“Apple just can’t seem to keep Wall Street happy,” Cadie Thompson reports for CNBC. “The tech giant’s stock was down by about 5 percent on Wednesday afternoon after disappointing the street in two big ways this week. First, Apple didn’t meet pricing expectations with its iPhone 5C and second, the company failed to announce a deal with China Mobile.”
“Investors and analysts anticipated the iPhone 5C would price in the midtier market at about $350 unsubsidized. However, the smartphone costs over $500 without a contract and about $100 with a two-year contract, a price that is still too high for Apple to sell the device in emerging markets, industry experts said. In China, for example, an unsubsidized iPhone 5C will cost 4,488 renminbi, the equivalent to $733.,” Thompson reports. “‘Just how far behind is Apple trying to fall? I do not get Tuesday’s release and product launches. Something is just wrong,’ Doug Kass of Seabreeze Partners Management said in a note Wednesday… Customers in emerging markets are price-sensitive and want a lower-priced phone, but the iPhone 5C—or “iPhone dud,” as Kass describes it—won’t be cheap enough to drive market share gains that could lead to earnings growth.”
Thompson reports, “Kass said that Apple is making a mistake when it comes to trying to maintain high margins because growing market share is actually more valuable. ‘I fully recognize that Apple must somehow walk a tightrope between sustaining (elevated) profit margins and growing market share, but it did neither with yesterday’s announcements. Rather, it slipped badly,’ Kass said Wednesday. ‘From my perch, market share now is so valuable, not current gross margins — it remains my view that Apple is making a strategic mistake. Is Apple trying to lose as much market share as possible in a world where the value of the market share is immense given the ecosystem that goes along with it?'”
Read more in the full article here.
MacDailyNews Take: Entry point construction attempt or just a fundamental lack of understanding on Kass’ part?
Apple is an aspirational brand.
Tim Cook knows exactly what he’s doing, even if Dougie can’t figure it out.
The Story of the Cadillac Cimarron
The most important part of any luxury brand is its image and one bad model can ruin it. In the early 1980s, Cadillac joined other luxury brands in trying to attract more entry-level buyers with a smaller, more fuel-efficient car. Instead of coming out with a truly new product, GM added the Cadillac crest to what was, in all important respects, a Chevrolet Cavalier. It also added thousands to the price tag.
In all, it was neither a good Cadillac nor a good value. Even GM executives will readily admit today that this was a really bad idea. – CNNMoney
[Thanks to MacDailyNews Reader “First 2014, Then 2016” for the heads up on the Cadillac brand debacle.]
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Can the U.S. SEC prosecute Doug Kass over Apple stock split rumor? – February 27, 2013
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We need to think a li’l bit longer term here. AAPL will absorb part of the emerging market as well as the youth, the parents will buy the 5c for the young ones because it’s 1) fashionable 2)more sturdy.
We need to think what this will mean next year as the tier down the year old models, I personally think this is a key point. What more innovation is needed in a supreme form factor with all the basics to make the developers shine with great tools. AAPL fine tunes, every year what needs to be fine tuned, eg. camera, speed, and power. They are taking a different route with the fingerprint scanner in that it will be top end alternative when commerce takes hold. Solid security will go a long way for the e-commerce to transition.
Notice the Samsung changes the form factor to Apples well established model, why didn’t they stick with the tapered edge look and feel. Probably because they put a lot of trust in AAPL design team which saves them gobs of $ from R&D, so that money can be diverted to their expanding boiler room tactics, hence smear campaign.
Just keep making top quality phones for a profit. Have the awesome operating system. Make a profit. Let Samsung listen to the idiots who want go cheap. Bright colors is the Jonny Ives look. OK.
Have people noticed that only the 8GB 4S is on offer for ‘free’ or $450 unlocked/T mobile in the US. The other capacities have disappeared.
That’s the same capacity as the first gen iPhone !!
Kids want apps and music and nothing less than 16 GB or probably 32GB is of much use – so that kicks the 4S into touch for all but those with low phone usage requirements – ie, average camera, a bit of music and a few useful apps; not much beyong what will come free with the phone.
So are Apple targeting the 5C only at kids with rich parents ?
Going on record saying I think the 5c will be the best-selling iphone EVER.
Apple just can’t seem to keep Wall Street happy
And I could not be happier. It means Apple will continue to THRIVE and remain SANE.
What’s ‘wrong’ is stupidity, manipulation and cattle behavior on idiotic Wall Street. Ignoring these fools is an incredible Apple insight.
It means AAPL will remain valuable, in spite of the Wall Street fool’s worthless and detrimental advice mongering.
Apple may be looking at the future. In the past when they introduced a new phone, the ‘old’ phone sold cheaper. This time they introduced a cheaper, plastic phone, and discontinued the ‘old’ phone. So when next year and new iPhones arrive, Apple can discontinue the ‘old’ phone, the iPhone 5c is reduced in price, and a new ‘c’ model is introduced. The Flagship iPhone is always replaced, and the ‘c’ models address the lower price/profit markets.
As for ‘analysts’ and ‘pundits’ reporting on Apple; they should be referred to as ‘anal-ists’ and ‘troll-its.’ 🙂
Am I the only one impressed by the new phones, the free iWork, the friggin-awesome new MAC-Pro launch, the impending lighter/thinner iPADs, new iPODs, other new products, etc? I am personally ready to POUNCE on several new Apple products this Fall, and am also actively looking to add to my Apple stock position! Back up the truck!
The one disappointment was the lack of a formal agreement between China Mobile and Apple. This is LONG overdue, but I suspect is largely due to CM, as Asian businesses as big as this one like to exert leverage and test their new partners, as they view the partnership as strategic and long term, and therefore move cautiously before cementing the alliance. Cook even travelled there recently to meet personally with CM’s CEO – a smart move – but so far, no cigar.
As to share, Kass shows his ignorance of tech, emerging markets, and consumers. My sense is that Apple would have damaged its brand by dropping price like the others – especially in the emerging markets. In fact, the Chinese actively seek out aspirational brands like Apple. Price is part of that, and a low price – in their minds – actually damages the brand’s image and appeal.
Also, what is important is obtaining PROFIT SHARE – NOT UNIT MKT SHARE. Kass simply does not grasp that. He also does not understand that many difficult/miserly consumers are actually bad (unprofitable) customers, so a business should NEVER chase them. Let Google/Android and their partners have them! haha!
Kass said that AAPL was going to split.
Kass is a qualified stock manipulator, and has a following as he gives good head lines.
People who pay attention to him get their news from television.
As one has commented, look him up and see for yourself…using the Search box.
Mr. Kass is a noted expert on phones. He didn’t like the 5 because “it needs a lead weight”. Yes.
http://blogs.barrons.com/techtraderdaily/2012/10/03/aapl-kass-slams-iphone-5-feels-like-a-toy/
you can sell the iPhone 5C they way you want, but the reallity is:
it is all about last year’s tech with colored plastic case and premium price, everything else is just matketing shit!
First of all this isn’t all true. The 5c has a bigger battery. The 5c has the 5s’s front camera, and also the 5s’s radio – which covers more LTE bands. So while the iPhone 5c replaces the 5 ( yet still cost 100 dollars less as all older iPhones always do ) .. its better then the iPhone 5. Apple could’ve just sold the iPhone 5 at 100 dollar cheaper, instead they actually gave the hardware an upgrade – yet you’re still paying the price you would’ve for the older iPhone 5.
And secondly, a lot of folks planed on buying the iPhone 5 when it became the 2nd best model and dropped in price anyways…at least now ( for the same price ) they get the bigger battery, better front camera, and more LTE bands..
All the others will do what they always do – buy the newest phone. This is no different then any other brand of smartphone. When the Galaxy S4 came out – some still bought the older G3. Why ? I don’t know,.
The preorder for the Apple iPhone 5C has started in Singapore. Seems like it is not selling as fast as the previous release of iPhones. Probably 5S will sell better.
The 5c isn’t meant to be a killer in sales – its meant to replace the iPhone 5. The newest iPhones have ALWAYS outsold the 2nd oldest phones. Every year Apple has lowered the price of the older iPhone because it became cheaper to make, but this year they ran into a unique situation. The iPhone 5 had a bigger screen and was still a pretty good phone that cost more to make. They had to offer a “older” phone, but how could apple do it without killing its margins ? They figured out they could get rid of the nice exterior and replace it with plastic. While the 5c is not exactly an iPhone 5 ( the 5c has a bigger battery then the 5, has the 5s’s front camera, and covers more LTE bands the the 5 ) it is now cheaper to produce then the iPhone 5. Apple needed to be able to see an “older” cheaper phone – well… Here it is: The iPhone 5c ! … I’m getting a 5s !
How wrong was Apple now ?
They sold 5 million iPhone 5’s last year in 3 days ( which broke the previous record of the year before in which Apple sold 4 million iPhone 4s’s in 3 days )…
Apple now sells 9 MILLION iPhones in the same 3 day period ( nearly doubling last years record ) … haha.. Whose the one making the money ? Articles that report some analyst who definitely shouldn’t be running Apple, huh?? The analyst doesn’t understand the worthless market share ( of many cheap phones ) means nothing to valuable market share. Would you rather own stock in matches or lighter? More people use matches by far, but lighters make a lot more money.