Tag Archives: iPhone 5

Citi Cuts Apple’s Rating in Light of Low Expectations for iPhone 5

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Sales of iPhone 5 Not Gangbusters

Financial services company Citi has downgraded Apple’s rating from ‘buy’ to ‘neutral’ and lowered their price target to $575 due to their expectation that iPhone 5 sales will not be strong enough to prop up the stock.

Citi’s Apple analysts, Glen Yeung, Walter Pritchard and Jim Suva originally rated Apple ‘buy’ when they thought iPhone 5 sales would be impressive. UBS and Jefferies financial analysts also cut their price targets for Apple last week, but maintained the rating of ‘buy’ for the popular technology company.

Reports from Asian supply chains say that Apple has reduced their orders for the iPhone for 2013’s first quarter. It is logical that supply should be reduced after the holiday season somewhat, but Apple is cutting their production more than expected.

According to Citi, “Our checks suggest Apple has seen a 45-50% increase in monthly iPhone 5 production output October to December.” Since this improvement exceeded expectations it is not surprising that Apple is cutting orders for the beginning of the year.

It comes down to analysts at Citi believing that if iPhone 5 demand was high then Apple would continue to manufacture them at full-speed ahead. Since that is not the case and Apple is cutting production this signals to Citi that demand is only ‘good,’ and not ‘great,’ which is what Apple would need to get a ranking of ‘buy’ from Citi.

iPhone 5 Hits Stores Around the World Triggering Long Lines and Happy Customers

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Tim Cook, New CEO of Apple
On Line in New York for iPhone 5

The much anticipated iPhone 5 made its appearance on Friday, exciting buyers and sellers as it was whisked off the shelves by the thousands.

The new Apple offering is not an astounding technological breakthrough, but just a bit better in many of the ways the customers already love their old iPhones: like a super-model, its thinner, taller and lighter, and that’s about it.

This is the first product launch since Tim Cook took over Steve Jobs’ position as head wizard at Apple, and it seems his skills might not quite be a clone of Jobs’ special magic, but Cook seems to have a bit of magic of his own up his sleeve.

“We are positively surprised regarding the pace of the rollout, since we had expected a bigger impact from component constraints,” Barclays analyst Ben Reitzes said.

And what at pace it’s been, and is going to be. On Friday the iPhone 5 went on sale simultaneously in New York, Japan and Hong Kong, and a few other hot spots. By next Friday expect to see this hot-selling phone in 31 countries, and by December 31st of this year, in more than 100. That exceeds by 30 the number of countries the iPhone 4s , the 5’s predecessor, was launched from during a similar time-frame.

“His skills fit the time period and the flow of product,” said Raymond Miles, professor emeritus at Haas School of Business at the University of California, Berkeley. He added that Apple may be at a stage where it needs “someone with a production vision.”

Cook’s magic seems to be working: He was able to supersede Jobs’ sales record as preorders for the 5s climbed to 2 million within 24 hours, twice the speed with which the 4s was pre-sold. Analysts and observers/investors are anticipating a similar successful launch of the smaller iPad mini in October.