This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Apple's iPhones Are Built for Collect Calls

. NEW YORK ( TheStreet) -- On Monday, I asked if Apple's (AAPL - Get Report) new iPhones can answer margin calls -- particularly the iPhone 5C.

This was expected to be the lower-end version, the cheap or budget phone -- whatever you want to call it -- that was supposed not only to compete more effectively with Samsung's (SSNLF) device dominance, but also to steal share from Google's (GOOG - Get Report) Android.

On Tuesday, however, at the company's long-awaited Sept. 10 event, the Street learned that Apple's new phones were -- in fact -- just dialing for profits. By listing the iPhone 5C at an unsubsidized price of $549, which is (at least) $150 more than analysts expected, it's clear that Apple has no interest in sacrificing margins for market share.

And given that the stock is down more than 5% following the announcement, it's safe to say the Street hung up on the optimism.
[Read: <a target="blank" data-add-tracking="true" href=""><em>iPhone 5C's Impact Is Massively Underestimated</em></a>]

Now, to be perfectly honest, going the cheap route was never something that I supported. I made this known here. I can't say that I expected this sort of overreaction, either.

But let's have some perspective. Admittedly, as an Apple shareholder, I don't believe that the event -- in its entirety -- lived up to its billing, particularly since China Mobile (CHL), the world's largest carrier with over 740 million subscribers, didn't make the agenda.

Even so, I believe Apple understands its current market position. To that end, it's more than ridiculous that we, on the outside looking in, feel that we have more of an urgency to get Apple to decide between market share or margin. It was not a "flip of a coin" decision.

I'm not disagreeing that the 5C is still premium priced. But for a premium brand, this was a calculated move -- one that, I believe, signals that other product launches are certainly on the way.

Besides, Apple had sent signals during the third-quarter conference call that the phones would have been on the high end of the price range. This was why management issued guidance that was lowered by as much as 5%. This -- according to my calculations -- implied that revenue would be flat on a quarter-over-quarter basis. Essentially, I believe Apple would have guided fourth-quarter revenues higher if it had anticipated robust sales on a cheaper price-point phone.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SSNLF $1,050.00 5.00%
AAPL $92.29 -1.00%
CHL $55.70 -1.30%
GOOG $706.66 0.75%
FB $118.73 0.78%


Chart of I:DJI
DOW 17,657.19 -3.52 -0.02%
S&P 500 2,045.40 -5.23 -0.26%
NASDAQ 4,696.5620 -20.5320 -0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs