Apple's stock drops as investors worry about 'expensive' iPhone

[techbeck]

Apple showed off its newest iPhones yesterday and the market did not like what it saw. Analysts at UBS, JP Morgan, Credit Suisse, and Bank of America all downgraded their ratings on Apple's stock, which is down more than 5 percent this morning.

 

The big concern on Wall Street was the iPhone 5c ? investors were hoping Apple would unveil a low-end model that could compete on price with cheaper Android phones, which have been making big gains in developing markets like China. But despite its cheaper plastic shell, the iPhone 5c will retail for north of $700 in China, meaning it will be too expensive for most consumers there.

 

"The lower-priced iPhone 5c may not be priced low enough, in our view, which could limit incremental penetration of the midrange smartphone segment," writes Mark Moskowitz, an analyst at JP Morgan.

 

Apple also failed to announce a deal with China Mobile, the nation's largest carrier, which had been rumored for some time. It seems likely that Apple will get this partnership done, but it remains unclear when it will officially begin.

 

It's not unusual for Apple's stock to dip after an event, and the share price remains well above its recent low of $390. Investors are eager for a new narrative around Apple that could turn the stock's momentum around. A recent tweet from Carl Icahn's saying the company was undervalued boosted the stock by $17.1 billion dollars in 24 hours.

 

There were some bright spots in yesterday's event for Apple's business. The iPhone 5c, which will retail in the U.S. for $99 on contract, is cheaper to make than the iPhone 5. If it sells just as well, this could help boost Apple's margins. But overall, the market doesn't see gold at the end of this rainbow for Apple until it can find a way to significantly expand its reach to consumers of mid-priced smartphones.

 

http://www.theverge.com/2013/9/11/4718736/apple-iphone-5c-gold-5s-downgrades-stock-price-falls

[Astra.Xtreme]

Seems like Apple just wants to play the "high margins, low market share" game.

As long as their sales numbers stay high, I'm sure they'll keep on that same path going forward.

[Charisma Veteran]

Time to buy stock, eh? >.>

[psionicinversion]

i dont think the 5c is cheap enough. if more of the 5c sells then market share is still going to be the same because it just seems they wont be buying the 5S.its still a high end phone, not a "flagship" but still high end. it should be free on contract if they want to get anywhere.

[Sandor]

Time to buy stock, eh? >.>

I don't think so. The perception is pretty poor at the moment and there doesn't seem to be anything on the horizon to suggest an improvement. Unless they're planning a $500 watch attachment for the iPhone as the great saviour. 

[Astra.Xtreme]

i dont think the 5c is cheap enough. if more of the 5c sells then market share is still going to be the same because it just seems they wont be buying the 5S.its still a high end phone, not a "flagship" but still high end. it should be free on contract if they want to get anywhere.

They never make the previous gen phone free on contract.  The model 2 gens behind always is, which is the 4S in this case.

[vcfan]

the 5c is just a retooled iphone 5,which didn't sell as well as apple wanted(or else why would they retool it?). this is your typical apple launch, introduce the new model,and bump the other ones down one level. the problem is, everyone was expecting a cheap model,which didn't happen,hence the stock dropping.

 

stock pricing is determined by the emotions of people will a lot of money.  

[ctebah]

It's fairly simple.  If they released a cheaper iPhone it would allow people to buy the phone without signing up on a contract.  And cell phone companies want people on contract.  So Apple releases a more expensive iPhone and is also able to negotiate ridiculous purchase agrements with carriers.

 

On the other hand though, I really wanted a $350 iPhone free of contract.  I always wanted to tell my carrier to go f**k themselves.

[ctebah]

the 5c is just a retooled iphone 5,which didn't sell as well as apple wanted(or else why would they retool it?). this is your typical apple launch, introduce the new model,and bump the other ones down one level. the problem is, everyone was expecting a cheap model,which didn't happen,hence the stock dropping.

 

stock pricing is determined by the emotions of people will a lot of money.  

 

They retooled it because it is cheaper to do so than design a completely new phone.

[Charisma Veteran]

I don't think so. The perception is pretty poor at the moment and there doesn't seem to be anything on the horizon to suggest an improvement. Unless they're planning a $500 watch attachment for the iPhone as the great saviour. 

Doesn't it always seem to bounce back up, though?

 

Maybe not this time, you may be right. The magic spell Jobs had cast over everyone has been fading for a while.

[Atomic Wanderer Chicken]

The C in Iphone C means con!

[Astra.Xtreme]

the 5c is just a retooled iphone 5,which didn't sell as well as apple wanted(or else why would they retool it?).

If I'm not mistaken, the 5 is the highest selling phone ever. I think they designed the thing with super fine tolerances, which made it expensive to make, plus there was some rumor about the screens now costing more.  Plastic is cheaper and simpler to make, so they probably had to make some design changes to keep their margins the same.

[Sandor]

Doesn't it always seem to bounce back up, though?

 

Maybe not this time, you may be right. The magic spell Jobs had cast over everyone has been fading for a while.

Well it's a long way from $700 in 2012.

[vcfan]

If I'm not mistaken, the 5 is the highest selling phone ever. I think they designed the thing with super fine tolerances, which made it expensive to make, plus there was some rumor about the screens now costing more.  Plastic is cheaper and simpler to make, so they probably had to make some design changes to keep their margins the same.

 

http://appleinsider.com/articles/13/07/22/iphone-5-accounts-for-half-of-apples-smartphone-sales-iphone-4s-takes-30

 

iphone 4s 30%

iphone 5 50%

 

i doubt they would have messed with anything if sales were what they had hoped,because it could backfire. if it aint broke,dont fix it is the saying. i think they repackaged the exact same product,which will give it new hype,and hopefully it will give sales a boost.

[Astra.Xtreme]

http://appleinsider.com/articles/13/07/22/iphone-5-accounts-for-half-of-apples-smartphone-sales-iphone-4s-takes-30

 

iphone 4s 30%

iphone 5 50%

 

i doubt they would have messed with anything if sales were what they had hoped,because it could backfire. if it aint broke,dont fix it is the saying. i think they repackaged the exact same product,which will give it new hype,and hopefully it will give sales a boost.

Well like I said, the manufacturing on a phone with small tolerances is very expensive, and the price they were paying for the screens was going up.  That's a perfectly valid reason to redesign instead.  

 

Apple, of anybody, isn't going to change something in their usual product cycle if it's going to lose them profits.

 

The only thing I think is kind of stupid is that they won't have a black or white option for the 5C.

[vcfan]

Well like I said, the manufacturing on a phone with small tolerances is very expensive, and the price they were paying for the screens was going up.  That's a perfectly valid reason to redesign instead.  

 

Apple, of anybody, isn't going to change something in their usual product cycle if it's going to lose them profits.

 

The only thing I think is kind of stupid is that they won't have a black or white option for the 5C.

 

i see your point. could have been a decision based on more than one factor.

[Atomic Wanderer Chicken]

Apple has so much money, they could take a enormous loss on every product they make for the next 30 years and still have tons of money left!

[Astra.Xtreme]

Apple has so much money, they could take a enormous loss on every product they make for the next 30 years and still have tons of money left!

Probably, but then they'd have no investors left.  :laugh:

[Growled Member]

I still believe Apple was foolish to release the 5C. Cheap products aren't their thing. They should stick to the high end, luxury products they know and everyone loves.

[Anibal P]

I still believe Apple was foolish to release the 5C. Cheap products aren't their thing. They should stick to the high end, luxury products they know and everyone loves.

 

You mean overpriced items? Quality wise most other electronic companies have caught up and surpassed Apple by now, Apple just has their name and hype as selling points

[ctebah]

You mean overpriced items? Quality wise most other electronic companies have caught up and surpassed Apple by now, Apple just has their name and hype as selling points

 

Nah, it's no surprise that Apple keeps getting voted best company for product durability and built quality year after year.  Even Foxcon said iPhone 5 was the hardest product they ever had to assemble.

 

So as far as quality goes, Apple always has been and still is on top.

[Growled Member]

.... Apple just has their name and hype as selling points

 

They will loose that if they get to selling cheap knockoffs like everyone else.

[ATLien_0]

Did Apple officially say the 5c stood for 5 cheap? I feel like it means either core or color for the added colors. Someone mentioned above that Apple has really strict manufacturing guidelines. They do, probably one of the strictest out there as far as the attention to detail. Really tight tolerances, no mold or part lines etc. The Lumia 520/620 is probably as close as you get to the 5c. 

[majortom1981]

I still believe Apple was foolish to release the 5C. Cheap products aren't their thing. They should stick to the high end, luxury products they know and everyone loves.

The problem is if nokia can take the guts of its expensive phones  and make cheaper ones so can apple. Apple is just being lazy.

[Yusuf M. Veteran]

The problem is if nokia can take the guts of its expensive phones  and make cheaper ones so can apple. Apple is just being lazy.

The thing is, Nokia's Windows Phone devices didn't have high-end specs to begin with (aside from a better display and camera). Windows Phone doesn't require powerful hardware in order to run smoothly. I'm sure Apple can make a low-end iPhone device but they won't do it because they're known for making premium devices. Whether you think it's worth paying so much for such a device is up to you. I would never spend $719 CAD (price of 16GB iPhone 5S in Canada). I'd much rather get a 16GB Nexus 4 for $249 CAD.