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Apple Since Launch of the iPhone

Posted on Tuesday, Jul 31st 2007

It has been a month since the launch of the iPhone and in this post we will see how Apple (NASDAQ: AAPL) has been doing since the launch.

Following the launch, estimates of the first weekend sales of iPhone took the figure to an over optimistic and ridiculous level of 700,000. The announcements from AT&T and Apple brought it down to 146,000 activations and 270,000 sales (including accessories, it appears). Though it looks modest in comparison to the earlier estimates, it is nevertheless a strong sale and Apple expects to sell 1 million iPhones in the first three months. May be more. The iPod took a bit of time to hit its stride, and there is no reason for the iPhone to not follow suite.

A USA Today report on iPhone customer satisfaction shows that despite initial activation glitches, 90% of the customers are very happy with their iPhones. However, the report says that the customers wish the iPhone had longer battery life, faster Internet speed and more internal memory. AT&T being the exclusive carrier does not seem to be a problem with 50% of the buyers switching from another carrier. [It is with me, and I have not switched from Verizon yet.]

Another issue with the iPhone is its high cost. As per the report, it ranks as the No. 1 reason for deterring consumers interested in the device from buying an iPhone. When viewed as a laptop-replacement device, the iPhone’s cost justifies just fine. However, for me, the keyboard remains a problem to meet that goal. Nonetheless, there are many users who don’t need to type as much, and can effectively use the iPhone in this mode, as a laptop replacement device.

iPhone is a great consumer device but it just isn’t suited for heavy use as a computer and does not let you edit documents. One of the many reasons why it is not suited for corporate use. Some more issues with corporate use are its high cost, slow AT&T network, and lack of support from mobile security suites and major business mobile e-mail solution providers. I don’t see it as a business use machine quite yet, and not until the keyboard issue is addressed. RIM, Palm – not to worry!

However, there are many takers for the iPhone. It is set to launch in Europe in the fourth quarter.

On the financial front, Apple reported third quarter revenue of $5.41 billion and EPS of $0.92, a 24% growth over the last year’s June quarter sales. Record-breaking Mac sales and strong demand for iPods led to this landmark quarter with the highest revenue in a June quarter. Total revenue from iPhone and iPhone accessory sales was $5 million, which does not account for the payments from AT&T. Apple would not be accounting for iPhone revenues in one go, but would be apportioning it across a 2-year period. For the next quarter, Apple expects revenue of about $5.7 billion and EPS of about $0.65. Its stock has done well since the launch when it was $122.04 and hit $148.92 last week, before it dropped today to ~$135 on the news that Apple was cutting production orders from 9 Million to 4.5 Million units. [I am not sure to what extent this news is confirmed, but nonetheless, it has certainly crashed the stock for now.]

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At the end of this story the writer uses the term “news”. If it were news maybe aapl’s IR
Dept would have confirmed it…Maybe one day, the media would actually know something about the investing world before they act. Instead, what we have here is another writer just making it up as he goes along. knowing nothing about or “writing” about what might be the TRUTH behind the RUMORS!!! Like Jim Cramers flip flops on his thoughts concerning AAPL….(not a short term 4 horseman idea)Kinda funny how goldman sachs has a huge short position in AAPL and just like that—POOF—he’s a seller again…He told everyone to sell AAPL @ 120 and buy MSFT…AAPL trades to 148 1/2 (then he bragged about telling his TV nation that he got you out @ 143)
Funny how goldman took the street.com public. Now the street.com “breaks” the story about apples demise.. I will not try to hide the fact that I own 6500sh with a cost adv. of 76..It is my only long term position…This is the only stock i see that has had a huge run in its business model…(not like the dog shit cramer tries to push nightly—IE BANKS and Brokers)Days like today are great to panic-if you want to go broke…Or maybe—just maybe it might be time to look to own more (like @ 132 ish)when funds were buying more in the 145 area…I know a fund mgr that still liked it in the 150’s in the after mkt and it really had nothing to do with Iphone hype…Just ask dell if they would like to have Apples sales growth or even better -APPLES MARGINS…If you learn anything today—-Know this——Goldman is in trouble(just look @ the Lev 2 bids on down days) The ipo market is pretty cooked—Would you like to buy some BBB bonds????Maybe some CMO’s or bridge paper ?????? They have plenty…So much in fact that they cant even sell it and make $$$ in todays Mkt…They have to hold and store it —you show me a buyer….Last but not least—-I would love to have a GS VP package…LOL….
When the Mkt gets hit hard sell GS… After 189 ish its a quick ride to 150….Enjoy the party…
thanks—-
ML(just another 55)

ML Tuesday, July 31, 2007 at 5:53 PM PT

This article is a bit lame. First, author claims iPhone sales estimates were 700k when, in reality, that was the highest of estimates with the consensus arount 500k. Second, the author claims Apple announced sales of 270k for the weekend when, in reality, Apple announced those sales for the quarter which ended Saturday night. So Apple might have sold a number close to 500k over the whole weekend. Finally, as mentioned by ML, it’s pretty sad that the author repord a rumor as “news”. In fact, on CNBC’s OnTheMoney tonight, they reported that the firm reported as the source of his “news” was distancing themselves from it, saying they were asked by TheStreet.Com if they had heard this rumor and they said they had heard it, TheStreet.Com then went on to use them as a source for this so-called “news”. It reminds me of a similar rumor reported as “news” a few months back by,I think, Engadget (not sure about the source) that caused a big drop in AAPL and was later found to be false.

LarryF Tuesday, July 31, 2007 at 9:58 PM PT

FACTS FACTS FACTS?

  1. Apple announced 270,000 sales of iPhones in the first 30 hours – iPhones, NOT accessories. It seperately announced $5m of revenue from accessories.

  2. iPhone is expensive. Not it is cheaper and represents better value than many other so-called top of the range smartphones… try reading this analysis: https://www.roughlydrafted.com/RD/RDM.Tech.Q3.07/28CE05EF-2E0F-4912-A62A-CBAB41E0D305.html

  3. Not sure when this was written but the bear raid based on production drops of iPod and or iPhone were completely debunked yesterday.

  4. When considering iPhone it should be recalled that it took seven quarters before the iPod hit 1 million of sales.

  5. Keyboard a problem? Another myth perpetrated by people who have not even used it?! Read the reports of real users – it is no problem and faster than fixed keyboards of Treo’s and Blackberry’s.

  6. Great post above from ‘pay man’. But you forgot to say that the iPhone is really no good at all for hakers and virus makers who will really have to stick with Windows CE devices…

  7. Apple a luxury brand. It’s products are designed beautifully, the software is second to none, so yes it feels like a luxury brand. But every time you line up it’s products against competitors on a like-for-like basis you find Apple products cost the same and even sometimes less. Measure up HP’s or Dell’s to Macs, the Zune to the iPod, the top Nokias to iPhone, or the Blackberry. Apple just design and make better products at decent prices that represent much greater short and long-term value.

My question is, why does Apple attract such half-baked and badly researched commentaries from people who don’t know their subject?

Is it as some people suggest, the work of a certain Redmond based company’s PR machine?

Jon T Wednesday, August 1, 2007 at 7:18 AM PT

Jon,

You must be a first time visitor to this site. Please take a look at https://sramanamitra.comarticles/convergence/.

We have covered iPhone in a great deal of detail, so your accusation that I don’t know what I am talking about is unfounded, as is your allegation that this is Microsoft’s PR Machine.

I also said above, that the production cut-back news (rumor) may not be true.

As for the keyboard, my thesis is iPhone is positioned as a laptop replacement device, and to be that, its keyboard strategy doesn’t work for me.
IT DOES NOT WORK FOR ME. Get it? It may work for you. NOT FOR ME.

The iPhone, indeed, has a lot of positives, and if you choose to spend time on the blog, and follow my analysis all the way from before its launch, you will see, that they are neither lost on me, nor considered unimportant.

Sramana Mitra Wednesday, August 1, 2007 at 11:43 AM PT

Larry,

The quarter and the weekend were one and the same for the iPhone, because the product launched on June 29th, and sold only for 2 days over the weekend.

Sramana

Sramana Mitra Wednesday, August 1, 2007 at 3:42 PM PT

Hi, I am one of Sramana’s research assistants and had collated the data for this post.

Here’s what the Apple’s 8-K filing states:

iPhone and Related Products and Services – Units sold: 270,000; Value: $ 5 million

iPhone and Related Products and Services consists of iPhones and Apple-branded and third-party iPhone accessories.
So, the claim that “Apple announced 270,000 sales of iPhones in the first 30 hours – iPhones, NOT accessories. It separately announced $5m of revenue from accessories.” is not accurate.”

Jyotsna Popuri Thursday, August 2, 2007 at 3:17 PM PT

[…] make easy work of the 10 million iPhones target this year. But what I would have liked to see was a better keyboard and editing capabilities. That one still eludes, and with my huge writing load, I cannot yet replace my laptop with an […]

3G iPhone Going For Market Share - Sramana Mitra on Strategy Tuesday, June 10, 2008 at 8:34 AM PT