Tuesday, 06/04/13: $449.31

[Mav]

Nikkei had a nice close today. Redler would approve.

World futures mostly greenish, US futures about even.

[rezonate]

CDR and Mrs. Rez are somewhere in the western Bay of Bengal, on a westerly track to round Sri Lanka enroute Mumbai. Awaiting the WWDC news with excitement. (Catch up on our exploits at westbysea.com for a diversion before or after the close.)

[appledoc]

Jun 4, 2013 0:57:00 GMT -8 rezonate said:

Awaiting the WWDC news with excitement.

Me too. I need a new MacBook Pro.

Lesson learned yesterday; even of you're aiming for a long term hold, don't leave options open when you don't have the ability to pay attention closely enough to the market.

[lovemyipad]

Uuuuupppppppppp!!!!!

[lovemyipad]

WAG: this one might, just might, be a "Gap and Go" that we come back to fill later down the road...

Let's see if indeed we get a decent gap up, then let's see whether or not it fills in the first 90 minutes... No fill ---> heightened chances of another leg up

[macwire]

Jun 4, 2013 4:22:56 GMT -8 lovemyipad said:

WAG: this one might, just might, be a "Gap and Go" that we come back to fill later down the road...

Let's see if indeed we get a decent gap up, then let's see whether or not it fills in the first 90 minutes... No fill ---> heightened chances of another leg up

Got a little cross over on macd (12,26,close)

Daily chart has been in a right range since touching down at 420...

Yesterday washed me out of some winning positions. Re-entered at the 10 day when we came back over...

Jobs reports looms later this week.

[Mav]

Gap practically filled. Might as well make it official.

[Deleted]

Jun 4, 2013 5:44:23 GMT -8 Mav said:

Gap practically filled. Might as well make it official.

You bring the gap; I'll bring the go. If AAPL doesn't see $460+ sometime this week, I'll be more than a little disappointed.

Are money managers at institutions PC'ers?

[dreamRaj]

From the Fly on the wall site: Apple bulls focusing on technical pattern

There has been a great deal of financial media attention focused on a potential bullish, inverted, head and shoulders pattern forming on the stock's daily chart. While that pattern could become active should the stock make it above the neckline at $475, there is an important caution to add. Patterns form not just by price, but by time as well. If the shares don't break out above the neckline next week during the company's World Wide Developer Conference, there is a high risk the pattern will expire through time alone. This particular potential bullish set up will not be valid if bulls are waiting for earnings season. Though there may well be bullish fundamental news during earnings which could move the stock higher, the pattern won't be part of that equation unless it has already triggered. The emergence of the pattern, if it is valid, could mean bulls are way ahead of the news and will be out of phase unless next week's conference provides an opportunity. For now, a breakdown back below the first of the major moving averages, the 10-day at the $440 area, would cast serious doubt on the pattern's validity. That could well happen if next week proves to provide no positive trading catalyst.

[appledoc]

If we can close above 454.25ish, we'll get a bullish cross of the EMA13 and SMA20.

[Deleted]

Who needs a less expensive handset? Not Apple.

Ogg reports, “According to data sent to me by Kantar, 38 percent of customers who purchased iPhones in the last three months upgraded from another iOS device, 31 percent upgraded from a basic feature phone, and 20 percent switched from an Android device.” Ogg reports, “The context for this, of course, is whether or not Apple needs a cheaper iPhone model — one that would allow Apple to sell a new model iPhone for a lower-than-typical price for an Apple premium device. There is some recent evidence to show that Apple is continuing to find ways to attract new customers without drastically altering its supply chain and product lineup.”

tinyurl.com/Late-Adopters

In other words, over half of iPhone buyers are new to the platform, and as we all know, once inside Apple's walled garden the incentive to leave is very low.

The same article stated that sales of the 4 and 4S combined almost equalled that of the 5.

Without additional data, it appears those new to the platform are buying the older models, but then when it comes time to upgrade they are buying the latest version.

[appledoc]

Jun 4, 2013 7:25:34 GMT -8 @greggthurman said:

Who needs a less expensive handset? Not Apple.

Ogg reports, “According to data sent to me by Kantar, 38 percent of customers who purchased iPhones in the last three months upgraded from another iOS device device, 31 percent upgraded from a basic feature phone, and 20 percent switched from an Android device.” Ogg reports, “The context for this, of course, is whether or not Apple needs a cheaper iPhone model — one that would allow Apple to sell a new model iPhone for a lower-than-typical price for an Apple premium device. There is some recent evidence to show that Apple is continuing to find ways to attract new customers without drastically altering its supply chain and product lineup.”

US data only. I don't see a cheaper iPhone being released in the US.

[Deleted]

Jun 4, 2013 7:25:34 GMT -8 @greggthurman said:

Who needs a less expensive handset? Not Apple.

Ogg reports, “According to data sent to me by Kantar, 38 percent of customers who purchased iPhones in the last three months upgraded from another iOS device device, 31 percent upgraded from a basic feature phone, and 20 percent switched from an Android device.” Ogg reports, “The context for this, of course, is whether or not Apple needs a cheaper iPhone model — one that would allow Apple to sell a new model iPhone for a lower-than-typical price for an Apple premium device. There is some recent evidence to show that Apple is continuing to find ways to attract new customers without drastically altering its supply chain and product lineup.”

I'm guessing this survey is US based? Where subsidized contracts make iPhones affordable to everyone...this isn't true everywhere else, especially fast growing markets like China. If you're making a few hundred dollars/month, are you going to spend 2 or 3 months of your wage for an iPhone or a weeks wage on an Android phone that does everything 80-90% as well?

[Deleted]

Jun 4, 2013 7:31:33 GMT -8 vitalogy80 said:

I'm guessing this survey is US based? Where subsidized contracts make iPhones affordable to everyone...this isn't true everywhere else, especially fast growing markets like China. If you're making a few hundred dollars/month, are you going to spend 2 or 3 months of your wage for an iPhone or a weeks wage on an Android phone that does everything 80-90% as well?

This is the popular misconception about China. Granted the average of China's total population makes less than the average American.

But China's population is 4X that of the US. China's emerging middle class is larger in absolute numbers than the US middle class. As a class, they make far, far more than "a few hundred dollars/month".

Everybody should be adjusting their perceptions of the buying power of the Chinese right now. In a couple years China's economy will be the largest in the world. By 2020 when China farts the rest of the world will be seriously impacted, we're seeing early signs of this already.

[macwire]

Jun 4, 2013 7:46:35 GMT -8 @greggthurman said:

Jun 4, 2013 7:31:33 GMT -8 vitalogy80 said:

I'm guessing this survey is US based? Where subsidized contracts make iPhones affordable to everyone...this isn't true everywhere else, especially fast growing markets like China. If you're making a few hundred dollars/month, are you going to spend 2 or 3 months of your wage for an iPhone or a weeks wage on an Android phone that does everything 80-90% as well?

This is the popular misconception about China. Granted the average of China's total population makes less than the average American.

But China's population is 4X that of the US. China's emerging middle class is larger in absolute numbers than the US middle class. As a class, they make far, far more than "a few hundred dollars/month".

Everybody should be adjusting their perceptions of the buying power of the Chinese right now. In a couple years China's economy will be the largest in the world. By 2020 when China farts the rest of the world will be seriously impacted, we're seeing early signs of this already.

Yes.
It is imperative that aapl penetrate this market.

The good news is that they know this.

The bad news is this isn't gonna drive aapls stock price growth or expansion this year. Unless something's announce like...next week. Lol

[sponge]

I agree with Gregg. China is huge and getting bigger. Their buying power will surpass our middle class in the next 5 years. The data comes from Import Export Bank president who recently met the president of our airport board.

Apple is up to something. TC said that he is paying attention to the competition.

A redesigned 4S with new plug and slightly cheaper can do the trick. Samsung is fearing that model the most. I think it is coming this fall. It is not a cheaper phone but rather a newer version of an 4" iPhone branded as no longer the 2011 model but rather 2013. Critics will cry that it is still too expensive but if Apple can sell the unsubsidized model for $350 they won't be able to produce enough when it comes out.

www.insidermonkey.com/blog/is-samsung-scared-of-what-apple-inc-aapl-will-do-next-159215/

[Deleted]

Jun 4, 2013 7:46:35 GMT -8 @greggthurman said:

Jun 4, 2013 7:31:33 GMT -8 vitalogy80 said:

I'm guessing this survey is US based? Where subsidized contracts make iPhones affordable to everyone...this isn't true everywhere else, especially fast growing markets like China. If you're making a few hundred dollars/month, are you going to spend 2 or 3 months of your wage for an iPhone or a weeks wage on an Android phone that does everything 80-90% as well?

This is the popular misconception about China. Granted the average of China's total population makes less than the average American.

But China's population is 4X that of the US. China's emerging middle class is larger in absolute numbers than the US middle class. As a class, they make far, far more than "a few hundred dollars/month".

Everybody should be adjusting their perceptions of the buying power of the Chinese right now. In a couple years China's economy will be the largest in the world. By 2020 when China farts the rest of the world will be seriously impacted, we're seeing early signs of this already.

Yes, I was off...but still the average Chinese worker makes around $7500/year, which if they're looking to buy a new iPhone prices it at around 8-10% of their yearly income. That's too much money still.

Will Chinese sales dominate in 5-10 years, most likely yes...but Apple would sure sell a lot more if they had something in the $250 - $300 range available in China.

[artman1033]

apple_economic_impact_on_cupertino


HMMMMMMMM...


16,000 employees currently based in the Cupertino area......enable Apple to add an estimated 7,400 new high-quality jobs.

Apple’s Cupertino-based employees collectively earned $2.0 billion in base salary in 2012.

($2 billion divided by 16,000 = $125,000 per employee... how is my math?)

$125,000 per employee

[sponge]

Which brings us to CM. we have not heard any new rumors about the future deal.

That will be a nice shock to the stock this summer. However I see that being announced with the new iPhone in Sept.

Although I think we will move up beyond Monday. How much it is hard to say right now. I am betting we get 465 by next Friday.

[Deleted]

Dissapointing action today

[sponge]

Jun 4, 2013 8:37:33 GMT -8 vitalogy80 said:

Dissapointing action today

Need to step back and look beyond today. We have been slowly moving up since May 12.

I think we are getting set up for a nice move upwards next Monday.

[appledoc]

Jun 4, 2013 7:46:35 GMT -8 @greggthurman said:

Jun 4, 2013 7:31:33 GMT -8 vitalogy80 said:

I'm guessing this survey is US based? Where subsidized contracts make iPhones affordable to everyone...this isn't true everywhere else, especially fast growing markets like China. If you're making a few hundred dollars/month, are you going to spend 2 or 3 months of your wage for an iPhone or a weeks wage on an Android phone that does everything 80-90% as well?

This is the popular misconception about China. Granted the average of China's total population makes less than the average American.

But China's population is 4X that of the US. China's emerging middle class is larger in absolute numbers than the US middle class. As a class, they make far, far more than "a few hundred dollars/month".

Everybody should be adjusting their perceptions of the buying power of the Chinese right now. In a couple years China's economy will be the largest in the world. By 2020 when China farts the rest of the world will be seriously impacted, we're seeing early signs of this already.

You've ignored that data you posted only accounting for US sales.

As you said, the US doesn't need a cheaper iPhone. But China does. The 4 is still $400+.

[sponge]

Also keep in mind that the longer aapl stays under $500 the more shares they can buy back.

We will reap the benefits of this bottom in the next three years.

Buy and Hold

[rob_london]

Beautiful weather in London today on the 60th anniversary of the Queen's coronation. Apple connection... she reportedly owns an iPod

[Deleted]

So with a large call wall at $460, is that looking like Max Pain this week??

[prazan]

Jun 4, 2013 0:57:00 GMT -8 rezonate said:

CDR and Mrs. Rez are somewhere in the western Bay of Bengal, on a westerly track to round Sri Lanka enroute Mumbai. Awaiting the WWDC news with excitement. (Catch up on our exploits at westbysea.com for a diversion before or after the close.)

Looks like a terrific trip. Have a blast and don't forget to check in.

EFFECT OF A LESS EXPENSIVE IPHONE ON MARGINS

Katy Huberty released a note about this yesterday, as reported by PED. In summary, KH reasons that iPhone margins are so much higher than the company average that volume sales of even a less expensive iPhone will maintain margins company wide, if not increase them marginally.

[Deleted]

Jun 4, 2013 8:11:37 GMT -8 vitalogy80 said:

Yes, I was off...but still the average Chinese worker makes around $7500/year, which if they're looking to buy a new iPhone prices it at around 8-10% of their yearly income. That's too much money still.

You continue to focus on the same useless metric. The metric you need to focus on is how many of ~1,200,000,000 (nearly 1/4 of the world's population) Chinese CAN afford an iPhone. How about 10%? That's not unrealistic and would be the equivalent of ~1/3 of the total population of the US.

More important, the number of Chinese that CAN afford an iPhone is growing rapidly.

There's no point in offering a less expensive handset, to address the 90% that CAN'T afford an iPhone (1,080,000,000 people), if you can't produce in those quantities.

The question becomes where do you draw the line? I like the line Apple has drawn. It balances units, gross margins and ability to produce. After all, what's the point of lowering your price (lower gross margins), to ostensibly sell more you can't produce (supply chain constraints), when you make less for the effort?

[macwire]

Jun 4, 2013 8:37:33 GMT -8 vitalogy80 said:

Dissapointing action today

Apples flat while all the indexes as of 130 are 1/2 a percent off. Hardly disappointing.

[macwire]

Jun 4, 2013 9:30:26 GMT -8 @greggthurman said:

Jun 4, 2013 8:11:37 GMT -8 vitalogy80 said:

Yes, I was off...but still the average Chinese worker makes around $7500/year, which if they're looking to buy a new iPhone prices it at around 8-10% of their yearly income. That's too much money still.

You continue to focus on the same useless metric. The metric you need to focus on is how many of ~1,200,000,000 (nearly 1/4 of the world's population) Chinese CAN afford an iPhone. How about 10%? That's not unrealistic and would be the equivalent of ~1/3 of the total population of the US.

More important, the number of Chinese that CAN afford an iPhone is growing rapidly.

There's no point in offering a less expensive handset, to address the 90% that CAN'T afford an iPhone (1,080,000,000 people), if you can't produce in those quantities.

The question becomes where do you draw the line? I like the line Apple has drawn. It balances units, gross margins and ability to produce. After all, what's the point of lowering your price (lower gross margins), to ostensibly sell more you can't produce (supply chain constraints), when you make less for the effort?

This. And even tho its "less developed" don't forget India. And Indonesia.

[Deleted]

Jun 4, 2013 9:23:17 GMT -8 prazan said:

EFFECT OF A LESS EXPENSIVE IPHONE ON MARGINS

Katy Huberty released a note about this yesterday, as reported by PED. In summary, KH reasons that iPhone margins are so much higher than the company average that volume sales of even a less expensive iPhone will maintain margins company wide, if not increase them marginally.

I have a problem with this logic, as it assumes that a less expensive iPhone will not impact current buying patterns.

What happens to present volumes of more expensive models when a less expensive model is available? Right now it appears that they cannibalize 50% of new model sales.

Apple has addressed this dilemma by making older models less expensive than new models.

You get what you pay for.

Something many are forgetting, are the other products that the Chinese are buying in large quantities. Items such as cars, houses and TVs. The example of the $7,500/average annual wage doesn't support those either.