Apple Inc. (NASDAQ:AAPL) has made several moves recently which appear calculated as an attempt to boost the Cupertino firm’s profit growth in this quarter and the next. These include the release of an 8GB iPhone 5C in several nations, with a price point about $100 lower than the 16GB iPhone 5C, and the replacement of the iPad 2 with a resurrected 4th generation iPad, or “iPad 4,” which has several advantages over the iPad 2. Nevertheless, Piper Jaffray analyst Gene Munster remains largely unimpressed and unconvinced. Mr. Munster remarked this morning that he expects growth to remain flat, or nearly so, all the way through June 2014.
The core of the Piper Jaffray expert’s argument is that no known major product releases are known to be scheduled for the first half of the year, meaning that Apple Inc. (AAPL) will be cruising entirely on sales of existing products. Though not infallible, Mr. Munster has considerable experience to back up his assertions. He has been the primary research analyst examining Apple and predicting its moves since 1995. His track record at predicting trends has been quite successful, with the exception of a single peccadillo – overly optimistic expectations of a full sized Apple television hitting the market each year.
Profit gains from the 8GB iPhone 5C are expected to be feeble at best. The smartphone slashes capacity by half but is only $100 cheaper, with an unsubsidized price point in excess of $700. This still puts it far out of reach of people looking for an actually cheap smartphone they can afford, while its wizened memory makes it even less attractive to higher end purchasers than the existing 5Cs.
Though the iPad 4’s relaunch to replace the outgoing iPad 2 strikes a more positive note for Apple (AAPL) and its customers, the Piper Jaffray analyst expects negligible results from this, too. The early release of the iPhone 6 could be a potential dark horse that upsets these predictions, of course. Apple’s unprecedented early increase of production for the smartphone could herald a fresh product bursting on the scene sooner than September. On the other hand, it could simply be stockpiling large numbers of iPhones to meet Chinese demand following the September release.
Despite possibly well founded misgivings about the true profit potential of several recent marketing moves (the 8GB 5C and the iPad 4), Piper Jaffray remains bullish about Apple’s prospects for the near to medium future. The firm rates Apple’s stock as “overweight” and asserts its current worth per share is approximately $640, or $100 than its actual trading price.
