Neil Hughes
Ahead of its holiday quarterly earnings report, Apple finds itself in a situation the company hasn't encountered in awhile: investor expectations for the next year are surprisingly low.
With that in mind, Ben A. Reitzes of Barclays Capital believes Apple's earnings conference call on Jan. 23 will be the company's most important in the last decade.
Over the last three months, Apple's stock price has fallen by nearly 17 percent. One of the reasons is believed to be investor concern over Apple's continued growth potential and gross margins heading into calendar 2013.
Barclays has maintained its overweight rating for AAPL stock, as Reitzes believes that Apple faces lower expectations for its fiscal year 2013. He sees new product cycles from the company later this year helping to change investor sentiment.
In particular, Reitzes is a proponent of Apple building a low-end iPhone to address emerging markets like China. Recent reports have claimed that Apple plans to release such a device this year.
While some investors are concerned that a low-cost iPhone would cut into Apple's margins, Reitzes doesn't share that sentiment. He also believes that other investors will change their tune if and when the product is built.
"We believe Apple can sell a phone with a more inexpensive casing for emerging markets and a (bill of materials) below $150, and believe concerns around margin dilution may be overdone, given the pending benefit to revenues," Reitzes wrote in a note to investors on Friday.
He believes that Apple is in a "peer group of U.S. disruptors" that also includes Google, Amazon and Facebook. Reitzes noted that Amazon and Google also saw large sell-offs in 2011, but those are a "distant memory" after both companies rebounded in 2012.
"Momentum can change quickly among the leaders in disruptive mobility — along with sentiment," he said. "If Apple can prove yet again it is more than a handset company, then we believe shares can recover."
Charles Martin
Christine McKee
Wesley Hilliard
Malcolm Owen
Andrew Orr
William Gallagher
Sponsored Content
99 Comments
Please, no more about this mythical 'low cost iPhone'.
I think this cheaper iPhone is in fact a future offering of Apple. Tim Cook has said that China will soon be their number one market, and in order to accomplish that, they will have to compete with mid and low end Android products on a grand scale. Read more here: http://tinyapplebytes.com/
Typical hyperbolic BS... Analysts aren't worth the bandwidth they're given.
I think this cheaper iPhone is in fact a future offering of Apple. Tim Cook has said that China will soon be their number one market, and in order to accomplish that, they will have to compete with mid and low end Android products on a grand scale.
I bet China is a big area of growth for BMW too, but I don't see them making a special "cheap" car for that market either. It would kind of defeat the purpose. The reason that people like Apple devices is that they can rely on a certain level of quality in everything they do (and that lends prestige to the brand, so people also buy the products because of this "prestige"). People are willing to pay extra for that guarantee, or the associated "brand prestige." If Apple started making cheap crap, they would lose this advantage. My sister had a Samsung Android phone, probably not one of the best ones, and she hated it so much that when I got her an iPhone for Christmas, she actually cried tears of joy. I think the best Samsung phones are probably pretty decent from what I can tell, but I doubt she'd get another Samsung anytime soon, just because her first experience with one was so bad. If her first Samsung was a Galaxy S3, maybe she'd be a repeat customer.
as an ex tiffany employee i can tell you you don't get bargain at tiffany's for what you get. you pay a premium for the blue box it is in, and your girl knows that you love her enough to simply throw your money away. the product is top quality and perfectly crafted but you can buy a similar diamond anywhere but you dont get the box and the bragging rights for your best girl . apple is in this league it as well as tiffany's has a cash'e that although there are lots of people in their market they actually have no competition.
to ask either of them to wallow in the treadmill of commodity competition shows a person who does not understand branding and tribal purchasing. Apple needs to keep focusing on that 75 % profit share of the market!