Sanford C. Bernstein analyst Toni Sacconaghi looked at Apple Inc.'s (NASDAQ: AAPL) latest sales numbers and thinks that the company may have an iPhone inventory problem:
We believe the data points to a significant amount of iPhone channel inventory ... This is negative in two ways: (1) it indicates end-user demand for iPhone is lower than many investors may think based on Apple's sales figure; and (2) it points to slower iPhone sales in the current quarter, since much of this inventory is likely to be drawn down.
Check out News.com's coverage of the report for more details and insight.
Apple's stock has been hit hard of late, and this latest inventory report underscores one of the reasons I wouldn't buy Apple stock (I wouldn't short it either): The company is 100% dependent on its continued ability to innovate and stay ahead of the competition with each new product introduction. Even a blockbuster hit can only carry the company for so long.
Any investment in Apple is essentially a bet on the company's ability to continue being an innovator. Call me crazy but if I'm going to pay 6+ times book and 25 times earnings, I'd prefer a strong moat that doesn't require continued brilliance.











Reader Comments (Page 1 of 2)
1-27-2008 @ 8:29PM
ProudWiiOwner said...
um no shit.....
its after christmas so that means almost everyone who planned on getting an iPhone before the 3G model comes out, got one.
btw...apple cant deliver another "ipod' revolutionary
product every keynote. Apple's product line looks very excellent and is way ahead of its competitors. and most important 99.9% of their customers are extremely happy with apple products (how many ticked off ipod touch owners do u know are switching to a zune or zen or something)
1-27-2008 @ 8:29PM
Amit said...
I really dont understand...what is the hurry? Ipone is here just for a few months. To identify the market for cell phone sales, I think at least more time is required. Also, you cannot expect the same sales taking place towards the end of 2007 (Oct, Nov, Dec) to be the same throughout 2008. The "deal" season is gone...and people are back to their own work...
bookmarked @ http://livbit.com
1-27-2008 @ 8:29PM
Boards0000000 said...
The iphone wasn't priced competitively. It was a new and novel thing but consumers are smarter and more frugal than they used to be. They know it's just a matter of time before someone comes out with something similar or better. So they use what they have and wait a year or two to get something the same or better for 1/4 of the price(or free through the cellphone carrier). There is no gotta have product in 2008 except maybe a savings account, LOL.
1-27-2008 @ 9:55PM
ProudWiiOwner said...
agreed.
I have everything (from apple anyways), that I need.
1-28-2008 @ 7:12AM
Aviv said...
All I can say is.... WOW.
You wouldn't buy Apple stock ? Clearly you don't watch, trade, research or invest in the tech industry on a daily basis. Otherwise you would see the unbridled per/share targets and realize that even if the stock bottoms out at 100$ after a crazy run to $200, it's a win for most investors.
If you consider the stock overpriced at $130, then it should have been considered overpriced at $100 and even $65 per share based on their revenue.
Apple is a company which continues to innovate and they hold strong locks in several industries and markets. They have positioned themselves perfectly between Hollywood and consumers in delivering a wonderful "Rent-at-home" model of getting video into our hands.
Steve Jobs unveiling this new model of video rentals through iTunes along with the support and backing of ALL 6 MAJOR LABELS !!!! is an enormous milestone, one that has never been achieved via an online digital media retailer. This is similar to the announcement of iTunes with the industry and stock price not feeling the effect for up to 5 years.
If you know what you are doing, you can comfortably trade APPL on a daily basis as well as designate shares for long term investment. You can weigh the risk and the reward based on the latest products and buzz around the product. Or you can rely on resources in major manufacturing companies overseas to predict Apple's next product. Either way, there are many ways a smart, savvy and intelligently confident investor can find to make money on the monster that is Apple. If you support the company culture, products and software, then you will find reasons and ultimately reveal to yourself the fruits of investing in a company like Apple.
1-28-2008 @ 7:11AM
joey jo jo said...
Why would you NOT buy a company based on it's ability to innovate? Do you buy companies like phillip morris who generate earnings on chemical addiction? Innovation is the name of the game in tech.
Would you own RIMM? Or MSFT? Companies that have FAILED to generate new growth/rev drivers? At least apple is moving from one driver (ipod) to another (iphone). In fact, I can't think of another company in tech who's earnings are as based on innovation than Apple. All others are based on mathematical trickery to increase EPS like Dell or forced upgrade cycles like MSFT.
1-28-2008 @ 8:24AM
michael schneider said...
Comments by Fox panelists on Apple from this week's Bulls & Bears show are available free right now in the Weekend Stock Review (white label by red dot) at http://www.Barrelomoney.com. Apple has pulled back quite a bit but there is more market risk now, although Mark Hulbert observes in Sunday's NYT that insiders, a group usually right on the market are more bullish while newsletter writers, a group usually wrong are bearish now.
1-28-2008 @ 9:33AM
Rob said...
I just did an entire anaysis of the best stocks for this market. Check it out, Rob
http://wallastoninvestments.com/what-stocks-will-make-you-rich-week-of-jan-20-26
1-28-2008 @ 4:33PM
benoir said...
commentators in the US fail me....... DO YOU NOT UNDERSTAND, your economy is knowledge based. That means that you need to support companies that can innovate if you want to sustain the kind of lifestyle you lead.
1-29-2008 @ 7:36AM
JJ said...
The only reason I don't have the iphone is because it's only has ATT as a carrier. Why??????
1-29-2008 @ 8:20AM
Rivka said...
The reason the iphone's sales are down is because it's closed architecture. Who wants a PDA phone you can't add anything to?
1-29-2008 @ 8:25AM
normsyh said...
I bought my iphone when it came out. They replaced it when I had a problem but its worth the money...its a great phone.
1-29-2008 @ 8:26AM
normsyh said...
I bought my iphone when it came out. They replaced it when I had a problem but its worth the money...its a great phone.
1-29-2008 @ 8:37AM
valerie r said...
Anyone I know that has an iPhone would never give it up..I'd love to have one
1-29-2008 @ 8:52AM
babycakes said...
I have no problem paying what they want for an iphone - it's AT&T that keeps me from getting one. If another company offered it, I would get one. But service from AT&T - no thanks!!!
1-29-2008 @ 9:04AM
stusmctow said...
The I phone SUCKS anyway.
1-29-2008 @ 9:31AM
crazybob57 said...
a good thing to do is to set the price so everyone can afford it . it wont be long the people from other countrys will be selling them real cheap to much money hungry people
1-29-2008 @ 10:43AM
Jeremy said...
I have to agree with the ppl who talk about AT&T. i think the iPhone is cool and i know alot of ppl who have them but i travel with work and pleasure and have Verizon now and i kno that if i go skiing in VT that my PDA phone i have now is gonna work. if Verizon offered the iPhone i would buy it....it just doesnt make sense that Apple would choose AT&T as an exclusive carrier when they have had so many problems and in fact just recently merged into Cingular in order to make an even somewhat competetive network.
the price of the iPhone isnt bad. if u consider that it isnt that old. the price will drop soon like all tech does but i think that it truly is the network that keeps some ppl away. specially the tech savvy ppl who kno more about things that just "OOO ITS PRETTY".
1-29-2008 @ 10:42AM
joeg679 said...
I think if Apple released it to Verizon, it would be selling better. I know people who bought the iPhone and got rid of it after a few days. Not because it was a bad phone, but because ATT has horrible coverage. I love my iphone, but am seriously considering going back to Verizon. With Verizon I NEVER had a dropped call in 5 years. Since July, I have had about 100 with ATT and a lot of the are in Manhattan, which I would think would have some of the best coverage in America.
1-29-2008 @ 10:52AM
Margi said...
I got the iPhone for Xmas and absolutely love it! It has been a lot of fun to use and I have used many features when out to dinner with friends showing how versitile it is. It is the first Apple product we own and will be purchasing an Apple computer after years of using PC's. They are much more user friendly.