Wall Street analysts can be an odd sort. Apple is seen as a red hot company producing must-have products, yet many observers of the Cupertino, Calif. tech giant are downright wet blankets when it comes to Apple’s future. Monday, a fellow analyst said pessimists predicting Apple will grow -2 percent must live in some alternate universe where up is down and iPhones don’t sell.
To achieve -2 percent growth, the iPhone market share would need to fall by 75 percent over the next three years, Apple shedding most of its 116 million handsets expected to sell between 2012 and 2015, Bernstein analyst Toni Sacconaghi told investors. But there could be another bizarro possibility, he said.
Apple, one of the most profitable tech companies ever conceived, could drop overall gross margins from 41.3 percent to 30.9 percent by 2015. Alternatively, the profit on iPhone sales alone could plummet 2,000 points, the analyst envisions.
But neither scenario is remotely close to reality, Sacconaghi reminds us.
“What makes Apple’s valuation truly astonishing to us is that the iPhone and iPad — which together drove 87 percent of its revenue growth and an estimated 91 percent profit last year — are exposed to secular tailwinds,” the analyst writes. In other words, both key Apple products are as extremely profitable and demand remains high.
Wall Street analysts can be an odd sort.