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Technology Stocks : Apple Inc.
AAPL 259.35+0.1%Jan 9 9:30 AM EST
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To: pyslent who wrote (171866)7/20/2014 9:39:24 AM
From: slacker7113 Recommendations

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clean86
david1951
pyslent

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As for the phablet making up the margin hit, I do think that the 4.7" model will outsell the 5.5 niche model significantly, so I don't expect it to help that much. But Apple will make it up in volume regardless.


I think I am a fair bit more bullish about the proportion of sales from the 5.5" model. The Note 3 sold at about half of the rate as the S4 during its initial launch and the Android device market has only continued its migration towards larger models over the last year. The S3 launched in 2012 and was already 4.8" and the 2013 flagships were almost all around 5" or larger.

I do expect iPhone upgraders to pick the 4.7" model in large numbers, but think that the 5.5" model will sell well among Android switchers.

Yes, it's unclear that they ever improved-- It says a lot that they were unwilling to drop the price by 15% after a year and instead bothered with a new, presumably cheaper design. I suspect we have seen the last of the 5/5S body, and hopefully build cost / yield was a bigger factor this time around.


Yes, we never returned to the glorious gross margins of the 4S. Yields and materials would seemed to have played a big role in that.

I dug up an old report from Asymco that shows the gross margin impact of each new iPhone design. Well worth a read ahead of the launch of the 6.

asymco.com



Hopefully, the Kuo report about a possible delay in the 5.5" model due to manufacturing issues is simply noise. A new easier to manufacture design would go a long way towards alleviating any gross margin pressure due to more expensive components.

I took a look at consensus December revenue and it seems analysts are expecting $4.4 billion in revenue growth YoY. That is about 7.3 million extra iPhone units will all other product categories flat YoY. Yep, that pretty much confirms that the only worry I would have for the 2nd half would be on the gross margin side....and definitely leaves open the possibility that even if iPhone gross margins came in below consensus, that unit upside would allow for a beat for Apple as a whole :-).

Slacker
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