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Technology Stocks : Apple Inc.

AAPL 278.79

-0.7%

Dec 5 3:59 PM EST

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From: Keith Feral	9/12/2012 10:23:27 PM
	of 213173

Apple's decision to launch the iPhone on Sept 21 will pull forward Q4 demand into September results. Should be a decent boost for Q3 GDP this year too. There is always a catch, in that most of the new demand this quarter will shave Q4 results for Apple. If they get 5 or 10 million pre orders in this quarter, that would shave that many handsets from October to December. Maybe not such a big deal for December quarter, but more of a drain for March quarter since the iPhone 5 will be 3 quarters old by this coming March. I don't think the rally had anything to do with anything new or great about the iPhone 5, more of a knee jerk response to the fact that Apple will have a better September quarter than analysts were modelling. Maybe they can do closer to $10 or $11 a share this quarter, vs $8 guidance. If Q4 results come in flat vs last year, that's when things start looking tricky for Apple. Worry about those problems later. The repricing of Apple's legacy phones also signals a flag for long term iPhone margins. Handsets are finally getting cheaper every year as the iPhone 4 now becomes a free handset. iPhone 4S will be offered for $99. Next year, the iPhone 5 will be offered for $99 when the next handset rolls out. Once people start expecting $99 declines in ASP's every year for Apple's legacy iPhones, margins begin to deteriorate. Why not wait around til next year to buy the iPhone 5 for $99 when the next iPhone is launched? From my experience, there is little improvement between iPhone 4 and iPhone 4S since Siri only works about half the time.

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