Tech earnings.

[Coronita]

Apple lovers are going to hate me for posting this. But the article is amusing. Take it with a grain of salt, because it comes from Fortune, which is known more for selling ads then giving sound financial advice.

 

The case of the 1.4 million missing iPhones

The talk among Apple (AAPL) watchers today is Toni Sacconaghi’s dogged pursuit of the 4 million iPhones Steve Jobs claimed to have sold as of Jan. 15, the date of his Macworld keynote speech.

AT&T (T), the iPhone’s exclusive U.S. carrier, reported yesterday that it had activated “just at or just slightly under 2 million” iPhones. That’s quite a discrepancy.

Sacconaghi, Sanford Bernstein’s Apple specialist, did the math and concluded in a report to clients that there are roughly 1.4 million iPhones “missing in action,” either unlocked or sitting in inventory. Assuming that 20% of those iPhones were purchased to be unlocked (a generous assumption given that a jailbreak for the latest iPhone firmware was only released yesterday), he believes that there are at least 650,000 gathering dust somewhere — in warehouses, perhaps, or in closets, as unwanted Christmas presents waiting to be returned.

Here’s how he gets that number:

• 3.75 million iPhones sold as of Dec. 29 (per Apple’s Q1 report)
• minus 2 million iPhones activated through AT&T as of Dec. 31 (per AT&T)
• minus 350,000 iPhones sold in Europe via O2, T-Mobile and Orange
• minus 750,000 iPhones purchased to be unlocked
• equals 650,000 unaccounted for.

Sacconaghi concludes:

This is negative in two ways: (1) it indicates end-user demand for iPhone is lower than many investors may think based on Apple’s sales figure; and (2) it points to slower iPhone sales in the current quarter, since much of this inventory is likely to be drawn down.

Of course, compared to other Apple analysts, Sacconaghi is something of a bear. One day before the Q1 earnings report and the subsequent run on Apple shares, he went out on a limb and predicted that the company would sell only 7 million iPhones in 2008. That’s considerably less than the 10 million target Steve Jobs set — a goal COO Tim Cook said on Tuesday he remained “very confident” they would hit.

Most Apple watchers shared Cook’s confidence, given the 4 million number Jobs had trotted out at Macworld. Today they’re singing a different tune.

“Apple might have a demand problem,” writes Tom Krazit at CNET.

Russell Shaw at ZDNet says the iPhone is at a “crossing the chasm” moment, stuck between early adopters and the mainsteam, and predicts that to survive its price will have to come down to $299 by the end of May at the latest.

Ewan McLeod at the U.K.’s SMS Text News waxes positively elegiac in a post entitled “The Apple iPhone will only ever be a bit player”:

This may be premature. A lot could change in the next 50 weeks. New apps. A 16 GB iPhone. A 3G model. New price points. New markets in Canada, Thailand, and maybe even China.

But one thing is certain: having promised and repromised to sell 10 million iPhones in 2008, there will be hell to pay in 2009 if Apple falls even a little bit short.

 

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—– Sour grapes for everyone!

[an]

FLU, you know how the game is played. Even if they meet that 10M iPhone shipment for 2008, that still might cause a drop in price in 2009. It’s all about buying on rumor and sell on news.

davelj, of course the devaluation help a lot for internationally operated company, but that’s to be expected. Do you expect the dollar to get strong again w/out the economy recovering as well? I mean seriously, how can the dollar get any stronger w/out interest rising. Only way interest would rise is if we have inflation… See where I’m going w/ this?

[an]

FLU, you know how the game is played. Even if they meet that 10M iPhone shipment for 2008, that still might cause a drop in price in 2009. It’s all about buying on rumor and sell on news.

davelj, of course the devaluation help a lot for internationally operated company, but that’s to be expected. Do you expect the dollar to get strong again w/out the economy recovering as well? I mean seriously, how can the dollar get any stronger w/out interest rising. Only way interest would rise is if we have inflation… See where I’m going w/ this?

[an]

FLU, you know how the game is played. Even if they meet that 10M iPhone shipment for 2008, that still might cause a drop in price in 2009. It’s all about buying on rumor and sell on news.

davelj, of course the devaluation help a lot for internationally operated company, but that’s to be expected. Do you expect the dollar to get strong again w/out the economy recovering as well? I mean seriously, how can the dollar get any stronger w/out interest rising. Only way interest would rise is if we have inflation… See where I’m going w/ this?

[an]

FLU, you know how the game is played. Even if they meet that 10M iPhone shipment for 2008, that still might cause a drop in price in 2009. It’s all about buying on rumor and sell on news.

davelj, of course the devaluation help a lot for internationally operated company, but that’s to be expected. Do you expect the dollar to get strong again w/out the economy recovering as well? I mean seriously, how can the dollar get any stronger w/out interest rising. Only way interest would rise is if we have inflation… See where I’m going w/ this?

[an]

FLU, you know how the game is played. Even if they meet that 10M iPhone shipment for 2008, that still might cause a drop in price in 2009. It’s all about buying on rumor and sell on news.

davelj, of course the devaluation help a lot for internationally operated company, but that’s to be expected. Do you expect the dollar to get strong again w/out the economy recovering as well? I mean seriously, how can the dollar get any stronger w/out interest rising. Only way interest would rise is if we have inflation… See where I’m going w/ this?

[kewp]

“Kinda cool that a single person has that much influence.”

Yes, high tech definitely allows folks to screw up on a truly global scale these days.

[kewp]

“Kinda cool that a single person has that much influence.”

Yes, high tech definitely allows folks to screw up on a truly global scale these days.

[kewp]

“Kinda cool that a single person has that much influence.”

Yes, high tech definitely allows folks to screw up on a truly global scale these days.

[kewp]

“Kinda cool that a single person has that much influence.”

Yes, high tech definitely allows folks to screw up on a truly global scale these days.

[kewp]

“Kinda cool that a single person has that much influence.”

Yes, high tech definitely allows folks to screw up on a truly global scale these days.

[davelj]

asianautica,

I’m not saying that the dollar will get stronger. (I expect it to flounder and perhaps even weaken a bit more.) I’m merely saying that in all likelihood the majority of the benefit that US-based multinationals get from dollar depreciation has already occurred, so the benefit going forward will be diminished. (That is, the dollar is declining at a decreasing rate – negative first derivative, negative second derivative in calculus terms.) Does that make more sense?

[davelj]

asianautica,

I’m not saying that the dollar will get stronger. (I expect it to flounder and perhaps even weaken a bit more.) I’m merely saying that in all likelihood the majority of the benefit that US-based multinationals get from dollar depreciation has already occurred, so the benefit going forward will be diminished. (That is, the dollar is declining at a decreasing rate – negative first derivative, negative second derivative in calculus terms.) Does that make more sense?

[davelj]

asianautica,

I’m not saying that the dollar will get stronger. (I expect it to flounder and perhaps even weaken a bit more.) I’m merely saying that in all likelihood the majority of the benefit that US-based multinationals get from dollar depreciation has already occurred, so the benefit going forward will be diminished. (That is, the dollar is declining at a decreasing rate – negative first derivative, negative second derivative in calculus terms.) Does that make more sense?

[davelj]

asianautica,

I’m not saying that the dollar will get stronger. (I expect it to flounder and perhaps even weaken a bit more.) I’m merely saying that in all likelihood the majority of the benefit that US-based multinationals get from dollar depreciation has already occurred, so the benefit going forward will be diminished. (That is, the dollar is declining at a decreasing rate – negative first derivative, negative second derivative in calculus terms.) Does that make more sense?

[Author]

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