🍎 Today is earnings day for Apple as it releases their fiscal Q3 2013 Financial Results. Here is a clue, iPhone activations on Verizon grew 41% year over year, and analysts seemingly didn’t notice.
🍎 However, my parents told me 50 years ago,
"The Line to Stardom is Not a Straight Line UP ."
🍎 In July of 2012, shares of Apple were trading in the low US $600 range and were about to embark on a rather sudden ascent to $700. The party, however, didn’t last long as Apple shares quickly began a steady decline, hitting a 52-week low of $390 this past April.
🍎 In an effort to explain why Apple stock was falling so precipitously, we were treated to a host of analysts and talking heads who were quick to proclaim that Apple had peaked and that it had, seemingly overnight, lost the ability to innovate.
🍎 Verizon today announced its earnings for Q2 2013. As expected, the carrier reported strong results with $5.2 billion in profit and $29.79 billion in revenue. Verizon added 1 million new customers and now has 100.1 million retail connections.
🍎 Verizon confirmed it activated 7.5 M smartphones, 51% of which were iPhones. This brings Verizon’s quarterly iPhone activations to approximately 3.87 million units, which is up from the 2.7 million it activated in the same quarter last year. This represnts a 143% increase in iPhone activations YoY. It is right on par with the 4 million activations it reported in the opening quarter of 2013. Recall it was not until later in 2010 that AT&T’s iPhone exclusivity expired, which let Verizon join the party.
🍎 An oft-heard refrain, absurd as it may be, was that everyone who wants an iPhone already has one and that Apple would face many challenges trying to sell more iPhones in an increasingly crowded marketplace. The absurdity is that (A) there is a stampeed of "Non-Smart Phone" owners (presently 40% of the cellular customers use "dumb-phones in the USA) that moving to Smart Phones, and (B) there are 26% of the Android Users that are migrating to iPhone very month, as their contracts expire.
🍎 But then a funny thing happened. Last week, Verizon reported its earnings results from Q2 2013 and the results were better than what most analysts were expecting. Last quarter, Verizon activated 7.5 million smartphones, of which 3.8 million units were iPhones. Put differently, nearly 51% of all smartphones Verizon activated last quarter were iPhones.
🍎 That’s pretty impressive, but the folks on Wall St. don’t care so much about product share as they do about overall growth. To that end, the 3.8 million iPhones Verizon activated this past quarter far eclipsed the 2.7 million units it sold during Q2 of 2012. Year over year, iPhone activations on Verizon grew by 40.7%.
🍎 And yet, somehow, that little tidbit was inexplicably glossed over by those who are so quick to paint a doom-and-gloom scenario for Apple based upon some sketchily sourced second-hand rumor about iPhone production emanating out of a manufacturing plant in Asia.
🍎 Apple is set to announce its earnings for the quarter gone Today, at 5pm eastern, and it remains to be seen how iPhone sales will measure up to the year-ago quarter. Indeed, many analysts are predicting that Apple’s year-over-year growth will be somewhat stagnant in that regard. And that may very well be the case.
🍎 After all, Verizon is just a single carrier and its recent results many not be representative of iPhone activations across all carriers.
🍎 I’m more positive, as Verizon was late to the iPhone Party, as were their sales associates, selling Android and BB almost exclusively. So here we are only several years later and Verizon is now selling More iPhones, than all the other phones combined, in the stores. IB Analysts not recognizing these facts is amazing to me.
🍎 BTW, I am not an Apple stakeholder so my opinions are not economically skewed.
🍎 That notwithstanding, it’d be nice if the investment banking analysts who get paid to keep up with Apple products, profits, pace, and the industry, paid as much attention to potentially good news as they do to potentially alarming news.
🍎 In Business as in Sports, everyone "hates" the Winner, and seems to cheer-on the under-dogs. IMHO, Apple IS actually Better, it delivers Better Products in every product category, and therefore should do Better business-wise.
However, the "Line to Stardom is Not a Straight Line UP."
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