Just a few hours ago, JP Morgan analyst Kevin Chang reported that Apple plans to release a Nano version of the all-mighty iPhone. A little over a week has passed since the iPhone was unleashed on the public, and despite a 700,000 unit weekend, this news is only one thing for Apple’s 3Q: bad.
Apple’s sales performance has somewhat relied on the ability to keep information out of the consumer’s hands. A “leak” of this proportion must make for one unhappy Steve. Think about it, with the news that the iPhone Nano (priced at $300) will launch in the fourth quarter of this year (a measely 3-4 months away), what consumer in his or her right mind wouldn’t summon every drop of whatever patience has gotten them this far to hang on until then?
Investors may be disappointed come 3Q earnings season, as consumers back off from papa iPhone in anticipation of the nano version. Further, even though gross margins (reported in excess of 50%) might make for some sparkling earnings figures, with the release of the margin information, one must assume that the market has already built that sparkle into the stock price (hence the 5% jump last week).
That being said, it should be noted that the above usage of the word “bad” must be taken in its relative meaning. Chang is right to suggest that this release will actually drive profits by fiscal year end. If the stock takes a dip at 3Q earnings, it is probably a good time to buy, because when 4Q rolls around, its headed in the only direction it seems to be able to go, up.
Even so, tonight Steve goes to bed tonight with a sad puppy dog face.
-Jake Levine
