This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Tim's Got This: Question Apple's Revenue Growth at Your Own Peril

Stocks in this article: AAPL MS

NEW YORK (TheStreet) -- Steve Jobs would often refer to a desirable Apple (AAPL - Get Report) product as one in which all the features magically combine to give the user an unexpected and pleasing sensation of ultimate utility and quality. The whole exceeding the sum of its parts.

The same can be said for Apple's financials. Taken bit by bit, the things that Apple does on a routine basis end up driving revenues, frequently to record highs. Regrettably, perspective is often lacking. So let's take a close look at the product line.

1. iPad. Apple recently replaced its low end, full-size iPad, the iPad 2, with the iPad 4 (with better specs all around) while keeping the price at $399 for the basic model. This move had some thought behind it. As Wells Fargo analyst Maynard Um pointed out on March 18, "The price reduction comes at a time where Samsung is launching a new Galaxy TabPRO line priced at $499 (Model 10.1/16GB/Wi-Fi) and positions AAPL to be more competitive in regards to pricing."

Apple always does things for a reason. In this case, the extreme quality of a generation-old iPad, with an attractive price and good gross margins, can go toe-to-toe with the competition's latest. There is wisdom in always making the best.

2. iPhone 5c. Contrarians mew that the iPhone 5c hasn't sold as well as the 5s. A price reduction could be construed as an admission of defeat. However, in practical business terms, Apple has been very adept at clearing out inventory with judicious price reductions.

Apple is now selling an 8 GB iPhone 5c for about $70 less than the 16GB model in non-U.S. markets.

Apple is clearly operating with good knowledge of customer needs and changing local market technology. Under the watchful eye of Tim Cook, it generally succeeds at clearing excess inventory. (Unlike Android's attempt, an 8GB iPhone is very usable.)

3. iPhone 5s & 5c. A recent Morgan Stanley (MS) report claims that it is consistently better at predicting total iPhone sales than the consensus estimates of analysts. And for the first calendar quarter of 2014, Morgan Stanley's AlphaWise Tracker calls for 42 million iPhones sold, 4 million more handsets than consensus estimates.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs