Bidness Etc

Apple is being seen in a positive light by investors after a breathtaking WWDC display and Apple Pay foray

Apple Inc. (AAPL) has been the target of great scrutiny by its investors, some of whom have dared to argue that fall in demand for the company’s flagship product is reminiscent of the once popular Blackberry phones. However, Steve Job’s legacy is not as weak as it appears once you take a deep look into Apple’s lair. The tech giant seems to be foraying increasingly into other streams of revenue, while holding onto the legacy that it associates with the iPhone.

Another worry that investors constantly remind Apple’s management of is growth in the iPhone’s Average Selling Price, which has plummeted after the release of the mostly labeled ‘budget’ version of the iPhone. The company announced that lead time for the SE had initially risen to 2-3 weeks, due to higher-than-expected demand for the product. However, Apple has finally come to terms with inflated demand and the lead time has begun to normalize in the US, China, and the rest of the world.

In a research note to investors, Nomura Securities analyst, Jeffrey Kvaal, reaffirmed the belief that the growth in demand for iPhones is nearing a halt, as the SE model drastically affects the iPhone’s ASP. Mr. Kvaal noted that there is definitely a demand for Apple’s ‘one for the budget’ and could perhaps help the company cover up some, if not most, of the decline. The analyst, while rating the company’s stock a Buy and setting the price target at $120, expressed great confidence in early indicators that suggest a smooth first quarter of fiscal year 2017.

Moreover, the company’s share value is down more than 10% in the past 3 months, over iPhone unit sales and a prevalent saturation of smartphone sales. As depicted by the graph above, iPhone unit sales decreased year-over-year (YoY) in the second quarter of fiscal year 2016. According to Apple, the decrease in unit sales is mostly due to unfavorable global macroeconomic conditions, and a higher-than-expected acceleration in iPhone upgrades in the first and second quarter of fiscal year 2015. While the SE’s demand is reaching a first buyer market in China, analysts believe that it is in fact displacing iPhone 6s sales.

Piper Jaffray’s Gene Munster expects the inclusion of Apple Pay on the Safari browser, for both desktop and mobile, latest by Fall 2016. A simple integration process for merchants gives Apple the opportunity to impact consumer’s digital payment habits. While older players in the payments industry, such as PayPal, might lose some market share —considering that a substantial amount of its users possess Apple devices— Apple Pay will presumably face a lot of competition on that front.

Finally Apple’s performance at the WWDC was at, if not above, par and the company’s ecosystem claims were more convincing, with updates ranging from improvement in response time of apps in the Apple Watch, to direct ride ordering from Uber through Siri and Maps. Apple’s Net Sales has also taken a hit both sequentially and YoY, as decelerating iPhone sales and weakness in foreign currencies against the dollar took its toll in the previous quarter.

For more information on Apple financial performance and history, refer to our Apple Data Analysis section.