Apple Pay Slammed by CVS, Rite-Aid, Wal-Mart in favor of CurrentC

The introduction of Apple Pay last Monday was widely described as the dawn of a new era for smartphone payments.

But within a week, two major pharmacy chains, Rite-Aid and CVS, rejected Apple’s version of the future: Both disabled Apple Pay (as well as other tap-to-pay mobile payments systems Google Wallet and Softcard). As expected, customers took to Twitter to complain, and they almost universally sided with the smartphone company over the drug stores.

CVS hasn’t publicly explained itself. Rite-Aid spokeswoman Ashley Flower defended the company in an email to Bloomberg Businessweek. “We are continually evaluating various forms of mobile payment technologies, and are committed to offering convenient, reliable, and secure payment methods that meet the needs of our customers,” she wrote.

That’s not the whole story. Objections to Apple Pay aren’t actually about convenience, reliability, or security—they are about a burgeoning war between a consortium of merchants, led by Walmart, and the credit card companies. Rite-Aid, CVS, Walmart, Best-Buy and about 50 other retailers have been working on their own mobile payments system, called CurrentC. Unlike Apple Pay, which works in conjunction with Visa, Mastercard, and American Express, CurrentC cuts out the credit card networks altogether. The benefit to the merchants is clear: They would save the swipe fees they pay to the credit card companies now, which average about two percent of the cost of transactions.
CurrentC is also likely to allow merchants to gather data about transactions and offer discounts and loyalty programs. This stands in marked contrast to the anonymity built into Apple Pay, which has drawn concerns even from some merchants who are actively supporting the system.

Apple chief executive Tim Cook would be happy to have this fight with MCX’s backers. When he introduced Apple Pay last month, Cook said mobile payments had failed so far because they were built to serve the business models of their creators, rather than to provide a useful experience for customers. Because Apple’s primary goal is to sell more phones, tablets, and laptops, its system is more straightforward.

Rite-Aid and CVS screwed up the optics on this one. It’s hard to argue that you’re doing right by your customers when you stop accepting a form of payment that you’ve already demonstrated presents no technical hurdles. They also don’t have an alternative to offer. CurrentC isn’t expected to be ready until 2015, and the specifics of the system aren’t public.
The irony of this conflict is that Apple, the innovator, is in the position of endorsing the status quo. Walmart and its brick-and-mortar allies, on the other hand, are actively trying to turn the payments industry on its head and challenge the entrenched power of the credit card networks. Apple is happy to help the incumbents make the existing system feel slicker to customers, without touching the underlying economics. In return, American Express, Visa, and Mastercard have been solidly in Apple’s corner.

Apple Update Target Price $ 120

AAPL : NASDAQ : US$99.76
BUY 
Target: US$120.00

Technology — Communications Technology — Wireless Equipment
STRONG RESULTS; RECORD IPHONE 6 UPGRADE CYCLE DRIVES SOLID Q1/F’15 GUIDANCE

Investment recommendation:

Apple reported strong September quarter results above our and consensus estimates. Consistent with our surveys
indicating very strong global iPhone 6 demand with limited supply, Apple
issued strong Q1/F’15 EPS guidance slightly above our estimates as Apple is
currently selling all iPhone 6 devices it can produce. Please see our October
13 report titled “Monthly surveys indicate very strong iPhone 6/6 Plus
demand; limited supply” for more details on our survey work.

We maintain our expectations for a record iPhone 6 upgrade cycle driven by strong
replacement sales to existing iPhone customers and strong high-end
smartphone market share gains due to our surveys indicating a greater mix
of Android smartphone consumers switching to the iPhone 6 smartphones
than during the iPhone 5 series launches. Mac sales were also above our
expectations as Apple gained material PC market share during the important
back-to-school season. We reiterate our BUY rating and increase our price
target to $120 from $115.

Investment highlights

 Apple reported Q4/F’14 sales of $42.1B and EPS of $1.42, above our
$39.7B/$1.28 and consensus of $40.0B/$1.30. The strong results were
driven primarily by stronger iPhone sales of 39.3M units at $606 ASP
versus our above-consensus 37.7M/$574 estimates.
 We believe Apple’s Q1/’15 sales guidance in the range of $63.5-66.5B
was adversely impacted by F/X from the stronger dollar and iPhone
demand well above Apple’s ability to supply throughout the December
quarter. Our updated estimates are at the high-end of Apple’s guidance
due to our surveys indicating an increasing sales mix of higher-ASP
64GB (versus 16GB) iPhone 6/6 Plus SKUs combined with a growing
demand for the higher-ASP iPhone 6 Plus, particularly in China. We
anticipate materially higher iPhone ASPs during Q1/F’15 and maintain
above-consensus iPhone ASP of $680 adjusting for deferred revenue.
 Given the strong results and guidance, we maintain our bullish F2015
product cycle thesis and raise our F’15/F’16 EPS estimates from
$7.77/$8.19 to $8.00/$8.50.

Valuation:

Our $120 price target is based on shares trading at roughly 14x
our F2016 EPS estimate.

You Can’t Buy a BlackBerry Passport – ‘Being Sexy’

It’s a good thing that some people can’t buy BlackBerry Ltd. (BBRY)’s Passport phone, Chief Executive Officer John Chen said.

That means it’s popular.

Disclosure : Blackberry remains one of Jack A. Bass Managed Accounts largest long positions.

Shortages of the business-focused smartphone show that efforts to turn around the unprofitable company, formerly known as Research In Motion Ltd. (BB), are taking hold, Chen told an MIT Enterprise Forum event today in Hong Kong. Demand for the phone — the first major new device released globally since Chen took charge in November — has exceeded the Canadian company’s expectations.

“I’m glad to have inventory issues. It shows that people want the phone,” said Chen, 59. “We took a very conservative approach and didn’t order too many.”

In his attempt to return the company to profitability by 2016, Chen is focusing on products such as the BlackBerry Blend feature that appeals to corporate customers because it helps them merge work and personal information. BlackBerry’s smartphone shipments sank to 13.7 million units last year from 52.3 million in 2010, according to data compiled by Bloomberg, as it struggled to compete with touch-screen devices produced by Apple Inc. (AAPL) and Samsung Electronics Co.

‘Being Sexy’

The Passport pre-sold 200,000 units in the first two days, selling out in six hours on BlackBerry’s website and within 10 hours on Amazon.com. The square-screen smartphone is designed for business users who write e-mails, study spreadsheets and read documents on their phones.
BlackBerry was focused on the 30 percent of the market that sees their phones as a tool, not as an entertainment portal, Chen said.

“That is not a space that we can afford to be in now. Being sexy and being a workhorse are two different things,” he said.

Chen, a Hong Kong native, said he doesn’t yet have a strategy for expanding into China. The company got 16 percent of its sales from the Asia-Pacific region during the fiscal year that ended in March, compared with 19 percent from the U.S., according to data compiled by Bloomberg. Chen said he hopes to get ideas when he attends the Asia-Pacific Economic Cooperation summit in Beijing next month, his first trip to the country as CEO.

“China is too big a market to ignore,” Chen said. “It is clear that BlackBerry needs to and should be in that market.”

Shares of BlackBerry rose 1.3 percent to $9.42 at 9:37 a.m. New York time.

Avago Technologies Limited iPhone Upgrade Target price $97

AVGO : NASDAQ : US$83.47
BUY 
Target: US$97.00

COMPANY DESCRIPTION:
Avago Technologies Limited is a designer, developer and
global supplier of analog semiconductor devices. Avago
offers products in three primary target markets: wireless
communications, wired infrastructure, and industrial and
automotive electronics. Applications for Avago products
include smartphones, connected tablets, consumer
appliances, data networking and telecom equipment, and
enterprise storage and servers.

Technology — Communications Technology — Semiconductors
RAISING ESTIMATES BASED ON STRONG IPHONE 6 CONTENT SHARE AND INCREASED IPHONE 6 ESTIMATES
Investment recommendation: Based on our analysis, industry
conversations, and recent iPhone 6 teardown reports, we believe Avago has
roughly doubled its dollar content in the recently launched iPhone 6/6 Plus
smartphones versus the iPhone 5s/5c models and has the highest RF dollar
content share among the RF suppliers. With our recent surveys indicating
extremely strong demand for the new iPhone 6 products, we anticipate very
strong Q4/14 iPhone sales and high-end smartphone market share gains for
Apple versus high-tier Android OEMs, particularly Samsung. Given Avago’s
strong dollar content in the new iPhones and our recently raised iPhone
estimates, we are raising our Avago estimates. We reiterate our BUY rating
and raise our PT to $97.
Investment highlights
 Our recent surveys and analysis indicate very strong iPhone 6 demand,
and we anticipate a record iPhone 6 upgrade cycle. Please see our
separate Apple note, published Sept. 22, titled “Monthly surveys
indicate record iPhone 6 upgrade cycle, strong market share gains,” for
our updated iPhone estimates.
 We estimate the RF front-end content in the iPhone 6/6 Plus increased
to roughly $15.25-15.50 per device versus $11.25-11.50 in the iPhone
5s/5c models due to increased LTE band support and features such as
envelope tracking and carrier aggregation. Due to the increased
number of higher-frequency bands supported that require FBAR filters,
we believe Avago increased its RF dollar content to roughly $6/iPhone 6
models versus roughly $3 in the iPhone 5s/5c.
 While we believe Avago has growing dollar content in other flagship
Android smartphones such as Galaxy Note 4, Avago has stronger dollar
content share in the iPhone 6 devices given Android smartphones tend
to support more regional LTE SKUs. Therefore, we believe Avago will
benefit from strong iPhone 6/6 Plus sales despite our recently lowered
Android estimates due to share losses to the iPhone 6 products.
 Given these trends, we raise our F2014/15 Wireless business sales
estimates, resulting in our F2014/15 pro forma EPS estimates
increasing from $4.63/$6.35 to $4.65/$6.45
Valuation:

Our $97 price target (was $95) is based on shares trading at
roughly 15x our F2015 pro forma EPS estimate.

Apple’s New iPhones Face Shipping Delays

Apple Inc. (AAPL)’s new iPhones will take as many as four weeks to ship, a sign that early demand for the smartphones is outstripping supply.

The iPhone 6 Plus, which has a larger display, will take three to four weeks for shoppers who pre-ordered online yesterday, according to Apple’s website, as people rushed to buy the handset hours after the company began taking pre-orders. Certain iPhone 6 models, which have a slightly smaller screen, will take seven to 10 business days to arrive, though some versions are still available for delivery on Sept. 19 when the devices are set to go on sale in stores. Pre-orders through some individual carriers’ websites indicate shipments could take even longer.

“Response to iPhone 6 and iPhone 6 Plus has been incredible, with a record number of pre-orders overnight,” said Trudy Muller, a spokeswoman with Cupertino, California-based Apple.

Apple this week unveiled the new smartphones with rounded edges, thinner frames and higher-resolution displays, and they became available for pre-order starting at 3 a.m. New York time yesterday. Chief Executive Officer Tim Cook is counting on the new devices to usher in demand for other products he introduced this week, from the iPhone-compatible Apple Watch to the credit card-substituting Apple Pay service.
Demand for the latest iPhone is the greatest AT&T Inc. has seen in two years, Ralph de la Vega, CEO of its mobile division, said yesterday at a Goldman Sachs media conference.

“Every time there is a change in design, and this is clearly a change in design for Apple, there is an uptake,” de la Vega said. “I think there’s going to be a great uptake, which is good for us.”

Familiar Pattern

This isn’t the first time Apple and phone carriers have seen iPhone models delayed well before they were available in stores. In 2012, the iPhone 5 was delayed for shipment by a week after a rush of orders, and in 2011 the iPhone 4S sold out at AT&T, Verizon Wireless, and Sprint Nextel Corp. only five days after pre-orders began.

“The iPhone 6 Plus experiences severe supply constraints,” Brian White, an analyst at Cantor Fitzgerald, wrote in a note to investors.

The iPhone 6 has a 4.7-inch display and the iPhone 6 Plus has a 5.5-inch one, while the previous iPhones have a 4-inch screen. The iPhone 6 costs $199 to $399 with a two-year contract, while the 6 Plus is priced at $299 to $499. The devices will come in silver, gold and space gray.

“It’s the biggest advancement ever in iPhone history,” Cook said yesterday in an interview with Charlie Rose at Bloomberg headquarters in New York. “We think that the upgrade cycle here and the number of people that will switch from other smartphones — it will be enormous.”

Twitter Gripes

Customers took to Twitter to complain of difficulties loading Apple’s website to place pre-orders. The website had problems loading at about 3:22 a.m. New York time yesterday, according to Isitdownrightnow.com, a site that tracks Internet issues.

Shares of Apple rose less than 1 percent to $101.66 at the close in New York yesterday. The stock is up 27 percent this year.

While the company normally doesn’t disclose figures for its production runs of new products, it typically has a supply of its new devices in stores on the first day.

Carriers, which often offer deals when a new iPhone comes out to lure more data-hungry smartphone users and bolster their market share, are again offering incentives that may be bolstering interest.

Carrier Incentives

Verizon is promoting a “Trade In & Trade Up” smartphone sale on its website, offering $100 to $300 for used devices. AT&T said earlier this week it will let customers swap in their old iPhone for a new iPhone 6 and as much as a $300 credit. Sprint is offering the “iPhone for Life” plan, which for $70 a month lets users rent the iPhone 6 and upgrade to a new version every two years, while T-Mobile US Inc. says it will top the best trade-in price with an added $50.

“Right now, we’re in an online, preorder phase, and will share info on in-store when it becomes available,” Debra Lewis, a Verizon spokeswoman, said in an e-mail.

While AT&T is planning on having new iPhones in stores by Sept. 19, the company won’t comment on which specific models will be available, said Mark Siegel, a spokesman for the carrier.

Legere Apologizes

T-Mobile will have the iPhone 6 Plus in stock in stores when the device goes on sale next week, said Tolena Thorburn, a spokeswoman for the Bellevue, Washington-based company. The company’s website was unable to process orders part of yesterday, with its site carrying a message attributing the errors to “strong demand for preorder devices.”

T-Mobile CEO John Legere apologized to customers on Twitter, saying “demand has been huge but we are on it.”

Michelle Mermelstein, a spokeswoman for Sprint, declined to comment on whether the Overland Park, Kansas-based company would have the iPhone 6 Plus in stores on Sept. 19.

The iPhone remains the most important piece of Apple’s business.

The handset accounted for about half of Apple’s $171 billion in revenue in its last fiscal year, and with sales of the iPad slowing, the company needs to keep the iPhone a blockbuster to maintain growth.

The handsets will initially be available in a limited set of markets — including the U.S., Australia, Canada, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the U.K. – – for pre-order and shipping on Sept. 19, the company has said. China, one of Apple’s biggest markets, won’t get the new devices at first, though the company said it plans to have the phones in 115 countries by the end of the year.

Google Launches Android One In India

Android’s future lies not in expensive, feature-packed smartphones for the tech elite. Instead, it’s all about getting smartphones to the rest of the world.

Google today officially launched Android One, its initiative for cheap-yet-high quality smartphones for developing countries. The program is debuting in India with three cheap devices starting at around $105 off-contract, and the company is also planning to expand the program to Indonesia, the Philippines, and the rest of South Asia by the end of the year.

While high-end Android devices will be a mainstay among gadget geeks, there’s a much bigger opportunity for Google in focusing on the more than 5 billion people worldwide that currently don’t have smartphones. After getting its hooks into those potential consumers early, Google will likely be able to make them lifelong customers.

Cheap Android devices have already helped the platform dominate smartphone market share (85 percent of smartphones shipped in the second quarter ran Android, according to IDC), but with Android One, Google is aiming to bring some stability to the low-end market. It’s similar to Google’s Nexus line, which highlights what Android can do for higher-end phones (while still focusing on relatively inexpensive off-contract pricing).

Google says it’s working together with phone and component makers by sharing reference hardware designs, which could lead to cheaper devices with high-quality specs. Just like Nexus devices, Android One phones will get updates directly from Google, so users won’t be beholden to the whims of their carriers. The devices also include features that are particularly useful for the developing world, like dual SIM capabilities, expandable storage, FM radio, and removable batteries.

Android Wear is launching in India with phones from Micromax, Karbonn, and Spice. They all share similar specs: A 4.5-inch processor, 1 gigabyte of RAM, a quad-core processor, and a 5-megapixel camera.- the phones look fairly indistinguishable now. But you can expect phone makers to get more creative with their designs down the line. Google also revealed new partners for Android One, including Acer, Asus, HTC, Lenovo, and Qualcomm.

Google has also partnered with Airtel in India to offer free updates over cellular for the first six months. During that time, Airtel customers can also download up to 200 megabytes worth of apps for free every month.

Google also plans to launch an offline version of YouTube in India, which will let consumers rewatch videos without eating up their mobile data.

“Access for access’s sake is not enough,” wrote Google VP Sundar Pichai, who leads Android and Chrome, in a blog post today. “With Android One, we not only want to help people get online, we want to make sure that when they get there, they can tap into the wealth of information and knowledge the web holds for everyone.”

And of course, it also helps that all of those new web users will likely be dependent on Google’s services.

Apple’s iPhone 6 Plus sells out in less than a day (VB )

Apple has already sold out of its new iPhone 6 Plus device, not even a full day after the device became available for order.

Apple opened up preorders for the iPhone 6 and iPhone 6 Plus last night, and it appears that Apple and all the major U.S. wireless carriers have completely sold through their initial allotments of the Plus. That’s saying a lot, considering that the iPhone 6 Plus is $100 more expensive than the regular model and is available with three different storage options (16GB for $299, 64GB for $399, and 128GB for $499).

Those wishing to preorder the iPhone 6 Plus at this point can still do so but will need to wait longer before getting the actual device. While people who managed to pre-order the phone before it was out of stock should receive their devices by Sept. 19, Verizon is telling customers they’ll get their back-ordered phones by mid October, while AT&T warns it could take up to 45 days. T-Mobile and Sprint don’t have concrete shipping dates, but do notify customers that the phone is on back order.

Apple is expected to ship over 80 million iPhones this year, and if today’s preorder activity is any indication, that shouldn’t be a problem.

Prior to Release

Apple had run into a huge buying pause just ahead of the launch of the next iPhone. This shows that there are a lot of consumers who are holding off their purchases for the upcoming iPhone. According to analysts, Apple’s introduction of big-screen phones is likely to drive a massive iPhone 6 upgrade cycle. Banking on this possibility, shares of Apple have surged in recent months. Earlier this month, Apple’s shares have touched an all-time high and are hovering around $1

Plenty of reasons to upgrade to an iPhone 6

The biggest reason for someone to upgrade to a newer iPhone would definitely be its bigger screen. As opposed to its competition who were busy churning out phablets like the Galaxy Note 4 and Sony Xperia Z Ultra with screen sizes reaching as large as 6.4 inches, Apple has held itself restricted from releasing a smartphone with a bigger screen.

When asked about a possibility of an iPhone with a bigger screen, Tim Cook said in an interview with the Wall Street Journal, “What we’ve said is that until the technology is ready, we don’t want to cross that line. That doesn’t say we’ll never do it. We want to give our customers what’s right in all respects – not just the size but in the resolution, in the clarity, in the contrast, in the reliability. There are many different parameters to measure a display and we care about all those, because we know that’s the window to the software.”

Read more: http://www.dazeinfo.com/2014/09/08/apple-inc-aapl-iphone-sales-replacement-upgrade-offer-price/#ixzz3D7KlZMnd

Apple BUY Target Price $112

AAPL : NASDAQ : US$97.99 BUY 
Target: US$112.00

Technology — Communications Technology — Wireless Equipment
APPLE DELIVERS WITH PORTFOLIO OF INNOVATIVE PRODUCTS AND SERVICES; FEATURES
CONSISTENT WITH RFIC, SEMI SUPPLIER THESES
Investment recommendation:

We believe Apple delivered a portfolio of impressive new products with the 4.7”
iPhone 6, 5.5” iPhone 6 Plus, and two Apple Watches, along with innovative
services such as mobile payments and health-related services. Based on our
analysis of global iPhone sales by region, we believe consumers slowed the
pace of iPhone upgrade purchases during the iPhone 5 and 5s product
cycles, and we believe the extended replacement rates combined with new
larger-screen iPhones position Apple for record iPhone 6 sales. While we
anticipate limited initial supply of the iPhone 6 Plus and were slightly
disappointed the Apple Watches will not ship until C2015, we keep our
estimates above consensus, and reiterate our BUY rating and $112 target.
Investment highlights
 While Apple’s product launches were consistent with our expectations in
terms of hardware products, we believe the event met lofty investor
expectations. Further, we believe the increased focus on software and
services could result in a higher multiple longer term.
 In the near-term, our supply chain analysis and conversations with global
distributors indicate the channel is preparing for a record iPhone 6
launch, and we anticipate strong sales of the 4.7” iPhone 6 during the
December quarter. However, we believe the 5.5” iPhone 6 will ship in
limited volume through the end of C2014 due to supply constraints, but
this could result in strong March quarter follow-through sales with an
improved ASP and margin mix. We were impressed with the Apple Watch
products, but initial shipments in C2015 were later than our belief a
couple million could ship in C2014.
 We have slightly reduced our iPhone ASP assumptions, added the Apple
Watch products to our forward estimates, and slightly increased iPad
estimates given our expectation for a new 9.7” iPad.

This results in our
F2015 EPS estimate increasing from $7.50 to $7.55, and we are introducing our F2016 EPS estimate of $7.92.
Valuation:

Our $112 price target is based on shares trading at roughly 14x our F2016 EPS estimate.

Apple Shakes Doubters as Stock Surge Greets IPhones Blackberry To Benefit

AAPL:US98.36-0.61 -0.62%
98.36
09/08/2014

Apple Inc. (AAPL)’s prospects seem a lot brighter than they were the last time Tim Cook introduced an iPhone.

When Chief Executive Officer Cook unveiled two new smartphone models 12 months ago, Apple’s stock was slumping and the company was losing market share to Samsung Electronics Co. and low-cost manufacturers such as Xiaomi Corp. Questions abounded about whether Apple could keep innovating without co-founder Steve Jobs.

Fast forward to a year later and the company’s stock is flirting with a record high. Anticipation is building for the bigger-screen iPhones, a wearable device and a mobile-payments system that people with knowledge of the matter have said Apple is set to announce today. Even the recent stolen pictures of naked celebrities such as Kate Upton from Apple’s iCloud service have done little to derail investor enthusiasm.

Driving the change are shifts in the smartphone industry and how investors have come to accept that Cook is firmly in charge of Apple. Rival Samsung (005930) is losing momentum as its multiple-device strategy to please all people at all prices is stalling, making Apple’s decision to stick just with high-end phones look smart. Cook is also set to give investors what they’ve been seeking: a new category of products, and larger-screen devices that consumers have been craving.

 

They’re on top of the world,” said Tim Bajarin, an analyst at Creative Strategies Inc. “The No. 1 difference between last year and this year is the fact that Wall Street and even the customers have embraced the fact that this is Tim’s company — he’s proven that he not only can pick up the mantle of Steve Jobs but advance it.”

Even Cook’s venue choice for tomorrow’s event is symbolic, Bajarin said. Apple will reveal its latest gadgets near its Cupertino, California-based headquarters at the Flint Center for the Performing Arts. That’s where Jobs introduced the Macintosh computer in 1984 and the iMac in 1998, both of which triggered growth spurts at the company.

Cook still has a lot to do to maintain Apple’s growth streak. The wearable device, which may include features for tracking health and fitness activity, along with a push into mobile payments, will test Apple’s ability to integrate hardware and software to make the products easy to use. Competition against deep-pocketed Samsung remains stiff in smartphones and other mobile devices.

Trudy Muller, a spokeswoman at Apple, declined to comment.

Bigger IPhones

Apart from investors, software developers are also optimistic about Apple’s prospects. Mark Kawano, CEO and co-founder of Storehouse Media Inc., said he’s looking forward to iPhones with larger screens, a better camera and an operating system that will likely let his company’s storytelling application be better utilized.

“More and more, the iPhone is just getting better and better at things that a traditional computer used to be good at,” he said. “Those things are what we are really well positioned for.”

Apple’s perceived renaissance dates back to earlier this year. At the end of 2013, Samsung, with its panoply of multipriced Galaxy devices running on Google Inc.’s Android operating systems, loomed large. The Suwon, South Korea-based company’s share of the global smartphone market had surged to 31 percent, while Apple held about 15 percent, according to researcher IDC.

Facing Critics

Apple, meanwhile, faced criticism from analysts and investors for holding to a single phone style and high prices. Its then-new iPhone 5s started at $199 with a wireless contract and the less-expensive iPhone 5c was offered at $99 with a contract. The unsubsidized iPhone 5c was priced at $549 in the U.S. and 4,488 yuan ($733) in China while Xiaomi’s handset cost 1,999 yuan and Lenovo Group Ltd.’s flagship K900 IdeaPhone sold for 3,299 yuan.

“There was speculation in the tech media that the 5cs were going to be the low-price phones, so when they came out and the pricing didn’t really address the broader emerging markets that wanted cheaper phones, that obviously led to some level of disappointment and sell off,” Walter Piecyk, an analyst at BTIG LLC in New York, said.

Samsung Slowdown

Yet Samsung — instead of ratcheting up its revenue at Apple’s expense — began facing slowing sales growth as it got squeezed by competitors such as Xiaomi on the low end and Apple on the high end. Samsung’s global smartphone market share slid to 25 percent in the second quarter from 32 percent a year earlier, according to IDC. In July, Samsung reported sales and profit that missed analysts’ estimates.

“The loss of momentum at Samsung creates an unforeseen buffer globally — and is timed perfectly into a launch of larger screened phones with the potential to even get customers to switch back to Apple,” Ben Reitzes, an analyst at Barclays, wrote in a July note to investors.

By contrast, Apple steadily reported increasing year-over-year iPhone sales that topped analysts’ estimates. The new handsets “primarily” fueled Apple’s 12 percent sales gain by unit during the first three quarters of the company’s 2014 fiscal year, according to a filing with the U.S. Securities and Exchange Commission.

Best Ever

At the same time, Apple executives began a drumbeat to raise anticipation for new products. In May, Eddy Cue, head of iTunes, said products to be introduced later this year are the the best pipeline Apple has had in 25 years. In July, Chief Financial Officer Luca Maestri echoed that by saying he was “expecting a very busy fall.” Cook chimed in and said the company has an “incredible pipeline” that “we can’t wait to show you.”

Cook has appealed to investors in other ways as well. In April, Apple said it would expand its shareholder payout program, increasing its share repurchase authorization to $90 billion from $60 billion and announcing a 7-for-1 stock split, as well as a bigger dividend. The company’s stock surged in the aftermath of the announcements.

The CEO has also shown he’s serious this year about boosting growth through acquisitions. In May, Apple agreed to pay $3 billion to buy headphones and streaming-music service Beats Electronics LLC, the company’s biggest-ever purchase.

By the end of trading yesterday, Apple’s stock was up 38 percent from a year ago, ending the day at $98.36. Shares are up 23 percent so far this year, exceeding the 8.3 percent gain of the Standard & Poor’s 500 Index.

There’s a new willingness by investors to see “the glass as half full rather than half empty,” Piecyk said. “They’ve earned more investor trust.”

Seeking Alpha says Blackberry To Benefit

  

Summary

  • Apple’s iPhone 6 is about to make the phablet form factor the dominant one for consumers.
  • While Apple’s first iPhone destroyed BlackBerry, this release will catalyze BlackBerry.
  • The BlackBerry Passport could become the dominant business phablet in the marketplace.
    • The BlackBerry Passport could become the dominant business phablet in the marketplace.Apple will have validated for the masses the value of a bigger screen, and BlackBerry will have the biggest screen around. And this time, BlackBerry won’t be competing with Apple for the consumer market. It will be re-entering familiar territory with familiar customers in mind: working professionals for whom productivity is paramount,

If Apple does announce a payments system, it won’t be for the money

The rumor mill has concluded that Apple will announce some sort of payments system at its big event tomorrow.

Some believe it may actually work: Apple has some 800 million credit cards on file, it has the trust of its users (well, for the most part), and it has the cooperation of big payment processors including Visa, MasterCard and American Express.

But what impact will payments have on the company’s revenues?

James Gautrey, a technology and telecoms analyst at Schroders, an asset manager, ran the numbers.
On average, a payment processor takes as “interchange fees” about 2% of any purchase. So for every $100 you spend at your local Best Buy, MasterCard or Visa receives $2, which it shares with other players who are involved in the process, such as anti-fraud firms and banks. According to Gautrey, there can be as many as nine different parties involved in settling a payment.

Considering Apple’s involvement with Visa et al, it isn’t looking to disrupt the system and bypass all the middlemen so much as add itself to chain. Assuming it receives a 0.25% cut of each payment, and that 200 million of its 800 million card holders spend $500/year, that’s an extra 250 million in revenue for Apple, or about 0.1% of its projected revenue for the company 2015 financial year (which starts at the end of this month).
That’s the low end of the projection.

Let’s assume fully half of Apple’s existing customers, or 400 million people, spent $2,000 a year using the new payment system. Let’s go further and assume that Apple receives 0.75% of every transaction—perhaps by displacing some of the many intermediaries. That would still amount to just over 3% of Apple’s revenue. And we’re not even considering what it costs to put this system in place.
In other words, Apple’s presumed payment system is a play to lock customers into its eco-system by offering an innovative new service—one that other companies have struggled with. But it is not—and not meant to be—a money-maker for the company.

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