AAPL Stock
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Apple iPhone 5 Now a Golden Goose for Verizon and AT&T
Since the debut of the iPhone in 2007, the profit parade has mostly been a one-way street - but after five years, the major wireless carriers finally figured out how to make money with the Apple iPhone 5.
That means another way for you to make money from the iPhone 5, without having to buy Apple Inc. (Nasdaq: AAPL) stock.
Apple has raked in billions while first AT&T Inc. (NYSE: T), and later Verizon Communications Inc. (NYSE: VZ), and Sprint Nextel Corp. (NYSE: S), had their margins slammed by the huge subsidies they sent to Cupertino.
But evolving consumer habits and the Apple iPhone 5's addition of LTE network technology will soon change that in a big way.
The carriers are hoping the much higher data transfer speeds of LTE - approximately 10 times faster than 3G - will coax iPhone 5 owners to use more data-heavy functions, particularly video.
"With these great networks coming on, [data] usage is going to go up. Revenues will go up," AT&T Chief Financial Officer John Stephens said at recent media and communications conference.
While the carriers will still have to fork over the same fat subsidies to Apple they always have, the new data equation means they'll make the money back much more quickly. And that will translate into bigger profits.
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Why the Apple iPhone 5’s Lack of Killer Features is Pure Genius
Tech critics predictably pounced on the new Apple iPhone 5 yesterday (Wednesday) even before its debut event had ended.
As often happens with Apple Inc. (Nasdaq: AAPL) product introductions, many had hoped for more whiz-bang new features.
"Apple's Phone has been a trendsetter for half a decade. Now the question is whether it can avoid becoming a bore," lamented The Wall Street Journal.
The Apple iPhone 5 did get a bigger 4-inch screen, 4G LTE connectivity, and a faster A6 processor. But months of rumors and speculation had raised expectations for more dramatic enhancements.
Apple easily could have included some of those much-desired features, such as a mobile wallet chip (also known as NFC, or near-field communications), wireless battery charging, or biometric security (using your voice or fingerprint).
Amid the din of criticism, few are asking why Apple would leave such goodies out of the iPhone 5.
It could be as simple as the new stuff just didn't all fit in the case - the iPhone 5 is the thinnest and lightest version yet, after all.
Maybe the technology just doesn't work right yet.
But maybe, just maybe, Apple decided to hold a few plum features out of the iPhone 5 because it's mulling a major change to its iPhone business.
What if Apple has decided to modify its upgrade cycle to two iPhones a year instead of just one?
In that case, holding out a few juicy features for a late April-early May upgrade is strategic genius.
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Could QE3 Really Do Less for the Economy Than the iPhone 5?
Investors are eagerly waiting to hear if U.S. Federal Reserve Chairman Ben Bernanke will announce QE3 this week. Bernanke speaks Thursday at the conclusion of the two-day Federal Open Market Committee (FOMC) meeting and many expect him to announce some form of stimulus to revive the struggling U.S. economy.
But there's another huge event scheduled this week, one that could provide a tool other than printing money for boosting U.S. gross domestic product (GDP).
Believe it or not, analysts at JPMorgan Chase & Co. (NSYE: JPM) estimate that the Apple iPhone 5, expected to be unveiled tomorrow (Wednesday) afternoon and on sale by the end of this month, will raise GDP by 0.5% in the fourth quarter of this year.
Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on Fox Business' "Varney & Co." program Tuesday morning to discuss the possibility of this iPhone effect and what it implies.
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The Future Belongs to Apple's iPad
The Apple iPad is more than just a great tablet; it's the single most important computing device released in more than 25 years.
In fact, you'd have to go back to the introduction in 1984 of the Macintosh personal computer to find a machine as game-changing as this one.
Of course, back then, the Mac grabbed only a small share of the huge PC market. But what it did do was establish Apple Inc. (NASDAQ:AAPL) as the sector's clear technical leader. It also gave birth to desktop publishing.
This time around, however, Apple has turned the tables on its rivals in two ways...
- First, it came up with a breakthrough approach and the ideal screen size. At nearly 10 inches diagonal - very close to the size of a piece of paper - this format feels natural to most users.
- Second, it's a runaway success, boasting 70% of the market share.
You see, the PC industry is going into a long decline. It's already started. Ditto for newspapers, magazines, music distribution, and lots of other physical products that will get transformed into software.
So says Michael Saylor, author of the hot new book "The Mobile Wave: How Mobile Intelligence Will Change Everything." As I told you yesterday, I tracked Saylor down to talk about how mobile computing fit into the Era of Radical Change. (You can read the first of my three-part series here.)
His is hardly an academic view. See, Saylor also serves as the CEO of MicroStrategy Inc. (NASDAQ:MSTR), a leader in business intelligence.
He believes five billion people will use iPads or a comparable device within a decade. That's roughly 75% of the population of Earth. No doubt, he admitted to me, that's a bold prediction. He added this:
"It's a prediction upon which you can make a lot of money if you're an investor. Because if I'm right, then you will have beaten the crowds to that conclusion. And the reason I believe that is - we've reached an inflection point, where it's now cheaper to learn to read on a tablet than it is to learn to read on paper. And I think that's a very, very meaningful thing."Naturally, I wanted to know just what investors need to do to make money off this trend, so I could share the information with you.
Saylor answered by sharing four key facts every investor needs to know about this market-dominating device.
Here they are...
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Six Ways to Win Big on Apple's (NASDAQ:AAPL) New iPhone 5
So much for Apple Inc.'s (NASDAQ:AAPL) big earnings miss.
After coming under some brief pressure, Apple has since powered its way to new all-time highs.
Much of that rally stems from one key fact: Apple is set to release the hotly watched iPhone 5 as early as Sept. 21.
Make no mistake about it -- this is a key product launch for the firm, its stock and the whole mobile computing food chain.
Based on the number of people who want to buy the new device the moment it comes out, I think the iPhone 5 launch promises to be another huge success.
Clearly, the market agrees or Apple shares wouldn't once again be on such a tear.
For investors, that means it's time to take a serious look at how to ride this trend as the iPhone 5 product launch unfolds.
In fact, I've found six ways investors can play the iPhone 5's release right now. They include:
iPhone Play Number 1: Apple Inc. (NASDAQ: AAPL)
No doubt, many investors wonder if Apple stock can go much higher. Yes, it sports a high sticker price. But take a look at the numbers.
AAPL trades at just 12 times forward earnings, in line with the overall market. It sports a PEG of just .65 and has an operating margin of 35%.
Talk about cash flow. It has $27 billion in cash on hand and an equal amount in free cash coming in. And earnings will likely continue to grow at 20% a year.
Not only that, but the iPad is still ripping the high-tech market to shreds. Shipments grew 44% to 17 million in the second quarter, giving Apple the lead in the fast-growing tablet market.
Now you know why Peter Misek, an analyst at Jefferies & Co., has raised his price target to $900 from $800 a share, for a potential upside of 38%.
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Apple Earnings Miss Points to Slowing Growth
Now that the Apple earnings report missed missed Wall Street expectations for the second time in a year, it has some questioning whether the company is finally coming back to earth.
Revenue for Apple Inc.'s (Nasdaq: AAPL) third quarter was $35.2 billion, missing the consensus of $37.1 billion and only showing year-over-year growth of 23.2%. That growth rate was far below the 82% in reported for Q3 2011.
Profit growth slowed as well. Apple earned just $9.32 per share in the June quarter compared to analyst expectations of $10.38. That put Apple's bottom-line growth at 27.5% year over year, little more than a quarter of last year's eye-popping 125%.
Disappointed investors sent AAPL down 5% in after-hours trading.
The Apple earnings miss was driven mostly by lower iPhone sales of 26 million, while analysts had expected 29 million, although Mac sales also were short of expectations.
Several Wall Street analysts had lowered their expectations for iPhone sales in recent weeks, but Apple even missed those reduced numbers.
The bleak news carried over to gross margin as well, which came in at 42.8%, short of the consensus number of 44%.
The only positives were the iPad and iPod. Sales of the iPad were 17 million, beating the consensus of about 15 million. Sales of the iPod, which have been slowing for years, were actually up 10% to 6.8 million.
But it was the bad news that dominated this Apple earnings report.
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How the Apple (Nasdaq: AAPL) iPad Mini Will Crush Tablet Rivals
If Apple Inc. (Nasdaq: AAPL) does unveil an iPad Mini this fall - and fresh reports from both Bloomberg News and The Wall Street Journal indicate it will - the new device could help Apple lock up the tablet market for years.
The iPad Mini, as tech pundits are calling it, could debut as early as October. It's thought to have a 7.85-inch screen, significantly smaller than the 9.7-inch display of the three iPad models released so far.
Such a product would compete directly with Amazon.com's (Nasdaq: AMZN) Kindle Fire as well as the just-announced Nexus 7 from Google Inc. (Nasdaq: GOOG). Both sport 7-inch screens and a $199 price tag aimed at buyers unwilling to pay $499 or more for a new iPad (or $399 for an older iPad 2).
"It would be the competitors' worst nightmare," Shaw Wu, an analyst at Sterne Agee & Leach Inc., told Bloomberg. "The ball is in Apple's court."
There was no word on what the iPad Mini might cost, but in a note yesterday (Thursday) Topeka Capital analyst Brian White estimated a range of $250-$300.
"That would lure certain consumers away from these competitors with an overall better experience that includes a much more robust ecosystem," White said.
Apple's desire for generous profit margins will keep it from pricing an iPad Mini at $199. Both the Amazon Kindle and Nexus 7 lose money at $199.
With its impressive ecosystem, Apple can get away with charging more for a similar product. That ecosystem, built upon the iOS platform that runs all of the Cupertino, CA company's mobile devices, includes the iCloud remote storage service as well as 225,000 apps designed just for the iPad.
"This isn't like the old days, when it cost thousands of dollars more to buy an Apple product," Wu said. "Fifty or a hundred bucks wouldn't be enough to make someone switch."
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Will Apple Inc. (NASDAQ: AAPL) Keep Driving Technology ETFs Higher?
Despite the recent selloff, shares of Apple Inc. (NASDAQ: AAPL) have skyrocketed 48% in the first quarter, dwarfing the 12% gain posted by the S&P 500.
Apple's astonishing rise has also helped to underpin the Nasdaq Composite, which gained nearly 19% in the first quarter -- its strongest showing since 1991.
But that's not the only place to experience the "Apple Effect."
Many investors who own technology ETFs -- which hold almost 4% of all Apple shares outstanding -- were rewarded with even better returns.
For instance, theVanguard Information Technology ETF (NYSE: VGT) was up 20.85% in the first quarter.
Even better, the iShares Dow Jones U.S. Technology Index Fund (NYSE: IYW), was up 21.77%, thanks in part to Apple.
Now the question is: Can Apple's momentum continue to drive technology ETFs higher?
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