Jul 07

We voted to leave. The pound falls against the dollar by 12%, more than anyone expected and is now at a 30 year low.

Guess what? The super smart team at Citigroup predict that this will hurt sales of Apple, Dell and other US tech firms that price in $.

Citigroup Global Markets analyst Jim Suva has predicted that economic uncertainty in the UK following the referendum decision to leave the EU will hurt Apple sales. Business Insider reports that Citigroup has lowered its estimates for iPhone sales across two quarters.

We are lowering our estimates for June and September quarters given potential for lower demand from macro uncertainty (Brexit related), currency volatility and lengthening replacement cycles.

The reduction isn’t a major one – just 700k down on the previous estimate – but does give some indication that the economic consequences of Brexit will extend beyond the UK.

As an indication of how other tech companies are responding, Dell has confirmed that it has raised its wholesale prices by 10% in the UK in response to a 12.4% reduction in the value of the pound against the dollar, and it’s been suggested that HP is likely to follow suit.

A spokeswoman at HP Inc said:

HP is carefully assessing the Brexit situation to better understand its business and economic impact. In the meantime, we continue to actively move forward with day-to-day operations supporting employees, customers and partners.

Apple currently appears to be adopting a wait-and-see approach, it seems likely that it too will raise its UK prices at some point.

Feb 04

Yes it’s that time again when Apple returns cash to stockholders in the form of a dividend worth $2.8 billion

Apple new photo applicationNext week THursday, February 12, Apple will pay shareholders of record a quarterly dividend of $0.47 per share, but investors will need to buy shares by February 5th (to have settled ownership of the company’s stock by the market’s close on February 9) in order to qualify for dividend.

Apple has been paying its shareholders a dividend about a month and a half after the end of each fiscal quarter ever since it declared its modern dividend plan in the summer of 2012. This dividend will be the third to occur since the company issued a 7-for-1 stock split. That split also converted the dividend from $3.29 per share to 47 cents per share.

Following its stock split, Apple has been busy buying its own stock and spent $17 billion in the September quarter and an additional $5 billion of stock in open market purchase during its December quarter (Apple’s Fiscal Q1 2015). The company now has 5.825 billion shares outstanding down from nearly 6.6 billion in early 2013. That’s a significasnt drop in the number of shares outsrtanding.

AAPL Dividends & Buybacks

Dividends are a minority portion of Apple’s shareholder capital return program, the majority of which has been earmarked for buying back outstanding shares.

Buybacks increase the scarcity, and therefore value, of Apple’s stock by taking shares off the market and retiring them. Removing shares from circulation also enhances the company’s closely-watched earnings per share metrics. Over the last four quarters, Apple has repurchased $45 billion worth of its stock off the market or via accelerated repurchase programs.

The repurchase of shares has slightly reduced the total dividend Apple pays. While the company reports $2.8 billion in dividend payments for FYQ1, at $0.47 per share the 5.825 billion shares outstanding would appear to total $2.73 billion, a $70 million reduction over the previous quarter’s dividends.

“The Company also plans to increase its dividend on an annual basis, subject to declaration by the Board of Directors,” Apple states in its 10-K filing.

Over the past calendar year, Apple has paid out $11 billion in dividends to its shareholders, distributing about $2.8 billion every quarter, although that number is dropping in tandem with buybacks.

Apple’s volume of stock buybacks have also now reached the 5 percent threshold to qualify for inclusion in the “NASDAQ BuyBack Achievers Index,” as well as the PowerShares Buyback Achievers Portfolio, as noted in a report by ETFtrends.

In total, Apple has spent $72.9 billion on stock buybacks since initiating its capital return program, including an opportunistic $14 billion share grab initiated after the stock plunged more than 8 percent last January following the company’s holiday Q1 release which detailed its highest ever quarterly revenues and operating profits—results that the tech media depicted as “disappointing.”

Combined with dividend payments and net share settlements, Apple has spent $102.7 billion on capital return since mid 2012, but still holds over $178 billion in cash.

Jan 28

Yes, once again Apple far exceed revenue and unit shipments for the quarter with $18 Billion profit

Apple completely crushed not only its own all-time records, but also even the loftiest expectations on Wall Street on Tuesday, selling a staggering 74.5 million iPhones on its way to record revenue of $74.6 billion and $18 billion in net profit in a single, massively successful quarter.

iphone6p-gray-select-2014_GEO_GB

Apple posted record quarterly revenue of $74.6 billion, earning $3.06 per diluted share, for its first fiscal quarter of 2015. Apple’s net profits of $18.9 billion sets a new record for quarterly profits, blowing away previous record holder Exxon’s $15.9 billion performance.

The company was led by a blockbuster quarter for the iPhone, in which it sold nearly 75 million units — a year over year increase of 46 percent. As Tim Cook mentioned on the earning call 74.5million iPhones in 3 months represents over 34,000 phones sold per hour every hour of the quarter.

Mac sales were also at an all-time high at 5.52 million units, edging the company’s previous-best in the preceding September quarter. The company’s Mac hardware saw its numbers increase 14 percent year over year.

Record sales of both the iPhone and Mac helped push Apple to the strongest quarter in history.

iPad sales continued their decline, however, falling to 21.4 million units in the December frame. That was down 18 percent from the same period a year prior.

“We’d like to thank our customers for an incredible quarter, which saw demand for Apple products soar to an all-time high,” said Apple Chief Executive Tim Cook. “Our revenue grew 30 percent over last year to $74.6 billion, and the execution by our teams to achieve these results was simply phenomenal.”

Gross margin was also up to 39.9 percent this year, compared to 37.9 percent in the year-ago quarter. Apple also said that international sales accounted for 65 percent of the quarter’s revenue.

Apple also announced that its App Store set a record performance in the holiday quarter. The company’s “Services” revenue category, which includes the App Store, iTunes Store and other digital storefronts, reached $4.8 billion.

“Our exceptional results produced EPS growth of 48 percent over last year, and $33.7 billion in operating cash flow during the quarter, an all-time record,” said Apple Chief Financial Officer Luca Maestri. “We spent over $8 billion on our capital return program, bringing total returns to investors to almost $103 billion, over $57 billion of which occurred in just the last 12 months.”

Apple updated the expected release date of the Apple Watch to ship in April and made bullish comments on the growing use of Apple Pay in US retail stores. The company also announced that it has shipped over 1 billion iOS devices in total.

Also on Tuesday, Apple provided investors with the following guidance for its fiscal 2015 second quarter:

  • revenue between $52 billion and $55 billion
  • gross margin between 38.5 percent and 39.5 percent
  • operating expenses between $5.4 billion and $5.5 billion
  • other income/(expense) of $350 million
  • tax rate of 26.3 percent

As expected, the Apple Board of Directors declared a cash dividend of 47 cents per share of its common stock. The dividend will be payable on Feb. 12, 2015, to shareholders of record as of the close of business on Feb. 9, 2015.

And Apple updated iOS to 8.1.3

Early on Wednesday AAPL stock is at $117.29 up 7.4%

Listen to the earnings call and read the release on the Apple IR website 

Nov 26

A U.S. judge on Friday gave final approval to Apple agreement to pay $450 million to resolve claims it harmed consumers by conspiring with five publishers to raise e-book prices.

During a hearing in Manhattan, U.S. District Judge Denise Cote approved what she called a “highly unusual” accord. It calls for Apple to pay $400 million to as many as 23 million consumers if the company is unsuccessful in appealing a ruling that found it liable for antitrust violations. That works out a very beneficial $17 per eBook customer.

ebook imageThe $400 million comes on top of earlier settlements with five publishers in the case, which provided $166 million for e-book purchasers.

Apple agreed to the settlement in June, ahead of a damages trial set for two months later in which attorneys general in 33 states and territories and lawyers for a class of consumers were expected to seek up to $840 million.

During Friday’s hearing, Cote said it was an “unusually structured settlement, especially for one arrived at on the eve of trial.”

The deal allows Apple to continue to appeal Cote’s July 2013 ruling that Apple had violated antitrust laws by colluding with the publishers to drive up e-book prices and impede rivals such as Amazon.com Inc. 

That accord calls for Apple to pay $400 million to consumers and $50 million to lawyers if Cote’s findings are upheld on appeal, and nothing if the Cupertino, California-based company wins its appeal.

If the appeals court overturns Cote and returns the case to her, perhaps for a new trial, Apple would owe $50 million to consumers and $20 million to lawyers.

While the deal was unusual, Cote said she understood why the plaintiffs decided to go with it, given delay tactics by Apple.

An Apple spokesman did not respond to a request for comment.

The ruling finding Apple liable followed a non-jury trial in lawsuits filed in 2012 by the U.S. Justice Department and states attorneys general against Apple and the publishers.

The publishers include Lagardere SCA’s Hachette Book Group Inc, News Corp’s, HarperCollins Publishers LLC, Penguin Group (USA) Inc, CBS Corp’s Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan.

A federal appeals court is scheduled to hear Apple’s appeal Dec. 15.

The case is In Re: Electronic Books Antitrust Litigation, U.S. District Court for the Southern District of New York, No. 11-md-02293.

Feb 20

With iPhones and iPads selling in record numbers Apple is selling more computing devices than all of Microsoft’s Windows licensees put together.

As noted by leading market analyst Benedict Evans, Apple’s combined production of iDevices – Mac, iPhone, iPod touch and iPad, peaked in the December quarter at a level slightly higher than all Windows PCs put together, or essentially equal with PCs combined with Windows Phone shipments.

Such sales volumes were unthinkable for Apple only a few years ago. While the company’s Mac desktops and notebooks were growing significantly in the mid 2000s, they still remained in the realm of a million or two systems each year, in contrast to annual PC shipments well above 200 million.

ios and windows shipments

Mac gets big by going small

In 2007, Apple began selling a new kind of Macintosh, the iPhone Version 1: a handheld device running the same core OS (it was even called “iPhone OS X” in the beginning) and using a mobile-optimized version of the Mac’s NeXT-derived Cocoa app development frameworks. By the end of the first iPhone year, Apple added iPod touch, it’s first iPod based on Mac technology like the iPhone rather than a simple, imbedded OS.

Without phone features, iPod touch acted more like a general purpose computing system, attracting many users who were already committed to using their company’s Blackberry or a simpler phone tied to a provider, and simply couldn’t switch to an iPhone. That boosted the volumes of games and other app sales in the App Store, supporting iPhone growth and paving the way for a larger new table form factor.

In 2010, developers’ enthusiasm surrounding Apple’s rapidly expanding iOS platform was extended to iPad, which worked like a larger format iPod touch to broaden the reach and utility of Apple’s platform that proved to be effortlessly easy to use, manage and deploy.
The most notable aspect of Apple’s growth is that its Macs continue to maintain an premium Average Selling Price of $1300 and its iPhones remain above $650, in a PC market where Microsoft’s PC makers struggle to find customers with PCs priced at an average of $311, and where Windows Phones sell at an ASP of just $301.

 

Apple scores in profit rankings

Apple’s ability to surpass Microsoft’s Windows sales volume via mobile growth can also be compared to Android. Like Windows, Google’s Android platform (and the many variants of the software used by companies from Amazon to Chinese vendors unaffiliated with Google) is broadly used as an alternative to companies creating their own custom development platforms.

With this fragmenting, Android lacks the platform strength of Windows, because Google is unable to exercise much control over its licensees, despite attempts to do so.

Google also earns very little from Android as a platform compared to Microsoft’s Windows PC licensing, and essentially nothing compared to Apple’s far more lucrative, hardware-driven profits from iOS. Android’s phone ASP has now dropped to $276 as the majority of “smartphones” using the system apply it in a feature phone role on extremely low end devices with no upgrade potential.

Last year, Samsung said it planned to ship 100 million higher-end Galaxy S and Note models within 2013. Apple sold 153.4 million iPhones alone in 2013, without counting iPod touch, iPad mini or full size iPads.

Apple obviously earned more than Samsung in selling high end phones throughout 2013, but also earned far more (an order of magnitude more) on sales of Macs and iPads, a general computing market where Samsung fails to earn much money at all.

Add in every other Android maker’s higher end phones and profit-to-volumes ratio falls even faster, as most Android licensees, including Google’s own Motorola subsidiary, have been consistently losing money. Google’s Motorola subsidiary reported losing $1.245 billion in 2013 alone, despite tech media predictions about how Moto X and its siblings would undercut Apple’s iPhone and take over via volume sales to third world countries.

Particularly hysterical in retrospect is the August 2013 article by Steven Levy of Wired, which just months ago faithfully reiterated Google’s talking points explaining how the phone would launch a new epoch of smartphones justifying the $12.5 billion price tag Google had paid for Motorola. Instead the device proved to be a dismal failure. Google is now spinning Motorola as “successful” divestiture.

Feb 14

Yesterday – Thursday Feb 13th Apple distributed the latest dividend payout with a total value to shareholders of $2.6B. This follows massive stock buyback over the last few months, in turn reducing the payout as stocks are retired. Shareholders received $3.05 cash for every stock held, representing a payout ratio of 2.2% at current stock price.

AAPL.dividends.2014.Q1

 

According to the last figures reported by YCharts.com, Apple had 891.99 million outstanding shares in mid January. However, since reporting record earnings in late January, Apple’s chief executive Tim Cook announced the company had taken advantage of short term trading to buy back $14 billion worth of APPL stock.

Following earnings reports, Apple stock tumbled from $550 to slightly below $500 for one week. At those prices, Apple’s $14 billion could have bought up an additional 28 million shares, bringing Apple’s outstanding share count down toward 860 million shares. Apple shares have since recovered to $544.

After buying back shares, Apple doesn’t need to pay dividends for them any more, meaning the most recent buyback trimmed around $85.4 million off the total cost of its total quarterly dividend payment. For the remaining roughly 860 million shares, Apple paid shareholders “of record” by the ex-dividend date last week a $3.05 dividend per share, totaling around $2.6 billion.

Flush with billions in cash it simply can’t spend fast enough, Apple first announced plans for a dividend program nearly two years ago in March, alongside a $10 billion share buyback program. It was the first time the company had paid a dividend in 17 years. Each quarter, the company initially stated it would pay its shareholders a $2.65 per share dividend.

In an earnings conference call last year, the company’s chief executive Tim Cook announced that, after paying out more than $10 billion over the previous year in dividends, the company would launch “an aggressive plan that more than doubles the size of the capital return program.”

Cook said “the vast majority of our incremental cash return will be in the form of share repurchases,” explaining that “as the Board and management team deliberated among the various alternatives to returning cash, we concluded that investing in Apple was the best. In addition to share repurchases, we are increasing our current dividend by 15% to further appeal to investors seeking yield.”

He added, “while we continue to generate cash in excess of our needs to operate the business, invest in our future and maintain flexibility to take advantage of strategic opportunities, we remain firmly committed to our objective of delivering attractive returns to shareholders through both our business performance and the return of capital.”

The report cited consumer-oriented brokerage firm TD Ameritrade as saying that “more of its clients own Apple shares now than at any other point,” making Apple shares the second most widely held stock by its clients after General Electric in share count, and by far the most widely held in terms of dollar value.

Can’t spend fast enough to make a dent

Cook outlined that Apple’s newly expanded buyback and dividend plans would distribute $100 billion from its cash pile, leveraging debt markets to borrow at very low interest against the company’s vast holdings that are mostly held overseas. That strategy allowed the company to make use of its stellar credit rating and avoid massive taxes that would be triggered if it were to simply shift cash earned internationally into the U.S.

While this has triggered reports vilifying Apple for “avoiding” taxes, the company is actually “one of the top corporate income tax payers in the country, if not the largest,” notes Steve Dowling, Apple’s head of public relations.

In 2012, Apple paid $6 billion in federal corporate income taxes, which amounts to 1 out of every 40 dollars in corporate income taxes collected by the U.S. government Dowling told Bloomberg last year.

Dec 23

Apple confirmed yesterday that it has at long last reached agreement with China Mobile to officially offer the iPhone in China.

After many months of rumours and claims about the world’s largest phone company selling the iPhone the story is now confirmed. No more guessing.

This is big news worthy of a special press release due to the huge size of China Mobile’s customer base of 740 million subscribers, more than any other phone company by far. China Mobile will start selling the iPhone 5s and iPhone 5c on Jan. 17, with pre-registrations starting this Wednesday.

Pricing details will come later, Apple said. “Apple’s iPhone is very much-loved by millions of customers around the world,” China Mobile Chairman Xi Guohua said in a statement. “We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile’s leading network. We are delighted that iPhone on China Mobile will support our 4G/TD-LTE and 3G/TD-SCDMA networks, providing customers with high-speed mobile service.”

Apple’s Tim Cook said he is excited to begin working with China Mobile. “China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world’s largest network,” Cook said. “iPhone customers in China are an enthusiastic and rapidly growing group, and we can’t think of a better way to welcome in the Chinese New Year than getting an iPhone into the hands of every China Mobile customer who wants one.”

Read the full release below:

How many millions of iPhones will Apple sell into China? This is the great question that no one can answer but many people are happy to take a punt.

Piper Jaffray sees the potential for 17 million sales by China Mobile, while ISI analyst Brian Marshall said sales could reach nearly 39 million iPhones next year.

Cantor Fitzgerald analyst Brian White sees thing somewhere between those estimates, forecasting calendar 2014 iPhone sales of 20 million to 24 million on China Mobile, while Wedge Partners analyst Brian Blair sees sales of 18 million to 20 million iPhones, though the number will depend on how aggressively Apple and China Mobile promote the iPhone.

Even before the China Mobile deal, Apple has been making some inroads in the giant market. According to Counterpoint Research, the iPhone 5s, 5 and 5c were October’s No. 1, 2 and 4 top-selling smartphones, with Apple grabbing 12 percent of that month’s market share.

Apple stock up 3% pre-market.

Apple Release

China Mobile & Apple Bring iPhone to China Mobile’s 4G & 3G Networks on January 17, 2014

iPhone 5s & iPhone 5c Available for Pre-Registration Beginning December 25, 2013

BEIJING and CUPERTINO, California—December 22, 2013—Apple and China Mobile today announced they have entered into a multi-year agreement to bring iPhone to the world’s largest mobile network.

As part of the agreement, iPhone 5s and iPhone 5c will be available from China Mobile’s expansive network of retail stores as well as Apple retail stores across mainland China beginning on Friday, January 17, 2014.

iPhone 5s, the most forward-thinking smartphone in the world and iPhone 5c, the most colourful iPhone yet, will be available for pre-registration from China Mobile’s official website (www.10086.cn) and customer service hotline “10086” beginning on Wednesday, December 25, 2013.

“Apple’s iPhone is very much loved by millions of customers around the world. We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile’s leading network. We are delighted that iPhone on China Mobile will support our 4G/TD-LTE and 3G/TD-SCDMA networks, providing customers with high-speed mobile service,” said Xi Guohua, China Mobile Chairman. “Apple has enormous respect for China Mobile and we are excited to begin working together. China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world’s largest network,” said Tim Cook, Apple CEO. “iPhone customers in China are an enthusiastic and rapidly growing group, and we can’t think of a better way to welcome in the Chinese New Year than getting an iPhone into the hands of every China Mobile customer who wants one.”

China Mobile now has over 1.2 million 2G/GSM, 3G/TD-SCDMA, 4G/TD-LTE base stations and over 4.2 million Wi-Fi access points, providing broad coverage to quality networks for iPhone 5s and iPhone 5c customers. China Mobile is rolling out the world’s largest 4G network. By the end of 2013, China Mobile’s 4G services will be available in 16 cities including Beijing, Shanghai, Guangzhou and Shenzhen. By the end of 2014, China Mobile plans to complete the rollout of more than 500,000 4G base stations, which will cover more than 340 cities with 4G service.

The collaboration between Apple and China Mobile will give a big boost to the development of China’s homegrown 4G/TD-LTE technology. iPhone on China Mobile supports major cellular network standards, making a global phone a reality for China Mobile customers.

iPhone 5s redefines the best smartphone experience in the world with amazing new features all packed into a remarkable thin and light design, including the Apple-designed A7 64-bit chip, all-new 8 megapixel iSight camera with True Tone flash and introducing Touch ID, an innovative way to simply and securely unlock your phone with just the touch of a finger. iPhone 5c features an all new-design in five gorgeous colours and is packed with features people know and love like the beautiful 4-inch Retina display, blazing fast performance of the A6 chip, and the 8 megapixel iSight camera—all while delivering great battery life.* iPhone 5s and iPhone 5c both offer more 4G LTE bands than any other smartphone in the world and include all-new FaceTime HD cameras. iPhone 5s and iPhone 5c come with iOS 7, the most significant iOS update since the original iPhone, featuring a stunning new user interface, completely redesigned with an elegant colour palette, distinct, functional layers and subtle motion that make it feel more alive. iOS 7 has hundreds of great new features, including Control Center, Notification Center, improved Multitasking, AirDrop, enhanced Photos, Safari and Siri.

Details of pricing and availability of iPhone 5s and iPhone 5c for China Mobile will be available at a later date.

Oct 29

Last night, UK time, Apple released Q4 results

 

“We’re pleased to report a strong finish to an amazing year with record fourth-quarter revenue, including sales of almost 34 million iPhones,” said Tim Cook, Apple’s CEO, in a statement.

Fiscal Highlights: Apple reported $37.5B in revenue, $7.5B in net profit representing $8.26 per share. That marks a year-over-year growth of 4.2 percent in revenue and 4.7 percent decline in EPS, with net profit down 8.6 percent year over year.

Cash: Apple finished the quarter with $146.76 billion cash on hand.

Product Sales: Apple sold 33.8 million iPhones, 14.1 million iPads and 4.6 million Macs in the quarter, producing record Q4 revenue. Analysts had estimated 33.4 million iPhones, 14.3 million iPads and 4.3 million Macs for the quarter. iPhone sales grew 26 percent to hit another record number. iPad sales were relatively flat. Apple sold a total of 71 million iPads in fiscal 2013. Apple sold just 3.5 million iPods in the quarter.

This handy chart from Tech Crunch gives a good visual overview of Apple’s performance.

tc-apple-q4-2013-earnings-charts

Apple Beats

Apple beat analyst expectations across the board for revenue, posting record Q4 numbers.

According to Fortune’s collated estimates, Wall St analysts had projected $37.14 billion in revenue with EPS of $8.16. Estimates put year-over-year revenue growth at 3 percent and earnings growth at -6 percent. WSJ estimates had placed EPS at $7.94, which would give Apple a win in both categories as well.

Apple’s own guidance projected revenue at between $34 billion and $37 billion, with a gross margin of between 36 percent and 37 percent. Apple’s estimates have become increasingly accurate over the past few quarters, ever since it changed the way that it gave guidance. Previously, it had a reputation for severely under-estimating future quarters and it’s taken a bit of time for analysts to adjust to its new, more conservative outlook. Its projections for revenue in Q1 2014 are between $55 billion and $58 billion with gross margin of between 36.5 percent and 37.5 percent.

Apple’s gross profits fell to 37 percent, the seventh quarter in a row for such a decline. Much of that can be attributed to lower margins on devices like newer Retina iPads and lower-priced iPhones. If it hits the higher end of its Q1 ’14 estimates, it could reverse that for the first time in a while, but the lower end would mark another decline.

iPod sales were down 35 percent year over year, Macs were down 7 percent over the same period and compare favourably to the general PC market where sales are down close to 11%.. iTunes and software revenues were up 22 percent and accessories were up 5 percent.

Even with only a couple of weeks of the latest iPhone 5S and 5C sales, iPhones still accounted for 52 percent of Apple’s overall sales. The full impact of the two new models won’t be felt in full until Q1 2014.

Oct 10

The highly respected site – AllThings D report that Apple is set to hold an event on Tuesday, Oct. 22, where it is expected to unveil a new, redesigned fifth-generation iPad, as well as a second-generation iPad mini.

possible new ipads

Source: UnboxTherapy via YouTube.

The date for the anticipated media event was leaked to AllThingsD yesterday, which cited unnamed sources. They also were the first to nail the recent iPhone launch date. In addition to new iPads, the event in two weeks is also expected to focus on the company’s revamped Mac Pro high-end desktop, and the forthcoming OS X Mavericks operating system update.

The next 9.7-inch iPad is widely expected to sport a redesigned chassis that will make it look more like a big iPad mini. Apple is expected to cut the weight and thickness of its full-size iPad, and give the device thinner side bezels.

possible new ipad cases

AppleInsider exclusively obtained schematics being used by case makers that claim to show off the new design of the next iPad. Those images align with leaked parts purportedly for the fifth-generation iPad that have surfaced throughout the year. As for the iPad mini, it’s anticipated to feature a high-resolution Retina display with its second-generation model. Both devices are rumored to sport high-quality 8-megapixel rear facing cameras, equal with the iPhone 5.

Still unknown is whether either of Apple’s new iPads will sport the Touch ID fingerprint sensor the company unveiled in the new iPhone 5s.

The new iPads will hit the market ahead of the holiday shopping season, and at a time when traditional notebook PCs continue to struggle. Competition in the tablet space has heated up, with Amazon’s new Kindle Fire HDX, Microsoft’s Surface 2, and Google’s Nexus 7. Microsoft already announced its Surface 2 lineup last month, with the new hardware set to go on sale Oct. 22, the same day as the expected Apple announcement. How much coverage will Surface 2 generate?

Oct. 22 is also the same day that Nokia is scheduled to hold an event in Dubai where it is expected to introduce its own tablet hardware.

All will be revealed in two weeks time.

Sep 08

Rest of the year – setting expectation on Apple and AAPL

Ever since Apple stock passed over $700 and then fell back to sub $400, I have been telling clients to be patient and not have ridiculous expectations. Those thoughts became most prevalent after Apple did not refresh the iPad this March. The effect was visible in the third quarter financial breakdown. Apple reported a 14% year over year drop in iPad unit sales, a decline of more than 2.4 million units. As large as that seems, it doesn’t even take into account the fact that there was no iPad mini in last year’s Q3 period. Thanks to the unit sales drop, along with the cheaper priced mini, Apple reported a 27% decline in iPad revenue dollars for the quarter. That’s a decline of more than $2.4 billion, $72 million dollars more than the increase we saw in iPhone revenues. You can certainly understand now why total revenues were up just $300 million from the year ago period. It’s hard to show a lot of growth when your second leading revenue product has a $2.4 billion dollar decline. Throw in another $367 million in declines from the iPod and Mac lines, and Apple was set up for a sluggish quarter.

apple invite sept 10 screenThe current Q4 is also forecasted to be very sluggish, with current estimates calling a slight decline in year over year revenues. Again, this is something I’ve been discussing, and it is not that much of a surprise. Apple sold over 14.03 million iPads in Q4 last year, and those were all higher priced regular models of the device. The company sold 14.62 million in this year’s Q3, and that included a fair amount of iPad minis. If Apple does not launch a new iPad in the next week or two, we could see another revenue drop-off in the billions. Throw in the fact that last year’s Q4 saw Mac unit sales of more than 4.92 million, and that will be another chunk of revenues gone. The obvious question is can the iPhone save this quarter, and that will depend on what happens next week.

The latest news and rumours:

So that gets us to next week. By now, you has probably heard that Apple sent out invitations for a September 10th (Tuesday) event. The expectation is that Apple will launch a new iPhone, called the 5S, along with a cheaper version to be named the 5C. These phones may even come in a variety of colours. None of this should be shocking, as we’ve heard a continuation of these rumours for many months now. It would be expected that these phones would go on sale 10 days later, probably Friday, September 20th. The second to last Friday of the month was when Apple launched the iPhone 5 last year, so this year’s timing would mirror that launch. The launch also seems to be confirmed by vacation blackouts at large US carriers such as AT&T. When phone carriers are not letting employees go on vacation for a weekend or part of a month, it usually means something big is coming. The launch of a new iPhone (and potentially multiples) would certainly be significant.

Last Wednesday, we heard that Apple scheduled an event in China for the following day, September 11th. This has fuelled a number of rumours that Apple will be partnering up with China Mobile, the world’s largest carrier by far, which would be a tremendous opportunity for Apple. ISI analyst Brian Marshall believes that the China Mobile opportunity would almost equal the size of Apple’s unit sales from AT&T and Verizon combined. News like this could send Apple shares spiking much higher. The latest reports on Thursday state that Apple could even start selling their new phones in China on the same day as in the US. Last year, it was more than two months after the US launch when they went on sale in China.

We also heard from Nikkei that Apple could announce a partnership with NTT DoCoMo next week at its Tokyo satellite event. DoCoMo, Japan’s largest carrier, has roughly 60 million subs, of which 1/4 are using 4G phones. DoCoMo has been losing market share to Softbank because of DoCoMo’s failure to carry the Apple iPhone. This news could bring another few million iPhone sales per year to Apple. While a potential deal between Apple and DoCoMo wouldn’t be as large as a China Mobile one, a larger portion of DoCoMo’s sub base can afford a more expensive phone.

What else could be in the cards? Well, there have been some rumours of a potential Apple TV set-top device to be launched next week as well. MacRumors pointed out that nearly 550 days have passed since the Apple TV received its latest refresh, almost 50% more than the historical average of 377. Apple consumers and investors have been looking for something more than just iPhone and iPad refreshes (along with a cheaper phone), so this might just do the trick.

The last rumor I’ll discuss is more of a longer-term one. The Wall Street Journal is reporting that Apple has begun to evaluate a plan to offer iPhones with screens from 4.8 to 6 inches, as opposed to the 4 inch displays expected to be shown off next week. Apple has been very unwilling to go to a larger screen in recent years, but now they appear headed down that track. There have been calls for Apple to go to a large screen for some time now, and the ball now seems to be rolling.

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