Tag Archives: UBS

iPhone sales could be threatened as subsidized costs become more visible, say analysts


How much did your iPhone cost? If you said $199, $299 or even $399 you’re somewhere near $350 off. As some consciously forget, the carriers often shield the owner from the real total cost of the iPhone. That may not last.

iPhone sales could be hurt as carriers switch from so-called subsidized contracts, where customers pay only a fraction of the cost a new iPhone up-front, to deals where the true cost of the phone is more visible, argues a piece in the WSJ.

Many U.S. iPhone customers are not aware that the full cost of an iPhone ranges from $549 for a 16GB 5c to $849 for a 64GB 5s. The reason is that carriers have traditionally asked for only $0 to $200 up-front, hiding the balance of the cost in the monthly tariff. With carriers now switching to separate instalment costs for the phone, and the cost of upgrading every year or two more visible to consumers, analysts believe some will choose to upgrade less often …

AT&T Inc, which reports first-quarter results Tuesday, sold 15% of its smartphones without a subsidy in the fourth quarter. UBS analyst John Hodulik estimates that figure will rise to 35% this year [...]

Brian Marshall, an analyst at ISI Group, estimates U.S. sales of the iPhone fell 20% in the last quarter of the year following a flat showing the quarter before, as sales growth continues to slow.

The consensus estimate of Q2 iPhone sales was of year-on-year growth of just two percent.

Falling sales due to a switch away from subsidies is a phenomenon that has already been seen in the UK, where it’s common to pay the full cost of the phone up-front in return for much cheaper tariffs. The result has been more people holding onto their existing handsets for three years rather than two.

Not everyone thinks a move away from the subsidized model makes sense. Verizon’s CFO Fran Shammo said that the model “has done wonders for us in this industry, so I think to abandon that I think is a mistake.” But with both AT&T and T-Mobile pushing hard for contracts which separate the cost of the phone from usage charges, it’s likely that the shift will be a permanent one.

The big unknown in all this, of course, is what Apple will offer in the iPhone 6. Make that sufficiently compelling, and consumers will want it, up-front subsidy or not. A recent survey showed that 40 percent of North American consumers planned to buy the new handset, a higher figure than for both the iPhone 5 and 5s when also measured before any official announcement by Apple.

Filed under: AAPL Company, iOS Devices Tagged: Apple, AT&T, Brian Marshall, iPhone, iPhone 5C, iPhone 5S, iPhone 6, iPhone sales, Subsidy, T-Mobile, UBS, Verizon Communications

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Institutional money and Icahn shenanigans have AAPL headed back to 52-week highs


Less than a week after AAPL stock reached a new high for 2013, and two analysts raised their target price in response to Black Friday sales, the stock has also hit a 52-week high, running at $570 at the point of writing.

Billionaire investor Carl Icahn doubtless played a role, yesterday tweeting that he would be calling for a (non-binding) shareholder vote on an increased buyback program – though for a smaller amount than he had originally urged.

But Fortune yesterday posted a rather interesting chart that may suggest the upward trend will continue … 


What the chart shows is that the recovery so far has been driven mostly by private investors: the institutional investors who made a run for it when the stock price fell haven’t yet returned. UBS’s Steven Milunovich expects this to change.

Our sense speaking with investors is that many are now equal or underweight Apple relative to their benchmark, which could result in new money supporting the stock.

If he’s correct, the medium-term trend is likely to continue in an upward direction. As ever, however, remember that the market is driven by sentiment, not by facts …

Filed under: AAPL Company Tagged: 52 Week High, AAPL, AAPL future, AAPL stock, Apple, Carl Icahn, Investor, stock, UBS

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This could be the iPhone’s best quarter ever

Apple Event 10/4 Tim Cook iPhonesRemember in October how Apple CEO Tim Cook and CFO Peter Oppenheimer went off message and actually predicted this current quarter would see Apple’s selling more iPhones than ever before? It was certainly unusual for Apple executives to raise expectations in such a specific way, but it looks like it wasn’t such a risky call: A new report from UBS says Apple is on track to sell 30 million iPhones this quarter, which would blow away the previous record of 20.34 million set in the company’s fiscal third quarter.

Maynard Um of UBS sent a note to clients late Wednesday night saying that based on AT&T’s exuberant report that the carrier is on its way to selling more iPhones than it ever has, he is upping his estimate of iPhones sold during this quarter from 28 million to 30 million. AT&T says it has sold 6 million iPhones this quarter already, so even with more than three weeks left in the quarter, its executives felt comfortable predicting it would easily surpass its current record of 6.1 million iPhones sold.

But even then, Um said his estimate is still conservative and that the actual number of iPhones sold could go even higher this quarter. He writes:

We believe that there is a general strength across the board for iPhone demand and are raising our CY4Q [estimates] to 30mn from 28mn units. We continue to believe that our [estimates] are conservative as these revised [estimates] are still below where expected build plans are. We conservatively leave our out [sic] qtr ests though we believe China launches could drive upside.

Apple, on the other hand, was the opposite of conservative when it forecast this quarter. Back in October, just after the iPhone 4S went on sale, Cook stated, “I’m confident that we will set an all-time record for iPhone this quarter,” and Oppenheimer put a bold forecast out there to match: $37 billion in revenue for this quarter — up 38 percent from the $26.74 billion of the same quarter last year — and earnings per share of $9.30, up from $6.43.

We will find out mid-January just how bold — or conservative — that call was.

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Apple Will Sell A Crazy 30 Million iPhones This Quarter [Analyst]

Photo/Steve Rhodes - http://flic.kr/p/8dfETZ

Although AT&T provided few details on how many iPhones the carrier sold this quarter, several analysts are upping their estimates based on consensus that Apple will report record-breaking sales. The Apple smartphone has “general strength across the board” with sales hovering around 30 million units for the three-month period.

Maynard Um, analyst with UBS Equity Research, Wednesday night raised his iPhone sales estimate to 30 million for the holiday period, up from his previous 28 million forecast. “We believe that there is a general strength across the board for iPhone demand,” he told investors.

Both Sterne Agee’s Shaw Wu and J.P. Morgan increased their iPhone sales estimates to 28 million. Wu noted the iPhone strength is spread across the iPhone 4 and iPhone 3GS, as well as the newer iPhone 4S. Wednesday, AT&T announced it was on track to sell more than 6.1 million smartphones during the fourth quarter, smashing its previous high-water mark of 6 million. The carrier sold more than 1 million iPhone 4S handsets during the first five days of its availability. Apple sold 4 million iPhone 4S units in the first three days, more than double that of the 2010 launch of the iPhone 4.

While demand for the iPhone is still going strong, analysts revised slightly downward their expectations for the iPad. Um expects Apple will sell 12 million tablets, while J.P. Morgan’s Mark Moskowitz expects iPad sales will fall to 13 million, down from his previously projected 13.3 million. Wu appears to see the sharpest decline, writing Apple could sell 13.5 million iPads, down from 15 million.

The reason for the lower expectations for the iPad’s quarterly sales is economic pressure. “As consumer wallet constraints persist, some may not be able to buy multiple iProducts simultaneously and may be opting for one larger ticket item with more functionality,” Um reasons.

The increase in iPhone expectations should not come as a surprise. Along with the much-heralded Siri, the iPhone 4S offers razor sharp photography and a third carrier – Sprint. In addition, lowering the iPhone 4 price to $99 enabled more iPhone 3GS owners to upgrade, broadening demand for the iconic handset. In my family, two people have already joined the iPhone camp via the lower iPhone 4 pricing.

As for the slump in iPad demand, it could be a case of “older” technology combined with talk of an iPad 3 appearing in early 2012. The iPad 2 has been around for some time, enough for its newness to start wearing thin. Apple may not want to delay that introduction, learning a lesson from the slump of iPhone 4 handsets we saw as consumers waited for the “iPhone 5.”

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Emails from RoadRunner and Comcast not playing nice with Apple’s servers

The Apple discussion boards are starting to heat up with an issue related to users not receiving emails from particular domains sent to their me.com/ .mac accounts. The problem appears to specifically related to RoadRunner and Comcast domains, and is affecting users across the U.S.

The issue is related to me.com accounts being unable to receive emails from rr.com and comcast.com domains. One user reports being unable to receive emails from “hawaii.rr.com”, while others report the same for “tampabay.rr.com”, and “rochester.rr.com”. It appears Apple’s servers aren’t playing nice with the domain, although some users report receiving emails up to 24 hours late, which would indicate the domain isn’t being blocked entirely. Emails forwarded from one account, such as an rr.com account, to a .me account are apparently not affected.  There are a few mentions of the same issue for emails sent from Comcast.net as well.

Just today my boss’s emails stopped showing up in my inbox – online, in Mail, or on my phone.  I am able to send files to him.  He is sending and receiving emails.  The problem seems to be entirely between hawaii.rr.com (his email, time warner/roadrunner) and my .me/.mac mail account (neither work).  I am able to use my gmail account and my .me/.mac account just fine together.

At this point the problem seems to be inconsistent, but impacting a lot of users across the country nonetheless. Users in the Apple Support Communities report that Comcast claims it’s a “a .mac problem”, while one poster says rr.com has forwarded the issue to their engineering team. Most seem to believe it’s an issue on Apple’s end. We’ll keep you posted when Apple addresses the problem.

How Apple put the hurt on carriers’ subscriber growth

Apple’s decision to delay until September the launch of the iPhone 4S put a damper on what is usually a very merry pre-holiday quarter for the U.S. wireless industry. In total, the four nationwide mobile operators roped in 767,000 postpaid subscribers in the third quarter, a 14.5 percent decrease from last year, according to UBS.

In comparison, second quarter net postpaid adds increased 9.2 precent year over year – a quarter where there is traditionally no new iPhone to offer operators a bump, but this year was aided by Verizon’s snagging a CDMA version of the iconic device. The two major iPhone slingers didn’t do badly in the third quarter, but in UBS’ view their net adds were nowhere near the numbers either operator would have achieved if they had new iPhones to offer subscribers.

Verizon Wireless reported 882,000 net postpaid adds, while AT&T recorded 319,000, with a combined 4.7 million new iPhone activations between them.

That means the fourth quarter could be a bonanza for the wireless industry, combining the usual holiday craziness with the traditional third-quarter new-iPhone bump. UBS predicts a whopping 11.7 million iPhone activations between Verizon, AT&T and Sprint in the final three months of the year. That will result in 1.3 million total postpaid adds for national operators, up from 1 million in last year’s fourth quarter, UBS projects.

A lot of those customers will go to Verizon and Sprint – as the iPhone newbies – but UBS thinks the big winner will be AT&T. It will have the only “free” iPhone as the 3GS will be entirely subsidized with a two-year contract. UBS also believes that AT&T’s network will actually work for it rather than against it. The iPhone 4S has a 14.4 Mbps high-speed packet access (HSPA) chip tailor-made for AT&T’s network, compared to the slower CDMA EV-DO chips used to access Sprint’s and Verizon’s 3G networks. That may sound a lot of gibberish to the typical consumer, but AT&T merely has to say that its iPhone is faster than the others.

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