Apple’s Shares Hit Again On Its Decision To Keep iPhone Prices High

Deadline.com
Apple’s Shares Hit Again On Its Decision To Keep iPhone Prices High
.

View photo

Apple’s Shares Hit Again On Its Decision To Keep iPhone Prices High

Investors continued to hammer Apple after it made clear yesterday that it will continue to try to keep profit margins high on its iPhones, and not release a budget-priced model that might help it expand into developing markets. Shares dropped 5.4% to $467.83 today following downgrades from firms including Bank of America, UBS and Credit Suisse. On top of yesterday’s price drop, it translates into a $34.8B decline in the company’s market value since Monday. While investors love the iPhone’s high profit margin, estimated at about 40%, they also wanted the company to go after new buyers overseas, especially in China and India, who might be enticed by a device that costs about $400 (not including a carrier subsidy). Instead, the 5C came with a $549 price tag in the U.S., and about $733 in China. A budget phone was “nowhere to be found” as Apple maintained its focus on “profit share over unit share,” with the 5C expected to generate margins of about 50%, says Cowen and Company’s Timothy Arcuri. Hopes for a big deal with China Mobile at an event today also came to naught: China certified the new iPhones to run on the company’s network, but so far there’s no deal. At an event today the companies played a video of yesterday’s iPhone unveiling in California. But Apple still has fans, including billionaire Carl Icahn who disclosed last month that he has a large position in the company and is lobbying for it to up its share repurchase plans“Apple’s just a no-brainer,” he told CNBC. “It’s extremely cheap…At these levels we’re buying quite a bit.” 

Get more from Deadline.com: Follow us on Twitter, Facebook, Newsletter

View Comments