This Day On The Street
Continue to site
ADVERTISEMENT
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

The Street, as it is known to do, conveniently forgot this. And as expensive as the $549 price point may seem, let's not forget that Apple already has a less expensive version of the iPhone that's selling pretty well. It's called the iPhone 4S. So for Apple to immediately cannibalize a product with decent margins that is still selling well wouldn't make much sense, especially since production costs are already factored in.

Regarding the 5C, though, I can go into all of the details about the phone's features, including the five colors, the A6 chip, better battery life, and host of other stuff. Still, according to some, this wouldn't justify Apple's "better-than-cheap" pricing strategy. It won't make a bit of difference in the minds of analysts -- many of whom have already made up their minds and downgraded the stock. But the assumption of lower-than-expected market share growth is a bit premature, if not entirely exaggerated.

But look, we can't have it both ways.

Apple is being hammered today for attending to margins, yet over the trailing 12 months, the company's "eroding margins" were all you heard about from anyone that wanted to incite fear. Besides, who's to say that Apple can't lower the price of the phones if it so choose? It's easier to justify lowering the price than raising it on finding out that it was set too low.

I also believe that Apple's new capital plan, which includes doubling the cash returned to shareholders over the next two years, might have had a lot to do with this pricing decision. Not to mention the buyback program, which jumped to $60 billion, to go along with the 15% dividend increase. Someone's got to pay for all of that.

And with the iPhone 5C, I don't blame Apple for dialing in to collect. It's an Apple product. There's always someone to answer.

At the time of publication, the author was long AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a co-founder of StockSaints.com where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense.

His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio.

His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets.

2 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
SSNLF $1,150.00 -7.19%
AAPL $130.59 0.04%
CHL $65.99 1.10%
GOOG $542.41 1.60%
FB $81.05 0.95%

Markets

DOW 18,070.97 +30.60 0.17%
S&P 500 2,115.21 +3.48 0.16%
NASDAQ 5,094.3170 +11.3880 0.22%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs