Shares of Apple Inc. (AAPL) fell for the third day in a row today, which may possibly reflect shareholder concerns about the shift in its iPhone strategy, although some analysts continue to think that the company will thrive.
Behind the excitement of Steve Jobs’ announcement on Monday of the new iPhones 3G was news that Apple would increase the percentage of recurring monthly service revenue it got from wireless carrier AT&T Inc.’s iPhone users. Due to this, Apple is expected to see an earnings dip of about 3 cents a share this year, according to some estimates. Hudson Square Research analyst Daniel Ernst said, “There was a piece of negative news out of this—that they had to subsidize for growth. You could take a bearish look at that. They had to subsidize in order to keep growing it.”
Instead of AT&T paying Apple a portion of service fees each month as it did with the last iPhone, they will now shoulder part of the price of Apple’s latest iPhone model to the tune of $200 to $500 per phone, according to estimates. Ernst still said that he anticipated Apple would have to make such a shift to continue iPhone growth, and he remains positive about long term outlook, echoing sentiment from several other analysts. “My view is that that is the way the cell phone industry works—it’s not their fault,” Ernst added.
Apple shares were down $3.13 (or 1.8 percent) to $170.13 in early afternoon trading on Friday on Nasdaq, after hitting a daily low of $165.31 in early trading. The stock is down nearly 9 percent since the close of trade on Monday.
Shares of Apple Inc. (AAPL) fell for the third day in a row today, which may possibly reflect shareholder concerns about the shift in its iPhone strategy, although some analysts continue to think that the company will thrive.
Behind the excitement of Steve Jobs’ announcement on Monday of the new iPhones 3G was news that Apple would increase the percentage of recurring monthly service revenue it got from wireless carrier AT&T Inc.’s iPhone users. Due to this, Apple is expected to see an earnings dip of about 3 cents a share this year, according to some estimates. Hudson Square Research analyst Daniel Ernst said, “There was a piece of negative news out of this—that they had to subsidize for growth. You could take a bearish look at that. They had to subsidize in order to keep growing it.”
Instead of AT&T paying Apple a portion of service fees each month as it did with the last iPhone, they will now shoulder part of the price of Apple’s latest iPhone model to the tune of $200 to $500 per phone, according to estimates. Ernst still said that he anticipated Apple would have to make such a shift to continue iPhone growth, and he remains positive about long term outlook, echoing sentiment from several other analysts. “My view is that that is the way the cell phone industry works—it’s not their fault,” Ernst added.
Apple shares were down $3.13 (or 1.8 percent) to $170.13 in early afternoon trading on Friday on Nasdaq, after hitting a daily low of $165.31 in early trading. The stock is down nearly 9 percent since the close of trade on Monday.
Via [Palluxo!]
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