Ed Sutherland - page 98

Apple may have cut by 40 percent fourth quarter production of its flagship iPhone handset, a Friedman, Billings, Ramsey analyst said Monday.

The drop in production would be far deeper than the 10 percent cut previously anticipated.

“Our new checks indicate that iPhone production could fall more than 40 percent sequentially in the 4Q,” FBR’s Craig Berger wrote in a note to clients.

The drop in production shouldn’t be interpreted as a dip in iPhone demand. In October, Apple reported shipping 6.9 million iPhones during the third quarter.

However, the lowered production may signal “no market segment will be spared in this global downturn,” wrote Berger.

Apple has traditionally been viewed as a company limited chiefly to domestic sales. However, a review of sales figures suggests the iPhone 3G could unlock international markets, providing a ‘halo effect’ for other Apple products.

A halo effect has long been described to explain how iPod sales could boost purchases of Macs. Now some experts believe the iPhone 3G could give Apple a foot in the door to countries once alien to the Cupertino brand.

At the heart of the theory are numbers indicating Apple sold as many as half of iPhone 3Gs internationally. Apple shipped between 2.4 and 4.5 million of the 6.9 million iPhone 3Gs during the fourth quarter ended Sept. 30. The exact numbers depend on who’s talking.

It seems unlike Apple, which has scoffed at inexpensive Macs and been viewed as catering to higher-income consumers. However a new study suggests the iPhone is fast becoming a favorite of low-income buyers.

From June through August, iPhone sales grew 48 percent in households earning between $25,000 and $50,000 compared to 21 percent growth overall, according to comScore.

The researchers found low-income consumers see the iPhone as a way to consolidate costs of a phone, broadband connection and music device.

Apple’s iPhone was among one of the few bright spots in a gloomy third quarter for cell phone manufacturers.

Apple now has 2 percent of the global cell phone market during a time when cell phone makers scrambled to adapt to slowing consumer sales. In September, the Cupertino, Calif. company reported selling 6.9 million iPhones during the third quarter, a 516 percent jump over the previous year.

“Apple has become firmly established as a top ten vendor,” Strategy Analytics announced.

Analysts Thursday said global cell phone shipments either shrank or rose a tepid 5 percent to 8.5 percent.

Apple’s gross margin for the first quarter of fiscal 2009 is expected to “well-exceed management’s guidance of 30 percent,” Financial Alchemist blogger Turley Muller commented Wednesday.

Turley, one a few financial bloggers who’s predictions closely mirrored Apple’s fourth quarter results, said the Cupertino, Calif. company is acting wisely, given the economy.

“This cushion should help Apple exceed earnings expectations even if the economy adversely affects its business,” the blogger wrote.

Handset maker Motorola has reportedly decided to focus on the open-source Android platform, dropping most of its other cell phone designs – as well as more employees.

“They were like a drunk asking for another drink in the software area,” Gartner analyst Ken Dulaney explained to Cult of Mac.

After laying-off 10,000 employees and unsuccessfully attempting to regain its past glory, the Schaumburg, Ill.-based company will cut at least four handset platforms, choosing to concentrate on Android and two other handsets, the Wall Street Journal reported, citing unnamed sources Wednesday.

Giant discount retailer Walmart has slashed its price for MP3 music to 74 cents, challenging both leader Apple and Amazon. The Bentonville, Ark. chain also announced Tuesday it’s MP3 store will offer a free download with each music CD purchased.

The new pricing is limited to what Walmart calls its “Top 25,” songs from such artists as Coldplay, Nickelback and Carrie Underwood.

For some time, you could hardly read about Apple without “iPod-maker” following closely behind in press and analyst comments. However, that symbiotic description is dated, according to one of the rising stars among unpaid Apple watchers, Andy Zaky.
Zaky, who watches Apple sales figures from his post at Bullish Cross, wrote Monday iPod sales contributed just 14.2 percent to the fourth quarter revenue of the Cupertino, Calif. company.
By this time in 2009, the iPhone will replace the iPod as the second-greatest revenue generator for Apple, next to Mac sales, the blogger wrote. Last week, Apple reported selling 6 million iPhones for the quarter.
The blogger is among a new breed of Apple analysts not employed by financial houses to provide estimates and insight. Fortune recently gave bloggers the nod over pros in predictions on Apple’s recent Q4 report.

Partially hidden by the fantastic iPhone sales numbers Tuesday was the fact that Apple outsold RIM’s BlackBerry during the third quarter. Analysts say the information may serve as a roadmap for Apple.

Tuesday, Apple CEO Steve Jobs said 6.9 million iPhones during the quarter. RIM sold 6.1 million BlackBerries during the same period, according to reports.

Global Markets

“Apple sells to a much wider audience than RIM,” Gartner analyst Ken Dulaney told Cult of Mac. Apple’s iPhone 3G is sold in 51 nations.

Cool your jets. That’s the advice from analysts on a flurry of conjecture about whether Apple is stealthily testing online some mix of iPhone and MacBook.

What sparked the talk was a brief mention in the New York Times that an unnamed search engine found in its logs an unannounced Apple device with a display size between an iPhone and a MacBook.

Lending further weight to the suggestion were comments by CEO Steve Jobs that the Cupertino, Calif. company “had some pretty interesting” ideas for the netbook or mini-notebook market.

Citi Wednesday cut its target price for Apple to $153 from $170, joining several other analyst firms reducing Apple share price while advising investors the Cupertino company remains a good buy.

“We believe this is an attractive opportunity to buy a leading technology innovator on sale,” analyst Richard Gardner told clients Wednesday.

Although the financial firm reduced estimates for fiscal 2009 through fiscal 2010, Citi maintained a “Buy” rating for Apple shares.

Apple blew past analyst expectations, reporting Tuesday it sold 6.9 million iPhones for the quarter ended Sept. 30. Despite outselling RIM, the stock target price was cut Wednesday by one financial expert.

In a long-awaited pronouncement of Apple’s financial health, the company announced a 35 percent jump in revenue, posting $7.9 billion for the quarter, up from $6.2 billion for the same quarter in 2007.

On the eve of the release of Apple’s fourth quarter results, one analyst firm suggests the number to watch is how many Macs were sold during the period ended Sept. 30.

Piper Jaffray offered clients predictions that were slightly more optimistic than the Wall Street consensus. Mac sales are “key” to Cupertino’s financial picture, according to the analysts.

In a note to investors, the financial firm predicted 2.8 million Macs were sold during the fourth quarter. The estimate expands on a 2.7 million Wall Street projection.

Will Motorola’s Android handset pose a greater threat to the iPhone, improving on the G1, the first Google phone from HTC and T-Mobile? That’s the question on many minds as details of Moto’s open-source phone appeared Monday.

Motorola’s Android unit, not expected until late 2009, reportedly sports many features missing from the G1, offering improved specs, according to Monday’s BusinessWeek.

Citing information distributed to carriers, the financial news source said the Motorola device appears to be “a higher-end version” of the G1, produced by Taiwan’s HTC.

In the Cold War era, a cottage industry was created around determining the geopolitical significance of Khrushchev or Brezhnev not appearing at the May Day reviewing stand. For silicon valley, it is Apple CEO Steve Jobs and Tuesday’s new product announcement.

Was Tuesday’s announcement of new MacBooks a cryptic message to investors worried about Jobs’ health? We all remember the dive Apple’s stock took when a rumor (which turned out to be false) spread that the Apple leader had been rushed to the hospital for heart trouble.

So, when Jobs shared the stage with Chief Operating Officer Tim Cook and Senior Vice-President of Industrial Design Jonathan Ive, speculation began that Apple was sending a message to Wall Street: don’t worry, we have a plan.

To mark the one-month anniversary of launching HD sales at its iTunes Store, Apple announced it will offer more than 70 episodes of Fall prime-time hits from ABC, CBS, NBC, Fox and cable.

Among the HD episodes are ABC’s “Desperate Housewives,” “Lost,” “Grey’s Anatomy” and “Eli Stone.” CBS shows include “CSI,” CSI: New York, “CSI” Miami” and “Numb3rs.” NBC show in HD on iTunes include “30 Rock,” Heroes,” “The Office” and “Law and Order: SUV.”

Apple said it has also sold 200 million television episodes and 1 million HD episodes. The HD episodes from ABC, CBS, NBC and Fox cost $2.99 a piece while each regular episode from the iTunes Store carry a $1.99 price tag.

In September, Apple kicked-off HD sales, offering 12 high-definition NBC episodes for free. The announcement coincided with the release of iTunes 8 and the return of NBC, which left the iTunes Store in August 2007, following a dispute over pricing of its television shows.

Reaction is still coming in from analysts on Apple’s decision to drop the price of its plastic entry-level MacBook. While ThinkPanure and others believe the sub-$1,000 notebook isn’t enough to attract worried consumers, some onlookers told Cult of Mac the move was a good beginning.

“They’ve never done cheap well – but the $999 MacBook is a good start,” Piper Jaffray analyst Andrew Murphy e-mailed Wednesday.

Murphy said Apple is positioning Mac sales for a long economic slowdown. Wednesday, JPMorgan said Apple had “meaningful buffers” that could allow the company to ride out any initial impact. Analyst Mark Moskowitz pointed to the value of Cupertino’s brand and iPhone revenue expected later in 2009.

Although the price cut affects a legacy plastic MacBook, more than half of the consumers considering the $999 plastic MacBook will opt for the newly-unveiled $1,299 aluminum unibody design, Murphy wrote.

The upshot of Tuesday’s new products: a slight or no impact on Apple margins. The company is expected to announce third quarter numbers later this month.

JPMorgan Wednesday upgraded Apple to Overweight from Neutral, arguing the company is protected from the cold winds of a consumer downturn.

“We think that Apple’s brand and market share momentum offer meaningful buffers” despite 70-75 percent of Cupertino’s sales relying on the consumer, analyst Mark Moskowitz told investors this morning.

Acknowledging even Apple won’t come away unscathed from the current slowdown in spending, Moskowitz wrote “Apple likely has a backstop beyond the first round.”

Apple’s share of the PC market reached nearly 10 percent during the third quarter. Although Cupertino retained the third position in U.S. shipments, Apple posted 29 percent growth, outstripped all other computer makers.

Gartner announced Apple controlled 9.5 percent of domestic PC sales, up from 7.7 percent a year ago. In stark contrast to Dell and HP which had 6 percent and 4 percent growth respectively, Apple had a more than 29 percent increase during the third quarter of 2008.

Apple sold 1.6 million Macs during the third quarter, up from 1.2 million shipped the previous year.

Tuesday, Apple unveiled a lower-priced entry MacBook onlookers saw as a response to concerns of slowing consumer spending. The company has set Oct. 21 to release third quarter sales figures.

The ‘will he or won’t he’ question was answered Tuesday when Apple CEO Steve Jobs announced he’ll offer a $999 MacBook in time for the holiday shopping season.

Although the price cut is on the entry-level 2.1GHz white plastic MacBook and not on one of the nifty unibody aluminum notebooks introduced, the news appeared to satisfy some analysts.

“I think it is important to note that MacBook pricing is coming down. Nobody is immune to the consumer,” Vijay R Rakesh, ThinkPanmure analyst, told Cult of Mac.

After talking up the benefits of a sub-$1,000 notebook, the rumor mill is now soft-peddling the idea as everyone waits for Cupertino’s notebook event slated for 10 a.m. Pacific (1 p.m. ET).

In a post claiming what will and won’t appear, Daring Fireball blogger John Gruber calls analyst speculation of $800 notebooks so much “jackassery” leading up to Tuesday’s unveiling.

Gruber and others are talking of Apple lowering to $999 the price of the 2.1 GHz MacBook which had cost $1,099. In addition, two new MacBook Pros and MacBooks will be introduced. Also rumored: a glass trackpad that also acts as a trackpad button and the replacement of Intel’s graphics chipset for NVIDIA.

“We would be surprised if they didn’t have a $999 MacBook option” for investors, Piper Jaffray Apple hardware analyst Andrew Murphy told Cult of Mac Tuesday.

“If not, (Apple) has some explaining to do,” Murphy said.

He bases his belief on Apple’s prior statements of a “product transition” prompting lower margins.

Monday, Bernstein Research analyst Toni Sacconaghi estimated Apple could gain up to 69 percent in potential revenue if a sub-$1,000 notebook is released.

Giant discount chain Wal-Mart in November may become the second retailer to sell Apple’s iPhone, a report said Monday.

Wal-Mart, which already sells a huge number of iPods, could announce a deal Nov. 15, just two weeks before the retail sector’s “Black Monday,” according to the Boy Genius Report website.

In September, electronics retailer Best Buy began selling iPhones, making it the first third-party retailer to offer the Apple handset.

Gartner analyst Ken Dulaney told Cult of Mac if the report is true, the addition of Wal-Mart with its 3,500 stores, would be a good move.

“Problem is that Wal-Mart shoppers are on budgets and the iPhone is expensive for them both in device cost and service,” Dulaney wrote in an e-mail.

As we await Apple’s Tuesday notebook announcement, one analyst says offering a sub-$1,000 notebook could increase Apple’s potential revenue by up to 69 percent.

If Apple unveils a $900 laptop, the move would increase Apple’s potential revenue by 50 percent, Bernstein Research analyst Toni Sacconaghi said in a Monday note to investors.

If rumors are true and the Cupertino, Calif. company rolls out an $800 laptop, the news could boost Apple revenue by 69 percent.

“The spotlight turns to notebooks.” So goes the just-released invite from Apple to an Oct. 14 media event. The e-mail to media appears to lend credence to a bevy of reports that Cupertino is set to launch a low-cost notebook computer.

Earlier this morning, a number of tech news sites, lead by the Inquisitir, reported an $800 laptop is among a price list that was released to Apple retailers.

The rumors were also backed up by a series of leaked photos published by a Taiwan website. Among the photos was a 13-inch aluminum Apple laptop.

Analysts have speculated Apple may “refresh” its hardware with a sub-$1,000 Mac. Long known for its pricey hardware, Apple has seen its sales impacted by the sluggish economy.

Apple has once again won the “cool factor” with teen iPhone owners now nearly triple ( 8 percent versus 3 percent) compared to a year ago. The Piper Jaffray survey also revealed 22 percent of teens say they plan to buy the Apple handset – up from just 9 percent in 2007.

Other good news for Apple: 84 percent of MP3 players purchased by teens were iPods. Microsoft’s Zune came in a distant second, capturing just 3 percent of the teen marketshare.

Apple’s iTunes music download service now has 93 percent of the market. That’s up from 79 percent uncovered a year ago.