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Technology Stocks : Apple Inc.
AAPL 273.85+0.5%Dec 24 12:59 PM EST
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To: Ryan Bartholomew who wrote (165440)2/5/2014 5:59:01 PM
From: slacker711  Read Replies (1) of 213177
 
I agree with your first and last statements. But your middle one should be corrected to "Apple *used to be* one of them". The number of Apple customers willing to pay the premium for a device that is on par with much cheaper alternatives is dwindling

Your logic is faulty.

1) Apple reported record iPhone/iPad sales in the December quarter and are likely to report flat revenues in Q2. Any "dwindling" is in the future.

2) The idea that if sales do decline a small amount that they are no longer a brand that people pay a premium for is prima facie wrong. It means that fewer people are willing to pay that premium not that they are no longer in the category.

But to claim they will increase sales markedly while maintaining margins (which is required for EPS growth) because nothing has changed flies in the face of the data.

This conversation started with the launch of the iPhone 4 in India. I explicitly said that this will be gross margin negative but, since I expect little cannibalization, that it will generate a higher profit.
The iPhone 4 isnt going to have a big impact on Apple's business but I like the fact that they see the importance of maintaining a minimum share of these developing markets. It is important for long-term strategic reasons that go beyond the increased near-term profits.

Slacker

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