Analyst Meets w/Tim Cook, Foresees Cheaper iPhones

Bernstein Research analyst Toni Sacconaghi met with Apple execs last week, including Apple COO Tim Cook, CFO Peter Oppenheimer, and VP Eddy Cue, according to a research note covered by Forbes. Mr. Sacconaghi said he took away from the meeting “reaffirmation” that the company is working on cheaper iPhones to broaden the reach of the device.

While the execs didn’t seem to explicitly say that Apple would be introducing smaller/cheaper iPhones, Mr. Cook did tell the analyst that his company was working on “clever things” to address the prepaid market. He also said Apple didn’t want the device be “just for the rich,” and emphasized that there were no markets that Apple wasn’t willing to cede.

To wit: China, the world’s largest market. Mr. Cook characterized China as a “classic prepaid market,” and told Mr. Sacconaghi that Apple has devoted a lot of energy in developing that market for its products.

Apple has historically not had much market penetration in China, but with two flagship Apple Stores and the iPhone, the company did US$2.5 billion in sales in China during the December quarter alone, according to comments from the company during its annual shareholder meeting and its Q1 conference call with analysts.

If Apple wants to expand that business, therefore, one might ascertain from these comments that the company is looking to a future, less expensive version of the iPhone to do so - at least that was what Mr. Sacconaghi ascertained.

Tim Cook also told the analyst that he expects the tablet market to be larger than the PC market. Mr. Sacconaghi believes that Apple’s part of that business could eventually grow to become a US$60 billion and $100 billion enterprise, somewhere close to Apple’s entire business today.

Apple was trading higher in the early afternoon session, at $351.68, up 3.52 (+1.01%). That’s somewhat off the morning high of $355.05.

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Source: Yahoo! Finance

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.