Apple Inc. announced Monday morning that its first weekend iPhone 6s sales set yet another record. In the three days since it debuted, the iPhone 6s and iPhone 6s Plus sold more than 13 million units. Wall Street had forecast 12 million units.
“Customers’ feedback is incredible and they are loving 3D Touch and Live Photos,” Tim Cook said yesterday. “We can’t wait to bring iPhone 6s and iPhone 6s Plus to customers in even more countries.”
However, not every analyst is impressed.
Trip Chowdhry Thinks Apple Needs to Regain Investor Confidence
Trip Chowdhry at Global Equities Research notes that while the iPhone 6s debut was “very strong,” the tech giant’s stock will continue to languish as long as management does not regain investor confidence.
According to Chowdhry, 70-75 percent of the first weekend sales were to existing Apple Inc. users who were upgrading, with only the remaining 25-30 percent being Android users who were making the switch to Apple.
The Global Equities Research report points out that the stock has slumped from $132 to $115 in the past 3 months, resulting in a net erosion of $110 billion in shareholder value. However, Apple Inc. ’s management is yet to do anything to address this erosion.
The board instead embarked on a massive share repurchase program that doesn’t seem to be working. “Apple has gone from being a Zero debt company to a Debt-laden company with more than $50 Billion in debt.” This debt was taken to fund buybacks and to pay a large team devoted to find and implement ways to avoid paying $30 billion in taxes,” Chowdhry said.
Investors are left feeling that management is not interested in increasing the operating income multiple. “The high Multiple typically occurs by meeting or beating the estimates and raising the guidance….for many quarters under this current Apple’s Management and Board, Apple has instead handily beaten the estimates, but guided low,” Chowdhry added.
Jim Cramer Says Markets Don’t Care
Apple Inc. shareholders won’t be able to benefit from the record iPhone sales, Mad Money’s Jim Cramer said on Monday.
“I think that no one will care … and that’s because the gloom is so palpable,” Cramer said on CNBC “Squawk on the Street.”
“Apple keeps delivering. Apple’s China sales mirror Nike’s China sales; they’re very strong, but right now we’re in a moment where the market’s gripped by forces unseen that are concerning people,” Cramer said.
BoA Reckons Data is Inconclusive
Finally, analysts at Bank of America Merrill Lynch visited Apple Inc. , AT&T and Verizon stores in New Jersey, Virginia and Maryland to evaluate the level of interest for the latest iPhones. Apparently, they found that crowds outside Apple Stores were along expected lines. But what surprised them was lower than anticipated traffic at AT&T stores and Verizon.
If it weren’t for the stellar China numbers, iPhone 6s sales would have likely been flat year-over-year.
So are the numbers distorted? Probably yes. In 2014, only 10 global regions were included in the iPhone 6 launch. And China wasn’t part of that, says Abhey Lamba of Mizuho. This year that number has jumped to 12.