The Math On iPhones Doesn't Add Up

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from the 2-+-2-only-equals-3? dept

While Wall Street has had something of a love affair with Apple's stock until very recently, it appears that they're finally catching on that not everything may be as rosy as stated. With Apple and AT&T announcing numbers on iPhone sales and iPhone activations, respectively, there's a 1.7 million phone gap between those numbers. Taking into account the recent launches of iPhones in other countries (estimated at 350,000 to 400,000 iPhones so far) and a 20% estimate on people buying iPhones solely for unlocking, there are still nearly 700,000 iPhones unaccounted for... suggesting that they're sitting on store shelves, piling up as unsold inventory. That number suggests at least some gap between perceived demand and actual demand -- while also raising questions about how much effort it will take to eat through that inventory.

http://techdirt.com/articles/20080124/18052864.shtml

[Paddy]

Um...there's been a great deal of Apple-bashing going on lately and I'd think twice before swallowing this analysis hook, line and sinker.

See:

http://www.appleinsider.com/articles/08/01...iber_boost.html

Something certainly doesn't add up...

Also, I think the number of non-AT&T purchasers are probably underestimated. The iPhone is not available in Canada yet (officially) but lots of people have gone and gotten them and unlocked them. That has happened all over the place. Given that Apple has an exclusive contract with AT&T, and is working out similar deals in Europe and (one presumes - though heaven knows when we'll actually see it, since I'm sure Rogers is loathe to provide us with a data deal anything like what they have in the US!!) Canada, they're not likely to trumpet any of that information and instead feign ignorance.

[sandbox]

I've questioned the numbers in the past, but this includes those that use it for an iPod, or have been hacked and exported. The at&t numbers come from the accounts department, not hardware sales. I sold my Apple shares before Christmas when friends in retail told me how bad the activity was in all sectors, so I have no ax to grind. MacWorld was a flop for most and the new target audience is not the general consumer. With projected hardware sales down in 2008-9 Apple has targeted the segment of the population that will give them hi profits and low volume. Walmart has soldout on some of their $200-300 Linux boxes, that's where the volume is going. Microsoft's ##'s are just a reflection of removing XP from the install option package. AMD is better positioned for future sales, as is RIMM. IMO

[sandbox]

Russell Shaw  ip_telephony Converging worlds of IP Telephony, VoIP, Broadband

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Here’s why I predict iPhone will come down to $299 within a few months

http://blogs.zdnet.com/ip-telephony/?p=3122

Shaw has been making great predictions in this field since.....forever

[krissel]

More about the iPhone numbers. Be sure to read the comments.

http://apple20.blogs.fortune.cnn.com/2008/...rce=yahoo_quote

[Paddy]

And this comment says a lot...

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This discussion about how many iPhones were sold is getting ridiculous. Apple reported its gross sales and that should be good enough for judging the success of iPhone. What this endless, mindless splitting of hairs seems to be about is keeping the jackboot of shortselling firmly implanted on the neck of AAPL. Don’t you boys in the pretend media have something better to do with your time?

[sandbox]

The stocks were tanking after a soft buying season and saying nothing lost some folks 30%.

Sure.... there's value in short-term optimism and quiet anticipation, and had the Mac World event presented anything to support it, the stocks would have rebound, but they have not. Yes, it's part of a larger market trend but if this collapse is reflecting that reality then why didn't Apple stocks decline with the rest of the market? Silence and quiet anticipation I suspect.

So, now that reality has fallen upon the Mac community they are asking the questions that they should have asked earlier, before the loss, before the vale was lifted. Faith in a company and/or CEO is not the only criteria that should be used to value products or investments and I suspect the negativity that can be observed in the Mac World is a reality check on that front.

Kris, I suspect that some of those comments are true, but there was already a percentage of iPhones included in the calculation. Yes the 20% could be short, but how short?

As far as the Mac Community losing stock value, they will explain that it's a short term sag in a long term investment. That sort of investing can be very costly. I'm sure if they could have seen it coming they would have all got out of the way and shifted their equity to an offering that has made 10% since AAPL peaked.

Folks that held aapl stock in quiet anticipation lost 40% of value because some didn't asked the critical questions that one would ask of any other company.

Not to put Apple down but they made some critical errors in bringing the iPhone to market and I suspect they are paying for them now. The iPhone is a remarkable offering but it comes with too many strings.

[Paddy]

EH? The stock followed the market trends - it was not "tanking" any more than Microsoft (MSFT) or the NASDAQ. Apple in fact had record profits and sales in the last quarter - not a "soft buying season" - the dive in stock price occurred along with the rest of the market drop, exacerbated by the announcement from Apple that the earnings estimate for the next quarter was down from the original estimate..."down" to a mere 29% OVER THE SAME QUARTER LAST YEAR. How, may I ask, is a 29% increase in earnings a bad thing? Only in the whacked out minds of "analysts" who expected a percentage point or two more and decided that this was the end of the world.

A "short term sag in a long term investment" is only costly if you panic and sell when it sags, or bought when it was at its peak. As for finding something that has gained 10% since the sell-off started, there may be something out there, but darned if I can find it. Nothing in my portfolio has gained overall, that's for sure! The only way I could have realized any gain through that period is if I'd somehow managed to sell everything on January 15 or Nov. 7 and then bought back in on Jan. 22. And then, yes, RIM would have been a good buy; it gained 10% that day. BUT - it's fallen 24% overall since its Nov. 7 record. Market timing is a very dangerous game - most do NOT win at it.

Press conference when quarterly results were announced - including some interesting details and tidbits ignored by the financial press/analysts:

http://www.macworld.com/article/131746/200...08earnings.html

Comparison of Apple, Microsoft and the NASDAQ over the past 6 months. Google (GOOG) and Research in Motion (RIM) also make for interesting comparisons. (RIM is actually more volatile than Apple on a short term basis)

[sandbox]

Yes, appl had record sales but the market had soft hardware projections. The market after all is about speculating on the future. Looking at the future and what was traditionally a MacWorld that would inspire retail... did little. 30% in a short span is a tank in most game theory. Betting on appl to hold when the rest of the market is in decline requires one to Anticipate that it will do something other than follow the market trend. His Stevieness did not make his case at MacWorld, and the iPhone numbers not only didn't meet expectations but caused the investment community to question them. The 30% # is real, the 10% is an example, but it is possible to find long shots or recovery stocks after a sell off to meet that example.

say you hold on to appl for another quarter and it holds @129 .....what is to be gained? As I said if folks knew the fall was coming they would have gotten out of the way, but they anticipated that his Stevieness would deliver the Goods but failed.

With hardware projections being soft and the retail market showing less than a warm welcome during the gift giving season it was decided by some to get out of retail and find something else that would not decline or had already hit bottom. Money chasing a place to reside is going to be a problem for a while, it will require creative investing.  

[Paddy]

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As I said if folks knew the fall was coming they would have gotten out of the way

Heck - it's not just Apple investors that would have gotten out of the way if we'd known what was going to happen! But that's the problem - hindsight is always 20/20. The market was jittery - that was obvious, but typically in a bear market you get a lot more fluctuation over short periods of time. It is very difficult to tell exactly what will spark the next run up or slump, which is why people who try to market time invariably get it wrong most of the time. The time to get out of many equities was probably late last fall, although that depends on the market sector. Some tech stocks have been falling all year long - AMD is now worth about 50% of what it was worth a year ago. My husband's company, ADI, is down about 30% over the entire year - there was a nice spike in May and it was all downhill since then, largely because of the rest of the chip sector, not because ADI itself had lousy results.

Of course, buying Apple is more attractive now - though I'm not convinced that we've actually hit bottom yet.

Just hope nobody here is invested in Palm...that stock lost 66% of its value in ONE day after announcing that they'd lost $9M on $349M revenue in their second quarter. And there's been little in the way of good news since.

No doubt, it will be a rocky year, and Apple is not immune. But I still say that the reaction of the analysts had little to do with reality if you compare Apple to many other companies. After all, few big names are projecting earnings increases in the 30% ballpark. If that's a bad thing, this is a very strange world!

Of course, given the state of the US economy at the moment, anything could happen. Keeping it all under the mattress has certain attractions these days!!

[Xairbusdriver]

You may have also heard about the French bank that wrote off a HUGE chunk of change when they discovered a rouge trader who had managed to lose some 9 Billion dollars? That news hit the European markets and started them on a free fall and is said to have affected the Feds rate cut. Unfortunately, the Feds didn't know why the European exchanges were falling so fast...

As you say, "hindsight is always 20/20."

[RHPConsult]

"Tanking" is clearly in the mind/eye of the beholder.

Not selling a stock that has, over the past 4 years, grown several hundred per cent over its acquisition price, hardly seems to be a loss.

[MamaMoose]

As my late mother-in-law told me there are bulls, bears, and pigs in the stock market. Right now the people, including the so called experts are moaning about Apple stock. That's what I call "pig" talk. I agree with Dick, if you bought Apple stock at $30 to say $80 per share,  losing 10% to 20% of value is not a big deal. However, in late 2007, if you bought Apple hoping it would continue to run up so you could make a quick and nice profit, you are in deep do do.

One of the first laws of physics I learned was what goes up must come down. One can only predict a peak if you are dealing with an object that obeys classical physics - planets space stations, projectiles, etc.

Another lesson from the TS Physicist Emeritus    

MamaMoose*

_______________________________

* Charter member of OFF (Olde Fogey Fysiciste))

[sandbox]

Mama, I bought Appl in 05 @ $17
It was $202 it's now $129 about a 32% correction
If Dick saw that he was about to loose 32% of his investment he might have moved it.

Of course there are some that would will say that it paid well in the past so they should accept the loss in passing, but should they? If so why? If appl has little ability to make money what's the point in letting them have yours? Loyalty? This is stocks not a house pet.

If the market is telling you that tech retail is going to be soft in the near future why expect something else? On top of all of that the dollar in which you'll use is loosing value so you are loosing even if the stocks crawl up.

Now back to the iPhone who numbers were low buy all accounts. The network hookups do not match the sales numbers even after calculating in the variables. This product was the shinning star of his Stevieness's last performance and it's not making money beyond the hype. Consider the hype, the climate and the projections and ask yourself if you wouldn't retain that 30%. Or at least ask some questions?  Russell Shaw is better than pig breath, and if you look into his IP projections you would know that.

There is a downside to hyping your products and expectations, some people actually believe you. All commodities including energy will devalue in the coming year and Russell Shaw 's prediction of a $299.00 iPhone will fall in line.

[Xairbusdriver]

Please bury the horse, for heavens sake, it's been dead for too long!