The spread between -21.6B and +37.9B is about 59.5B. So between 2008 and 2012 Google increased sales revenue by $59.5B.

  8. The big picture: Apple stores are now only a small part of of the iPhone distribution network now in China. Outlets of China Unicom, China Telecom, and Suning (the Best Buy of China, with over 1000 outlets nationwide) are far more accessible and did not require advance reservation. In fact, if reporters had been doing their job, it was possible to read headlines from all over China speaking of crowds lining up a day in advance and iphones selling out in short order. Western reporters in China are either lazy, incompetent, or disingenuous in not reporting another barn-burner of an Apple product launch.

  9. GM wrote that Wall Street would prefer a China Mobile deal. I kinda think Apple would prefer a deal there, too.

    The problem with Wall Street’s view of Apple is that they want Apple senior management to care about their advice and Apple’s senior management most assuredly does not give one lick about Wall Street’s advice. Apple did when Sculley, Spindler and Amelio had their turns at the helm, but during those years Apple had to borrow, so the perception of Apple in the minds of the Wall Street bankers did matter. Steve nixed all that upon his return, knowing that by focusing on products that enhanced the lives of customers Apple would eventually win in the marketplace. And that’s just what has happened.

    Next time you even think about what an analyst is telling Apple, stop and go dig up how much money said analyst is managing; compare that figure to the amount of money Peter Oppenheimer is managing and I think you’ll decide to pay attention to Peter by orders of magnitude over the analyst.

  10. Apple should reduce the number of shares on the market by buying back its shares when Wall Street’s try to manipulate its price. Collect the shares as treasury shares. Apple has the cash to do so. Never split the share and produce more paper. Choke the supply and never let Wall Street play havoc with Apple shares again. Then after all the shares that Wall Street have fun in manipulating have been mopped up, then Apple can reward long-term investors, in addition with annual dividends, with distribution of the treasury shares. Apple has to control its shares in circulation.

  11. Pretty soon the stock market will be covered by TMZ. I’m sure they’ll do a better job than all the analysts. At least they’ll give it the sarcastic treatment it deserves.

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