Tag Archives: Walter Piecyk

Business, Finance, Occupation & Industry

No, T-Mobile Has Not Killed iPhone Subsidies

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By Evan Niu, CFA, The Motley Fool

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T-Mobile’s been stirring the pot in recent months, launching an ambitious “Un-carrier” initiative and touting its new unsubsidized strategy. Contrary to popular belief, T-Mobile hasn’t been able to quit subsidies quite yet (they are rather addictive, after all).

I can’t quit you
The magenta carrier has axed service contracts, but is still offering to foot part of the device bill, even if it’s not being entirely forthright about it. I noted the discrepancy between Apple‘s retail pricing and T-Mobile’s installment plan totals when the device was announced last month, but now investors have more evidence regarding the arrangement.

For starters, Apple now sells T-Mobile iPhones through its own online store, and they’re unlocked and contract-free. These models are sold at full retail pricing of $649 to $849. Unlocked iPhone buyers can choose to have a T-Mobile SIM pre-installed or get one SIM-free. It makes no difference to Apple.

Source: Apple Online Store.

If you mosey on over to T-Mobile’s online storefront and compare full device cost, there’s exactly a $69 difference between its prices and Apple’s prices.

Buy From

16 GB Model

32 GB Model

64 GB Model

Unlocked?

T-Mobile

$580

$680

$780

No

Apple

$649

$749

$849

Yes

Difference

$69

$69

$69

—

Sources: Apple and T-Mobile. iPhone 5 pricing shown.

That missing money has to be coming from somewhere. There are exactly two candidates for who’s covering the difference. Hint: It’s not Apple.

Not something for nothing
It’s not as if T-Mobile is giving away the $69 for nothing. The vast majority of consumers will opt for the installment plan, and those devices will be locked to T-Mobile’s network while you’re still on the hook for 24 monthly payments. The carrier will unlock the device for you once it’s paid off and you can call it your own. For $69, T-Mobile still has a good shot of getting two years of loyalty, just not through a service contract.

In theory, a customer could go purchase an iPhone from T-Mobile at full price for $580 and have them unlock it immediately and then go use the savings to buy an Apple Wireless Keyboard, but T-Mobile is playing the odds and hoping very few people care enough to do this.

BTIG analyst Walter Piecyk also noticed this difference, and believes it’s a “promotional subsidy within T-Mobile’s new strategy.” Furthermore, Piecyk believes the promotion will expire eventually and T-Mobile iPhones will go back up to full retail pricing, even if they’re available on installment plans.

Been there, done that
T-Mobile actually isn’t the only carrier to offer these types of promotions. Other prepaid carriers do the same.

Leap Wireless‘ Cricket brand offers a $150 rebate, bringing the entry-level iPhone 5 down to $500. Cricket is also a prepaid carrier with no contracts, and Leap absolutely pays subsidies. On the most recent conference all, CFO

From: http://www.dailyfinance.com/2013/04/16/no-t-mobile-has-not-killed-iphone-subsidies/

Business, Finance, Occupation & Industry

Will Apple Hit a New Low?

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By Evan Niu, CFA, The Motley Fool

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After putting up an encouraging bounce back to $470 at the end of March, shares of Apple have promptly given back nearly all of those gains. The Mac maker dropped by as much as 1.5% on Friday, in part because of the disappointing jobs report that dragged down the broader market.

In the final hour of trading, shares tanked for no apparent reason to as low as $419.69 — just pennies away from tapping a fresh 52-week low. Shares promptly recovered just as quickly and inexplicably.

AAPL data by YCharts.

Will Apple hit a new low?

Never say never
Shares have mostly stayed range-bound for the past couple of months following the January earnings plunge, lacking any positive or negative catalysts to speak of. The most apparent positive catalyst that investors are anxiously awaiting remains the inevitable dividend boost, but all has stayed quiet on the cash front so far this year.

The biggest potentially negative catalyst on the horizon is the fiscal second-quarter earnings release that’s due out on April 23. The March quarter is a seasonally slow one for the iPhone maker, and there’s a distinct possibility that Apple may miss consensus estimates. On top of that, this will be the first earnings release under Apple’s revised guidance philosophy, so investors really have no idea how to interpret its forecast of $41 billion to $43 billion in revenue or CFO Peter Oppenheimer’s vague description of the change:

In the past we provided a single-point estimate of guidance that was conservative, that we had reasonable confidence in achieving. This quarter and going forward we’re going to provide a range of guidance that we believe that we’re likely to report within.

Not only will March be a tough quarter, but the June quarter may be even more challenging. There are numerous flagship smartphones launching in April, including Samsung’s Galaxy S4 and HTC’s One, while consumers and investors are expecting new iPhones as early as this summer.

BTIG Research analyst Walter Piecyk fears that June guidance could potentially drive shares below $400, even as he recently upgraded shares to “buy” with a $540 price target and thinks the risk is worth taking.

Who compares?
Since Apple had such a monster 2012, it’s facing tough comparisons this year. Trailing-12-month EPS is projected to decline over the next couple of quarters.

Source: SEC filings and Yahoo! Finance.

If Apple hits the March EPS consensus of $10.15 on the dot, it will have earned $41.95 per share over the past four quarters. That would represent negative earnings growth during the quarter (down from $12.30 EPS a year ago), which would inevitably make for some gloomy headlines.

That might scare some investors, especially if they compared possible headlines of “Apple Earnings Fall 17%” with ones earlier this week of “Samsung expects first-quarter profits of $7.7B, up 53 percent.” Of course, Apple will still beat Samsung in absolute dollars with closer …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Prepare for an Apple Miss

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By Evan Niu, CFA, The Motley Fool

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Analyst sentiment over Apple continues to get more pessimistic, particularly in the short term. Several Street analysts have recently predicted that the Mac maker is in store for a tough quarter, and that the company could potentially miss consensus estimates in the March quarter. Both and BTIG Research have expressed such concerns.

The latest is Oppenheimer analyst Ittai Kidron, whose price target reduction from $600 to $550 is one of the headlines today that’s holding back Apple shares, preventing them from enjoying an up day in the broader market.

Should Apple investors be worried?

Since Apple’s rumored product pipeline constantly makes national headlines these days, consumers can be expected to delay some iPhone purchases leading up to the new models that are reportedly due out in June or July. That will put pressure on iPhone sales in the March quarter as well as the upcoming June quarter.

As a result, Oppenheimer is also dropping its estimates for those two quarters, but the silver lining is that it’s boosting its forecast of September quarter sales. Kidron believes that despite the risk of a near-term miss, most of this pessimism appears already priced in to the stock considering its dirt cheap valuation.

Even if June guidance leaves a little to be desired, it would appear that investors aren’t expecting much, as it isn’t until the latter half of the year when more product upgrades are expected to reinvigorate sales. Apple continues to keep mum on its cash plans, which has widely been pegged as the next possible positive catalyst.

Upcoming “miss” notwithstanding, Oppenheimer remains largely bullish on the long-term business, and is keeping its outperform rating on the Mac maker. That also echoes BTIG Research analyst Walter Piecyk‘s sentiments, who upgraded Apple to “buy” alongside a $540 price target despite his similar concerns.

Even if Apple misses when it releases earnings next month, the big picture remains rock solid.

There is a debate raging as to whether Apple remains a buy. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why This Analyst Thinks Apple Will Miss — and Why It's a Buy

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By Evan Niu, CFA, The Motley Fool

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The next few months are going to be tough for Apple investors, as if the last few haven’t been tough enough. Amid investor pessimism, this time of year is seasonally slow for Apple.

The company used to unveil new iPad models in the spring, which could give it a boost earlier in the year, with new iPhones in the fall to carry it into the holiday shopping season. That’s up in the air right now, as the iPad product cycle is anyone’s guess at this point. Throw in the fact that Apple is now being rather honest with its guidance forecasts, and investors are contemplating the distinct possibility of earnings misses over the next two releases. Citigroup has been pondering the same thing.

Even though BTIG Research thinks misses are in store for both the March and June quarters, analyst Walter Piecyk has still gone ahead and upgraded shares to “buy” and slapped a $540 price target on the iPhone maker.

June bug
Piecyk’s estimates for the March and June quarters are below consensus estimates, and the company’s June guidance is a risk factor in itself when it announces earnings in April. Results for the June quarter could come under pressure from rival product introductions. Samsung is unveiling its Galaxy S IV today, HTC showed off its new One earlier this month, and BlackBerry is also launching its Z10 in the U.S. during March. Both AT&T and Verizon have now announced pricing and availability of the Z10, which will compete on the high-end at $200 on contract.

BTIG notes that tightened carrier upgrade policies weighed on Apple’s iPhone sales in 2012. While slow upgrades were a headwind last year, that could turn into a tailwind in 2013. Investors were pleasantly surprised by the overwhelming interest that the iPhone 4S garnered when it launched in 2011, particularly after skeptics derided it as an incremental upgrade (which it was). But that also means that iPhone 4S buyers are quickly approaching upgrade eligibility within the next couple of months, and if there’s one thing investors know about Apple customers, it’s that they’re a remarkably loyal crowd.

Samsung, HTC, and BlackBerry, among other rivals, will be working hard to win those smartphone shoppers over, but an imminent iPhone 5S may hold them at bay.

It’s worth noting that BTIG downgraded Apple last April at a time when it saw strong quarters ahead, so upgrading ahead of a weak quarter is the flip side of that equation. Disappointing June guidance could easily knock shares down below $400, but Piecyk still thinks that’s a risk worth taking considering the potential upside.

What’s the rush?
BTIG expects a low-cost iPhone to be launched this year, but is not including the possibility of a larger iPhone in its estimates. The niche phablet trend is undeniably growing, but BTIG thinks that Apple can bide its time due to its brand awareness and differentiated software experience. The sales data also …read more
Source: FULL ARTICLE at DailyFinance