Apple’s share of $600+ smartphones holding just below 80%

Also, an apology from an Apple analyst. Or something like it.

From a note to clients by BMO’s Tim Long that landed in my inbox Wednesday:

Apple reported June-quarter results that were better than we had expected. iPhone units of 41.3M were below our 43M unit estimate, but ASP of $718 was higher than both we and the Street were expecting, due to a higher mix of iPhone X/8/8 Plus than we were modeling.

AAPL didn’t have a great overall smartphone market share quarter, but the company managed to gain 200–300 bps of share both Y/Y and Q/Q in the important $600+ ASP segment. This success is largely due to the weak Samsung quarter, where the GS9 has faded and the industry awaits the Note 9. AAPL has been able to successfully help the $600+ segment grow, while still maintaining about 80% market share. The new devices coming in September may stress the price elasticity even more…

We make no changes to our Apple model and maintain our Market Perform rating. While ASPs have impressed, we are concerned by the lack of unit growth, which may pressure the subscriber base at some point. We are modeling modest success from the September iPhone lineup, which we reflect in our model with slight unit growth and higher ASPs in FY 2019.

My take: That sentence about the “higher mix of iPhone X/8/8 Plus than we were modeling” is as close an apology as you’re going to get from an Apple analyst for delivering to clients a barrel full of FUD.

See, for example, Analyst: ‘We estimate that Apple had a poor Q2’

9 Comments

  1. Martin Beutling said:

    “AAPL didn’t have a great overall smartphone market share quarter, but the company managed to gain 200–300 bps of share both Y/Y and Q/Q in the important $600+ ASP segment. ”

    hahaha, THAT is the only market, Apple is competing in….
    What a great analyst.

    2
    August 9, 2018
  2. David Drinkwater said:

    “Apple reported June-quarter results that were better than we had expected.”

    Sorry.

    “We make no changes to our Apple model and maintain our Market Perform rating. ”

    Not sorry.

    Thank goodness Apple doesn’t strive to meet the Market’s expectations. And last week, the market showed appreciation for that.

    2
    August 9, 2018
  3. Fred Stein said:

    “We make no changes to our Apple model”

    Really? I don’t think Tim Long has an Apple model. So far he has just released random and inconsistent data points, and not his model.

    Tim Long changed his target from 171 to 184 on July 23 because the $171 was out of sync with the entire analyst community. His rationale was increased buybacks. But that’s not credible since the buyback story was very old at that time.

    I really think he’s just making it up as he goes.

    1
    August 9, 2018
    • “I really think he’s just making it up as he goes.”

      I don’t know what other firms Long covers, and he may do a great job covering those other firms, but he is without a clue about Apple.

      Personally, I think WS’s obsession with units, unit market share, and supply chain checks has more to do with having something to say to investors that create an air of inside (not known by the investor) knowledge, as opposed to genuine knowledge. They can then parlay that “air” into commissions from the unknowing.

      0
      August 9, 2018
  4. “iPhone units of 41.3M were below our 43M unit estimate, but ASP of $718 was higher than both we and the Street were expecting”

    This is why for the current quarter I don’t bother with unit or ASP forecasts, instead rely on managements GUIDANCE.

    I model unit/ASPs for future quarters until I have management’s GUIDANCE, then I adjust my estimates to make them fit into management’s GUIDANCE. It doesn’t matter if I get units/ASP wrong (for the current quarter) as long as I get REVENUE correct (or nearly so).

    0
    August 9, 2018
  5. With no better place to put it, I’m issuing an apology of sorts.

    Yesterday I announced that an order filled unexpectedly. It did. This morning AAPL was up, AND SO WERE MY CONTRACTS. But that couldn’t be because I bought Put Spreads and if AAPL goes up they should go down.

    On further review of my order, I discovered I had goofed. Instead of placing an order for Put Spreads as I wanted, I mistakenly placed an order for Call Spreads. I did get them for 81¢ (including fees) when AAPL dropped yesterday.

    This morning with AAPL trading near $209 I sold those contracts for $1.32, well above my target. ROI was 60.98% on an error. Sometimes you just get lucky.

    But seeing how AAPL is trading (and the effect on options) I have abandoned my effort to get my desired Put Spreads at 81¢. I have (correctly this time) placed an order for a total of 345 (divided between my corporate and Roth accounts) $207.50/$210.00 AUG 31 Put Spreads at $1.10.

    0
    August 9, 2018
    • David Emery said:

      I got my only Bridge Master Points on an error, so sometimes you just get lucky! 🙂

      0
      August 10, 2018

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