WEAK SALES | ‘Anemic’ iPhone 8 demand drags Apple shares lower

Apple Inc’s shares fell nearly 3 percent on Thursday on signs of weak demand for the iPhone 8 that caused analysts and investors to question the company’s staggered release strategy for its latest phones.

Wireless carriers in the United States and Canada have reported slow third-quarter customer upgrades. While some expect a pickup after the iPhone X goes on sale in November, others cautioned that phone’s high price tag could weigh on demand.

The chief executive of Rogers Communication, Canada’s largest mobile network, on Thursday said appetite for the iPhone 8 and 8 Plus, which went on sale in September, had been “anemic,” the latest sign of weak sales for those phones ahead of the Nov. 3 launch of the pricier iPhone X.

But some analysts said overall phone production looked in line with their earlier expectations, and that it is unclear whether weak iPhone 8 sales would hurt iPhone revenue and margins because users may still be buying more profitable older models with more memory.

Verizon Communication Inc’s Chief Financial Officer Matt Ellis said the number of third-quarter phone upgrades fell versus previous years, but that he expected an upgrade surge when the iPhone X is released.

“I think what you’re seeing there is a difference in timing of some of the new devices coming out versus what we’ve historically seen,” Ellis told an earnings call.

“As we get into the holiday season, some of those new devices come out, we think we will see strong demand.”

The uncertainty about demand coupled with a Taiwan media report of a cut in iPhone 8 production pushed Apple shares down 2.8 percent by midday.

“The Street is hyper-sensitive to any speed bumps around this next iPhone cycle and (that) speaks to the knee-jerk reaction we are seeing in shares,” said Daniel Ives, chief strategy officer at GBH Insights in New York.

“iPhone 8 demand has been naturally soft out of the gates with the main event being the iPhone X launch in early November. (But) this is the early innings of what we believe is the biggest iPhone product cycle with X leading the way.”

U.S. wireless carrier AT&T said last week its third-quarter postpaid handset upgrades were down by nearly 900,000 from a year ago.

Supply chain

Apple no longer gives regular updates on sales numbers, but indications from supply channels, wireless carriers and analysts help shed light on demand.

When Apple announced the plan to release both phones before the end of 2017, fans were disappointed they would have to wait until November for the iPhone X.

But there are also concerns that the more expensive phone marking the iPhone’s 10th anniversary may see a muted reception compared to the frenzy that normally greets Apple phone launches.

A carrier store survey suggested the cheaper iPhone 7 was outselling its successor just a month after iPhone 8’s launch, KeyBanc Capital Markets analyst John Vinh said this week.

But it can be hard to gauge iPhone revenue and profits from model sales numbers alone because Apple can earn attractive margins when customers switch into higher-memory devices, said Wayne Lam, analyst with IHS Markit.

“They’ve always been able to use that as a lever to improve their profitability on the iPhone,” Lam said.

There are also worries that the relatively high price of the iPhone X may discourage carriers from stocking the inventory and customers from ultimately buying the phone.

Rogers’ CEO Joe Natale said anticipation for the iPhone X was high but noted inventory would be limited and that, at Apple’s starting price of $999, it was an expensive device.

source: interaksyon.com

10TH ANNIVERSARY MODEL | Apple set to unveil iPhone 8 in major product launch

CUPERTINO, CALIFORNIA — A decade after then-CEO Steve Jobs unveiled the first iPhone, Apple Inc on Tuesday is set to introduce a completely redesigned top-of-the-line iPhone along with two other new phones, as well as a big upgrade to the Apple Watch and a higher-definition Apple TV.

The splashy launch event will take place at the Steve Jobs Theater at Apple’s new Apple Park “spaceship” campus – widely considered to be the final product designed by Jobs, who died in 2011.

The new products and the holiday shopping season that follows are the most important for Apple in years. The company has sold more than 1.2 billion iPhones over the past decade and ushered in the era of mobile computing, but last year suffered a substantial decline in revenue as many consumers rejected the iPhone 7 as being too similar to the iPhone 6.

Apple hopes the new high-end phone, expected to be called the iPhone X, will silence critics who say the company has lost its innovation edge. It features an edge-to-edge display with richer colors and facial recognition to unlock the phone without the need for a fingerprint reader or physical home button.

The two other models, expected to be called the iPhone 8 and iPhone 8 Plus, are intended to update the iPhone 7 and iPhone 7 Plus. They could also include some new features, such as a glass back similar to the iPhone 4 that would help facilitate wireless charging.

The phones are expected to come with a steep price tag. Bernstein analyst Toni Sacconaghi predicts the top-end model will cost $899, though other analysts expect it to cross the $1,000 threshold. That compares to a top base price of $769 for the iPhone 7 Plus prior.

Much of that added costs is driven by more expensive parts, like a higher-resolution display, 3D sensors and more memory capacity. “Some of these components are just darned expensive. There’s just no doubt about that,” said Brian Blau, an Apple analyst at Gartner.

Watch for wireless networks

Analysts also expect Apple to reveal a new Apple TV that operates at higher resolution than its previous set. The higher resolution could play into Apple’s efforts to court Hollywood, which have shifted into a higher gear recently with two high-profile executives hired away from Sony.

The company is also expected to reveal more details about the HomePod, its voice-activated home speaker that competes against Amazon.com Inc’s Echo devices and the Google. Home speaker. Apple announced the HomePod in June and said it will ship in December.

Lastly, Apple is expected to announce a new version of the Apple Watch. Previous versions of the watch had to be tethered to a user’s phone in order to receive send or receive data, but the new version is expected to connect to wireless data networks just like a phone.

Apple does not say how many Apple Watches it sells. Gene Munster, a veteran Apple watcher and analyst with Loup Ventures, believes the watch could double or even triple in sales because of the new connectivity.

But even a huge boom in one product will not move the company’s financials like the iPhone, which accounted for 63 percent of Apple’s $215 billion in sales last year. Even if Apple crushes rivals like Fitbit Inc and Garmin in smart watch sales, Apple remains the iPhone company.

“It’s a really big deal for the wearables category for Apple, but it’s not a big deal for the company,” Munster said.

source: interaksyon.com