Tero at TSC does his usual bullshit analysis of iPhone sales.. this guy really is such a complete dick.

Tero Kuittinen
Meh
9/10/2007 9:20 AM EDT
Well - the iPhone has now clearly underperformed volume expectations. Nobody believed the official Apple projection of 1 million by end of September - that was supposed to be a deliberate lowball setting up the stage for a major unit surprise. This device had the most massive marketing campaign in the history of the US phone industry. It surpassed the pricey ad campaigns of RAZR and Chocolate by a country mile; prime time television spots, saturation coverage on cable, the most expensive pages of magazines and newspapers. Yet Apple announced the 1 million unit benchmark only after the massive 33% price cut implemented last week. Until now, the leading conspiracy theory about the iPhone is that it actually sold 1 million by late July or early August, but Steve Jobs avoided making the announcement to set up a 3Q report surprise. I don’t think I’ve seen a single report on iPhone that expected the million unit mark to be crossed in September - the range was from the second week of July to mid-August.

The early sales trend is extremely important, because of the atypical distribution and pricing decisions Apple made. The decision to shut out 80% of US mobile subs by doing an AT&T exclusive and the $600 price of the main iPhone reflected enormous faith in pricing power. That exclusive pattern is likely to be repeated in Europe, where the iPhone distribution announcement is now expected next week. The reason most phone vendors choose wide distribution is that models age rapidly and consumers are typically unwilling to switch carriers for a phone. Apple tried to create its own model by signing a single operator per country. If that model turns out to be flawed, the whole iPhone franchise is going to be in jeopardy. This is not about the impact on the next two or three quarters; this is about how the whole project pans out in the next 2-3 years. Considering the pent-up demand iPhone had ahead of the late June launch, it is astonishing if it really took more than two months to move 1 million.

Re: Nay-Saying the One Million

[quote author=“Tommo_UK”]it is astonishing if it really took more than two months to move 1 million.

What is this idiot talking about…  13.513 phones for $600 per day isn’t good enough ?

Cody Willard puts a foot right and smacks Tero in the face:

Cody Willard
Apple’s iPhone is a Winner
9/10/2007 10:41 AM EDT
This, I have to say, is still just wrong, just as it was when everybody’s tried to freak us out about iPod sales in one quarter or another over the last few years.

Position: Net long AAPL and fully aware that the iPhone is a platform that will eventually be a MacBookPro in a cell phone form and that’s what matters to the stock.

Tero The Bear says AAPL is overvalued, only makes expensive products, Motorola is undervalued, the US is heading for recession, iPhone sales are a disaster, the device is showing no signs of performing well, European launch is delayed.. and and and (he can’t speak fast enough and keeps on catching his breath).

What an arse. This guy is such a fool.

Tero Kuittinen
Hmmm….
9/10/2007 10:56 AM EDT
Cody, I’ve been following the smartphone sector since its birth in 1996. “Second-guessing” handset vendors is my profession - that’s why I persist on doing it. It is extremely weird of you to ask why I write about iPhone. I’ve been on this site since 1999 and I hardly need your permission to contribute. Whether I am right or wrong about this device remains to be determined - time will tell. You are not the judge of it; the marketplace will be. So far, we have several signs of trouble - the 33% price cut after two months, the slower than anticipated path to 1 million units and the delays in European negotiations. There is no sign that the model has performed to expectations. You do a lot of handwaving and very little discussion of pricing issues, contract negotiations, feature profile and product comparisons.

The RAZR hysteria of the summer of 2006 is a good sign of how investors can misjudge the sales outlook of a major product platform. Now we have an opposite situation with Motorola - I think people are too negative. I also think running with the mob is an extremely dangerous thing to do when it comes to tech stocks. Apple has a $115 Billion market cap, it is nearly universally loved, it specializes in expensive products as we head into a US consumer recession, the phone project is costly and subject to pricing and distribution strategy missteps. And you have no idea what could possibly go wrong? You think you can pronounce what is a winner in the phone market with absolute certainty in advance? Stick around - this sector is kind of capricious.

Rev Shark weights in and says AAPL holders are part of a cult. Apparently it isn’t enough for him that the companies grows earnings 40-70% YoY every year, year after year, and anyone who thinks that this is a good thing is just a member of the Cult of Apple. This is typically ignorant and very widespread thinking amongst many many professional investors and highly competent traders. They really, really, don’t understand that earnings growth = increasing share price. Bizzaro.

Cult of Apple
by Rev Shark
9/10/2007 11:14 AM EDT
I have no position in AAPL and no opinion about the value of the stock, but sometimes I expect that some of its supporters will soon be wearing robes, begin chanting and start selling downloads at the airport. The cult status of this stock is getting to be a bit much but what really makes me roll me eyes is how having a large unrealized gain turns some folks into “true believers.”

Position:

[quote author=“Tommo_UK”]
Tero Kuittinen
Hmmm….
9/10/2007 10:56 AM EDT
Cody, I’ve been following the smartphone sector since its birth in 1996. “Second-guessing” handset vendors is my profession - that’s why I persist on doing it.

What a fool. Doesn’t this guy realise that Apple specialises in disruptive technologies? Apple is not like any other handset maker. What we are seeing is the birth of something totally new, yet this guy has his head stuck up his behind like all the handset makers.

Cody Willard tells the perma-bears to STFU and remember they’ve been dead-wrong for 5 years

Cody Willard
Coming Consumer Recession and Other Things We’re Still Supposed to Freak Out About
9/10/2007 11:22 AM EDT
Oh, I very much know about a millio things that can go wrong. My point is that owning Apple has been the right thing to do and we’ve both been in black and white on these pages with our opposing stance on the economy, the market and Apple over the last five years.

Position: Waving hands and happy that I still own AAPL

The AAPL debate rages on:
——————————-

Rev Shark
Apple
9/10/2007 11:35 AM EDT
Cody, what does being right about AAPL in the past have to do with it today? Anyone who has been in this business for a while has had some great picks like AAPL, but we all know that “past performance is no guarantee of future results.” Should AAPL be excused from ongoing analysis because it has done well in the past? Is the proper investing approach to just have faith because the doubters in the past have been wrong?

Position: none

Tero Kuittinen
Back Up Your Claim or Withdraw It, Cody
9/10/2007 11:34 AM EDT
No, Cody, we have not been in black and white on these pages regarding the economy and market over the past five years. I spent the 2003-2005 period working for Sanford Bernstein, writing research reports urging investors to buy Lucent, Ericsson, Nokia and other telecom stocks. I don’t understand why you are making false claims about permabears. Can you please retract your smear right now?

Position: none

Noah Blackstein
Memo to Doug “Bi-Polar Bear” Kass
9/10/2007 11:27 AM EDT
Doug, I think the most interesting thing coming is the FCC airwaves auction. Who are the bidders going to be? What is the impact? Comcast? Google? Dr. Evil? I think its actually one of the most “disruptive” times we have seen in awhile. A short bet is being placed on tech because of disruptions in the financial services sector. But unlike 2000, many technology leaders are better diversified. Today, Reliance Communications Ltd.,India’s second-biggest mobile-phone operator, began offering Research In Motion Ltd.‘s BlackBerry service in India. India has a very large a middle class. China-India; it not just commodities.

HAH! Tero is nailed:
I spent the 2003-2005 period working for Sanford Bernstein, writing research reports

Guess what? That’s the same bullshit outfit that Toni “AAPL deserves no upside to $78” Sacconaghi works for. No wonder the guy is so anti-AAPL; its in his genes.

As for Rev Shark.. well.. you can just smell the guys who missed the 1300% run-up in AAPL over the last few years can’t you!

IMO, the basis of Kuittinen’s probably wrong opinion is that he starts from the position that iPhone is Apple’s entry into “the smartphone market” he knows so well. To make a horticultiural analogy, because all the other plants in his garden are bean plants, if this seedling is within the size range for a 2 month old bean plant, he thinks it must be another bean plant. Whereas we think it’s a tree seedling.

[quote author=“sleepygeek”]IMO, the basis of Kuittinen’s probably wrong opinion is that he starts from the position that iPhone is Apple’s entry into “the smartphone market” he knows so well. To make a horticultiural analogy, because all the other plants in the garden are bean plants, if this seedling is within the size range for a 2 month old bean plant, he thinks it must be another bean plant. Whereas we think it’s a tree seedling.

Beautifully put.

[quote author=“Tommo_UK”]Rev Shark weights in and says AAPL holders are part of a cult. Apparently it isn’t enough for him that the companies grows earnings 40-70% YoY every year, year after year, and anyone who thinks that this is a good thing is just a member of the Cult of Apple. This is typically ignorant and very widespread thinking amongst many many professional investors and highly competent traders. They really, really, don’t understand that earnings growth = increasing share price. Bizzaro.

Cult of Apple
by Rev Shark
9/10/2007 11:14 AM EDT
I have no position in AAPL and no opinion about the value of the stock, but sometimes I expect that some of its supporters will soon be wearing robes, begin chanting and start selling downloads at the airport. The cult status of this stock is getting to be a bit much but what really makes me roll me eyes is how having a large unrealized gain turns some folks into “true believers.”

Position:

You really don’t like anyone who disagrees with you Tommo, do you?

You yourself expected a million to have been sold last month when the conference call referenced that Apple was on track to sell 1 million iPhones by the end of September, then after the $200 drop on the iPhone price and the announcement that it was still on track to sell 1 million by the end of September, you still clung to the idea that Apple had already sold more than 1 million iPhones and you defended your position by stating that Apple would never announce the exact date they hit the 1 million sales figure because it would give away too much strategical information to their competition.

Well now, we know the exact amount of days it took Apple to reach the 1 million mark, 74 days. I don’t think the iPhone will sell another 2 million iPhones in the next 16 days to beat the 3 million mark that so many on this board thought the iPhone would exceed in it’s first 90 days.

[quote author=“daemon”]You really don’t like anyone who disagrees with you Tommo, do you?
You yourself expected a million to have been sold last month when the conference call referenced that Apple was on track to sell 1 million iPhones by the end of September, then after the $200 drop on the iPhone price and the announcement that it was still on track to sell 1 million by the end of September, you still clung to the idea that Apple had already sold more than 1 million iPhones and you defended your position by stating that Apple would never announce the exact date they hit the 1 million sales figure because it would give away too much strategical information to their competition.

Stay short, stay happy. I’ll have a drink for you when you miss out on the next 300% rise in the stock

[quote author=“Tommo_UK”][quote author=“daemon”]You really don’t like anyone who disagrees with you Tommo, do you?
You yourself expected a million to have been sold last month when the conference call referenced that Apple was on track to sell 1 million iPhones by the end of September, then after the $200 drop on the iPhone price and the announcement that it was still on track to sell 1 million by the end of September, you still clung to the idea that Apple had already sold more than 1 million iPhones and you defended your position by stating that Apple would never announce the exact date they hit the 1 million sales figure because it would give away too much strategical information to their competition.

Stay short, stay happy. I’ll have a drink for you when you miss out on the next 300% rise in the stock

I appreciate that, but you don’t have me convinced that the market will drive Apple’s stock beyond $400 a share.

[quote author=“daemon”]I appreciate that, but you don’t have me convinced that the market will drive Apple’s stock beyond $400 a share.

The market won’t. Apple’s earnings will. Maybe not $400 - but close enough. Good luck nay saying the stock - its done so many favours to so many people being negative on the stock, after all.. yeah.. AAPL’s a pig and its peaked.. rock on dude.

[quote author=“Tommo_UK”][quote author=“daemon”]I appreciate that, but you don’t have me convinced that the market will drive Apple’s stock beyond $400 a share.

The market won’t. Apple’s earnings will. Maybe not $400 - but close enough. Good luck nay saying the stock - its done so many favours to so many people being negative on the stock, after all.. yeah.. AAPL’s a pig and its peaked.. rock on dude.

It’s like you’re making predictions based solely on emotion.