It's only logical that Verizon Wireless iPhone sales will be lower this year. Verizon started selling iPhones in Feb. 2011. So there was an initial surge of sales from 1) new customers and 2) existing customers who were either eligible for an upgrade or so eager to get an iPhone that they paid the higher price for the phone.
There was a lot of pent up demand for iPhones among Verizon Wireless customers. Now a large chunk of that demand is satisfied, and the 4S is not earth shattering enough to make someone who bought a phone in February buy a new one before he is eligible for an upgrade.
A lot of Verizon customers will keep the iPhones they have until the contract expires. And since most customers have two-year plans, I suspect iPhone sales at Verizon will only rebound significantly starting in the 1st quarter next year.
While I agree with many of your thoughts, I think the push away by AT&T and Verizon may well backfire on them. Verizon said 50% of the new lines it sold were for Iphone- therefore we will embrace the Windows phone for higher margins. In this business I thionk you need to listen to your customers. Trying to push them into something they don't want will never suceed. The LTE iPhone should give Apple plenty more running room in the US before they hit the wall.
If you pay attention to the latest development, actually it is easy to see cracks on Apple's foundation:
1. Both AT&T and Verizon started to push away iPhone as their premium phone due to the hefty price Apple charges against them. Two years ago, these carriers are begging for what ever Apple will throw at them. Now the situation changes. I won't surprised to see margin compression during next quarter
2. Even iPhone/iPad show strong momentum last quarter, their sale are slowing down recently in US. This quarter is saved by the sale in Chinese new Year . The momentum of China market is usually 6-12 month dragging behind US for mobile device.
3. We haven't seen any innovative product from Apple for two years. If there is nothing big in Apple's product pipeline for another year, something will happen.
I don't believe Apple can prosper for an extended period of time without delivering new revolutionary product. Let's wait and see.
@icebreaker 1975
I am not very sure whether Apple can continue this unbelievable run in the long term. They are still riding on their products introduced with Steve Jobs's influence. By next year we will get to see what the new management had been able to do. Customer loyalty might seem like it is sustainable but you can never guarantee it. If a shiny new toy comes along replacing the iPhone and iPad just like Apple did to its competitors they might just run out of luck.
Yeah I love it when people complain about capital gains ... like you said it's better than losing money. I know a lot of people who refused to sell tech stocks in 2000 "because of the capital gains." A few years later, they were looking at losses, they no longer had gains to book.
I never have a problem paying capital gains taxes cause it means I made money rather than lost it.
what "can't" Apple do? It seems as though the have a magic wand over there to conjure the latest and greatest products. Their continued success is truly amazing
Sure. Apple was at 4.2% of the S&P 500 yesterday. Financial Times had a great summary of it. You are correct that they are likely to rebalance soon, but so far this year Apple has had an outsized influence on the index and no rebalancing has been announced.
From the FT article:
"It accounts for 4.2 per cent of the S&P 500 and more than a fifth of the S&P's tech sector. Its plans to pay a dividend have made it a widely held stock. Without Apple, the S&P 500's gain of 9.1 per cent so far this year would be around a more modest 8 per cent.
Not since 1999, when Microsoft contributed 14 per cent of a 10 per cent rally in the S&P 500, has a group exerted such influence over the market. Apple's weighting in the S&P has rarely been achieved, let alone held, for long. ExxonMobil was the last group to have such sway, in April 2008."
Both the S&P and Nasdaq will have to continually monitor Apple's growth and potentially rebalance. What I'm saying is you are an individual investor you have a chance to get out in front of this!
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