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Analyst cuts rating on Apple from Buy to Neutral; stock rises to new all-time high anyway

Posted: , by Alan F.

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Analyst cuts rating on Apple from Buy to Neutral; stock rises to new all-time high anyway
One of the long time-tested sayings on Wall Street is that a stock that rises on bad news has plenty of fuel power left to go even higher. If true, it could mean that the $1001 price target put on Apple's stock by another analyst has some merit to it. But BTIG analyst Walter Piecyk believes that Apple's meteoric rise could be over as he lowered his rating on the tech titan's stock from "Buy" to "Neutral". The main reason he cites is that mobile carriers are getting tired of subsidizing the Apple iPhone to the extent that they do. Piecyk believes that the carriers are not happy with paying huge subsidies that lower their margins while fattening those belonging to Apple.

The analyst points out that companies like AT&T, which has had Apple's iconic touchscreen device in its lineup from the first day that the phone was offered, were ok with reaching into their wallet to help new and existing customers pay for the iPhone because it helped increase the average monthly invoice (ARPU) that the customer would pay. But with AT&T's margins dropping from 44% in 2010 to the current 30%, it would seem that helping to pay for a $600 handset is eating into the carrier's profits. To turn things around, AT&T says it will start using a stricter upgrade policy.

"Subsidies by post-paid wireless operators have fueled the growth of Apple’s $600 iPhone since its inception. Wireless operators have been happy to subsidize smartphones to new and existing customers in order to provide a lift to the average monthly bill (ARPU) of their customer base, a metric which had been falling for the past three decades."-Walter Piecyk
It is this new policy that Piecyz blames for his expectations of slower iPhone sales ahead. Slower iPhone sales equal a lower stock price for the Cupertino based tech firm. "We expect post-paid wireless operators to remain firm in their plan to stunt the pace of phone upgrades in 2012 and we expect to see some initial evidence of their success in the current quarter," said Piecyz who expects other carriers to follow in AT&T's footprints with new, stricter upgrade policies.

The bottom line? The analyst expects Apple to sell 27.5 million units of the iPhone in Q3 which would bring in revenue $1 billion less than the Wall Street consensus. $1 billion is nothing to sneeze at, even on Wall Street. If all of this comes true, you might expect Apple's stock to take a hit after Q3 earnings are reported. Since Wall Street is said to look ahead 6-12 months, the analyst feels that the stock's gravy days are over. But as we alluded to in the beginning of this article, Piecyz's downgrade is not slowing down that runaway freight train called Apple as the stock is up .75% as of this afternoon, making a new all-time high at $639.83 earlier Monday.

source: AllThingsD

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posted on 09 Apr 2012, 14:55 4

1. remixfa (Posts: 13903; Member since: 19 Dec 2008)


i feel like ive said something very similar to this. hmm.

nostra-remix strikes again! lolz.

posted on 09 Apr 2012, 15:21 7

2. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)


It's sad how out of touch with reality you are. You've been predicting Apple's demise since 2007. You've always been wrong. One day I'm sure their stock WILL drop, but that doesn't make you right.

posted on 09 Apr 2012, 15:28 4

3. taz89 (Posts: 2014; Member since: 03 May 2011)


people been predicting the death of apple and android for years and am sure eventually these analyst who predict such futures will be right one day cause they say the same prediction over again..they can both succeed,one does not need to ''die'' for the other to ''live''

posted on 09 Apr 2012, 15:56 5

4. remixfa (Posts: 13903; Member since: 19 Dec 2008)


can you go back to 2007 and find the post where i predicted apples demise?

My "prediction" was that if there wasnt a major change in the ipad and iphone line up, iOS would quickly lose market share from lost sales.

1) its already being outpaced month after month by android
2) the "new ipad" is not selling nearly as well as the ipad 1 or 2.
3) if the "iphone5" really does come with the same outdated A5X chip, its a sign that there isnt much changing on the phone other than maybe the screen size at best.. or maybe the new "iWidgets" lol.

The novelty has gone on through 5 phones and 3 tablets without major revisions to the OS or design. Novelty wears off when things dont change. Android is more stable than ever and more functionality than all the other OS's, WP7 is bringing desktop mode. What does apple have? a 4x4 grid of icons and magic?

I say this right here and now... without something MAJOR from apple for the i5, they are done. They will fall back below 20% marketshare and not recover. And they will lose that share to WP8.
Apple will continue to make money for a good while off of the app market and other things they have going, but as far as market share, they wont recover.

posted on 09 Apr 2012, 16:12

6. good2great (Posts: 1039; Member since: 22 Feb 2012)


thats like saying...

its gonna be night time around 9pm.

inevitable

posted on 09 Apr 2012, 17:35

8. taz89 (Posts: 2014; Member since: 03 May 2011)


one thing i have learned from the 4s is that regardless of how small or big the updates are,the loyal apple fans that are in the millions will always buy apple products regardless because it is an apple product.

posted on 09 Apr 2012, 17:48 4

9. JeffdaBeat (unregistered)


I kind of have to agree with Taco. Not with this case specifically, because like you, I question the whole "2007" deal. Plus, you're a fair poster.

But folks do this all the time. "It's going to come down...I'm serious." "It's only a matter of time before Apple falls." Yeah, that's true. Eventually the stock will drop. The sun will rise. I'll pay taxes. But we can't just take one analyst's word for it. How many times have we absolutely mocked analysts about outrageous claims or their so called "insider knowledge?" So this guy says he thinks the stock has simmered down...or will do so. Meh, okay he may be right, he may be wrong. But we can't all claim this is the sign of the end when these guys usually aren't ridiculously on their game.

Now I still challenge you on people getting tired of their iPhone. You are assuming that everyone is a nerd and the vast majority of the people buying their smartphones aren't. Middle aged and older folks have hard enough time operating their smartphone let alone discover new things about it. Now, that shouldn't be an excuse for Apple to be stagnant, but I think you overestimate the general public. Mostly, they care that the product IS new. They don't really care about all the new features. Maybe one or two. They also want to have physical evidence that it's new. New design or new look. But think about this. When people want a new car, do they really want to know why they shouldn't get last year's model? Heck no! They just want the newest thing out there.

posted on 09 Apr 2012, 18:23

10. taz89 (Posts: 2014; Member since: 03 May 2011)


great analogy with the car stuff and totally agree, some people just want something because its new.

posted on 09 Apr 2012, 20:54 1

12. remixfa (Posts: 13903; Member since: 19 Dec 2008)


And thats exactly my point. Apple has very loyal customers.. a huge swath of loyal customers. They will continue to buy the phones. They are very tied into the system. What about the general public that has iphones. Maybe they went from a 3g to an i4s or whatever other upgrade.. then its time to upgrade again. They go into the store and they say "whats new". Your going to show them another iphone that to them looks and does exactly the same (with probably a bigger screen), whatever new monstrosity from android is out and the neat things that it can do, or the new WP7/8 interface (maybe with desktop compatibility).
I know im not the "average joe", but from what ive seen, most people get tired of the same ol same ol after a while. Without a major OS revision, apple is going to keep giving the same ol to its customers.
I bet a large chunk of them leave iOS to try something new, simply because they cant see plunking another 200+ on a device that is essentially the same with minor improvements.

In my own life, the only people I know that have gone through 3 versions of the iphone.. or are thinking about it.. are apple diehards. The rest are bored and looking at the playing field.

Apple isnt going anywhere. Predicting their "demise" isnt the end of apple, its just the end of the cultural phenom that has been the iphone. Without a major revision 2012 is their last year of "sales king". Samsung has already overtaken them as over all smartphone sales, and probably isnt a phone generation or 2 away from taking away singular device sales... unless something drastically changes. Once that happens, the cultural phenom is over.

posted on 09 Apr 2012, 18:40 2

11. gallitoking (Posts: 4684; Member since: 17 May 2011)


you know all are rumors right?... you should know this.. guess not...

posted on 09 Apr 2012, 20:57 1

13. remixfa (Posts: 13903; Member since: 19 Dec 2008)


u dont say!

i dont remember you saying that when the rumors were that the stock was gonna shoot through the roof... hmmm..

posted on 10 Apr 2012, 11:35

15. gallitoking (Posts: 4684; Member since: 17 May 2011)


because at that time it was true.. in this article there are predicting hope you know the diference

posted on 09 Apr 2012, 16:09 1

5. jmoita2 (Posts: 930; Member since: 23 Dec 2011)


Amen, remixfa.
I hereby cut it to: SELL!!!

posted on 10 Apr 2012, 11:35

16. gallitoking (Posts: 4684; Member since: 17 May 2011)


well well well we have a remix sheep... cool.

posted on 09 Apr 2012, 16:54 2

7. cncrim (Posts: 495; Member since: 15 Aug 2011)


All ride must end somewhere. Apple has a good team they can come up with something news like original iphone but that will take them few years of research and develop........... Time to SELL SELL SELL apple stock.

posted on 10 Apr 2012, 08:41

14. -box- (Posts: 3778; Member since: 04 Jan 2012)


I think that, rather than necessarily tightening the upgrade policies (which just annoys customers all the more who are used to getting a new phone every 18 months), just bump the price of the device up. Instead of $200 on contract, make it $300 or $400. That way, folks will either buy the phone outright (and still need to buy data) or the margins will be decreased because the carrier is losing less money on phone sales. Blackberries are still sold for $200-300 on contract (the Bold, at least), because RIM still prices them as $700 phones. Androids and Windows Phones seem to have the right idea. Around $400-600 off contract, purchase for $100-200 on contract. It's no wonder carriers are more happy to sell Androids all day long, and another reason why its market share continues to rise daily.
Alternately, just get rid of contracts and subsidies all together. Works pretty much everywhere else in the world.

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