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AAPL Up Against The Tide
Earnings season begins today, and it’s not going to be pretty. Shares of AAPL are resilient in a down market. The company will report earnings for its third fiscal quarter on Tuesday, July 24. Shareholders are earning a dividend as of July 1. Investors remain focused on iPhone penetration globally and the anticipated launch of the next generation in the fall; iPad adoption and the rumoured launch of a smaller version; market share growth of the Mac business lines; the introduction of the anticipated Apple TV set and related products; and evolution of platforms such as Siri, iAd and iBooks. Shares of Apple trade at 9.7x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).Apple Tinkering, But Largely Staying Out Of Mobile Payments For Now (WSJ)
Apple often bides its time before diving in to developing tech markets, which explains why it’s largely on the sidelines in the mobile-payment wars. Last month, it unveiled a service called Passbook that pulls together loyalty cards, tickets and coupons. But Passbook, which Apple will release this fall, drew attention for what it doesn’t do: It can’t link directly to credit or debit cards, so consumers can’t use it to replace their wallets. That said, everyone from analysts to rivals to security professionals, expect Apple to come out swinging eventually once consumers become more comfortable substituting their phones for their wallets. For now, it’s baby-steps.
Apple’s Passbook: No NFC Here (FinVentures)
Apple’s exec team has kept the iPhone away from NFC. That strategy’s brilliance is an understatement. By expanding Apple’s ownership of Digital Goods into mCommerce and narrowly aligned Physical commerce they can maintain ownership of the entire consumer process.. from marketing, sales, purchase and “delivery.” No one can orchestrate value in NFC. What is truly ironic is that as the carriers spend hundreds of millions of dollars on NFC and their walled garden strategy to “force control,” Apple and Google will be further ahead in coordinating value in new networks.
The iPod Hasn’t Been Forgotten, It’s Being Ignored (Redmond Pie)
The iPod Touch could be used as something of a ‘gateway drug’ to help Apple snare the younger generation and catch potential new users when they are young, giving them a taste of the iOS ecosystem as early as possible. But the iPod is being ignored by Apple. With rumours of a smaller iPad, is Apple potentially going to kill the iPod Touch in favour of an ‘iPad Mini?’ Is the iPod Touch, which is basically filling the position of a small iPad already, not long for this world? Apple would be missing the point somewhat if that was the end-game. The iPod Touch’s big claim to fame is that it is an iPhone without the contract. A small iPad isn’t quite the same.
Small Tablets Will Dominate The Market (PCWorld)
Most tablets in use today are iPad sized. That’s because most tablets in use are iPads. Now it has become clear that there are major markets for two sizes: An iPad size in the 10-inch diagonal range, and a smaller size in the 7-inch diagonal range. The key attribute of small tablets that will drive them into mainstream use is low cost. Over the next two years, the “sweet spot” range for 7-inch tablets is between $100 and $200. Big tablets like the current iPad will be popular. But they’ll always be the high-end minority. The future belongs to small tablets like the Nexus 7 and the upcoming mini iPad.
Does Apple Really Need A 7-Inch iPad? (PCWorld)
Well, the above article seems to think so. Here are some of the industry opinions about the possibility of a smaller iPad:
- Adrian Hingsley-Hughes from ZDNet believes that Apple can sit comfortably with its 10-inch iPad while Google and Amazon send the price of Android tablets plummeting, eliminating higher-priced Android tablet competition, and therefore benefiting Apple.
- Computerworld blogger Jonny Evans, on the other hand, says: “There’s certainly competitive reasons for Apple to introduce a product like this.”
- Allvoices’ Joseph Thomas reports that “There will be no 7-inch iPad, I guarantee it!”
- TechPinions’ Patrick Moorhead thinks that the recently unveiled Google Nexus 7 will sell well and “take business away from Apple’s $399 iPad 2,” which is why he believes that Apple will be forced to make a 7-inch tablet or suffer the consequences.
- Daring Fireball’s John Gruber thinks that Apple could make a profit from a smaller iPad.
Consensus seems to be positive for the smaller iPad
The iPhone’s Pre-Paid Sphere Grows A Little Larger (Engadget)
Virginia’s nTelos was part of a big regional carrier push for the iPhone earlier this year. Now the company is offering the option to go prepaid at $55 a month for unlimited voice, messaging and data. Users will still want to reside in the state for nTelos to truly make sense, but if you regularly cheer the Hokies with pride, going the Apple route just got a lot more flexible. nTelos joins Cricket and Virgin Mobile on the pre-paid iPhone front.
Apple Is The Heavyweight In Many Fund Portfolios (The New York Times)
The market value of all stocks in the Standard & Poor’s 500-stock index increased by $282 billion in the 12 months through June. One stock alone accounts for the overwhelming bulk of that increase. In fact, of that $282 billion, some 83% of it comes from gains in shares of Apple. Apple is the most widely held stock among the 465 growth funds. Many mutual fund managers can attribute most of their recent success to large positions in Apple. But is a large current stake a ticket to further out-sized gains? Or is it an increasingly risky bet that could quickly sour?