Daily: Apple angst has increased – here’s why
For some reason there seems to be a lot of angst associated with the release of the iPad mini, with Apple shares falling over 10% in recent weeks. If you recall, Apple had a mini correction earlier this year when they missed earnings but they have since gone much higher nonetheless. The FT’s story o Apple gets the issue right. The iPad mini is not disruptive even in the way the iPad has proved to be to notebook and netbook sales – something I discussed when the iPad was launched. It’s not an offensive push into a hot new market. Instead, I see it as a defensive move by Apple to shore up weakness in its product offering because Google and Amazon are attacking the tablet space with cut-rate products.
The question is whether this is going to work. It’s hard to say near-term. I am pretty sanguine about this quarter – maybe unjustifiably so. Nonetheless, I am sure that over the long term this is going to work. As the Apple Insider article discusses, you have cannibalization issues to think about. I’d rather go for an iPad mini on price alone and then add storage capacity than go for a more expensive iPad. I think a lot of people are going to be thinking that way. And so, you will get people who would have bought an iPad, buying the lower cost, lower margin iPad mini. Piper Jaffrey estimates 20% cannibalization.
The larger issue is what happens after the holiday season. My view still is that Apple’s product cycle is too long and so Android manufacturers will have ample opportunity to flood the market with product, now in both the handset and the tablet space. And I believe this will erode Apple’s market share. Moreover, Apple’s defensive posturing here and on selling iPhone 4S and iPhone 4 models may have the net effect of lowering Apple’s overall price points and margins. So Apple remains vulnerable on both the margin and the market share front. Nothing I see up Apple’s sleeve makes me think otherwise.
Apple on the defensive – FT.com
“a seven-inch iPad will be disruptive of precisely nothing.
Rather, it is a symptom of Apple’s need to round out its product set and ward off rivals. Seven-inch screens will account for a third of the 202m tablets sold next year, according to IHS iSuppli. The war between tech ecosystems – which has seen Google and Amazon move into hardware as Apple pushes deeper into internet services – has ushered in a new competitive phase. Leaving an opening could be costly.
The message has not been lost on Wall Street. “
Every five ‘iPad mini’ sales projected to cannibalize one full-size iPad
“Apple’s anticipated “iPad mini” is forecast to have a cannibalization rate of 20 percent, which would mean every five smaller iPads sold would take the place of one full-size 9.7-inch iPad.
Assuming Apple’s 7.85-inch iPad goes on sale Friday, Nov. 2, analyst Gene Munster with Piper Jaffray sees the company selling at least 5 million units in the December quarter. That would be enough to cannibalize a million regular iPad units during the holiday shopping season, he believes.”
Apple Is Getting Clobbered In India – Business Insider
“Apple’s market share in India right now is a startlingly low 1.2%, IDC says–and even that figure that has dropped by half in a year.
Samsung’s market share, meanwhile, has soared to a whopping 51%, double a year ago.
Part of Apple’s problem in India is distribution. According to the WSJ’s Thoppil, Apple doesn’t have retail stores in India because local regulations make this too much of a headache, and Apple’s resellers don’t have a big presence in the country. To supplement this distribution, Apple will begin selling iPhones through a local subsidiary of the vast electronics distributor Ingram Micro.
Apple’s bigger problem, however, is price.”
iPhone dominates smartphone Web traffic with 46% share, report says
“Apple’s iPhone lineup accounts for nearly half of all internet traffic generated by smartphones in the U.S. and Canada, beating out the market share of next-closest competitor Samsung by over 30 percent, according to research provided by ad network Chitika. “
“Apple has lost an appeal against a ruling in a U.K. High Court that Samsung’s Galaxy Tab does not infringe the iPad’s design. The original ruling by Judge Colin Birss said Samsung’s tablets were not cool enough to be confused with Apple’s because they lacked the “extreme simplicity” of the iPad. That ruling has now been upheld by the Court of Appeal.”
Europe
S&P Downgrades Cyprus Further Into Junk Territory – WSJ.com
“Standard & Poor’s Ratings Services downgraded Cyprus’s sovereign ratings three notches further into junk territory, saying the island nation’s creditworthiness had deteriorated significantly since its ratings were lowered in August.
S&P has Cyprus at B, or five levels into junk category, and said the ratings remain on review”
Gewerkschaften: Spanier planen Generalstreik – International – Politik – Handelsblatt
On November 14th unions in Spain and Portugal will go on a general strike.
La prima de riesgo cae a 371 puntos tras la subasta de bonos y obligaciones | Economía | EL PAÍS
Spanish spreads to bunds are now down to 371 basis points.
El Tesoro coloca 4.614 millones de euros en bonos a un menor interés – ABC.es
Spain issued 4.614 billion euros in bonds at a lower yield today. The yields were the lowest since January for 10-year paper, since APril for 3-year paper. The country now has 94.4% of its funding need covered for 2012
Bad loans went up to a record 10.5% in August in Spain. The total is 178,597 million euros
Spanish bad loans hit new high | Reuters
“Bad loans at Spanish banks rose to a record high in August, driven by an increasing number of recession-hit Spaniards faced defaulting on their debt payments.
Loans that fell into arrears in August increased by 5.3 billion euros ($7 billion) from July, reaching 178 billion euros, Bank of Spain data showed on Thursday.”
United States
“The book is remarkably full of information and substantive narrative. Few books pack in so much and I mean this in a very positive way. I learned something on virtually every page, even after having read many of the other crisis books.
Yet her running claim that she had a plan to end the bailouts, or abolish “Too Big To Fail” is absurd. (Though most of these people do.) She should be presenting only the more modest argument that it would have been better to distribute more losses on creditors, which indeed she did advocate. Her narrative overreaches by a long mile.”
Buyer’s Remorse? – Tim Duy’s Fed Watch
I agree the data have been good and I also agree with Tim here that caution is warranted. But I am relatively upbat that a mudlle through is completely achievable unless the US goes over the fiscal cliff. I expect the US to go over the cliff. How hard the fall is will determine whether the recovery continues.
Bindersfullofwomen.com snapped up in 90 seconds – Oct. 17, 2012
“Romney’s tin-eared line — referring to job candidates he reviewed while holding office in Massachusetts — became an Internet sensation in record time . A scathing Facebook page drew more than 250,000 ‘likes’ in less than 12 hours, and #BindersFullOfWomen took off like wildfire on Twitter.”
Romney 50%, Obama 46% Among Likely Voters
“While Romney’s four-percentage-point advantage is not statistically significant, he has consistently edged ahead of Obama each of the past several days in Gallup’s seven-day rolling averages conducted entirely after the Oct. 3 presidential debate. Prior to that debate — regarded as a decisive Romney win by political experts and Americans who watched it — Romney averaged less than a one-point lead over Obama among likely voters.”
Elsewhere
The Mathematicization of Economics « azizonomics
“If one thing has changed in the last one hundred years in economics it has been the huge outgrowth in the usage of mathematics:
This is largely a bad development, for a number of reasons.”
Happy Habits: How to Fix Bad Moods — PsyBlog
“Happier people also tended to use socialising as a buffer against negative events, no matter what they were.
In contrast less happy people tended to use positive financial events as buffers against negative events, rather than social ones.”
China’s economy slows for a seventh quarter | World news | guardian.co.uk
“China’s GDP grew 7.4% in the third quarter, missing the government’s target for the first time since the financial crisis”
China says September industrial output up 9.2pc | South China Morning Post
“Production at China’s factories, workshops and mines rose 9.2 per cent in September compared with the same month last year, the government said on Thursday. Output for the first nine months of 2012, meanwhile, rose 10.0 percent compared with the same period in 2011, the National Bureau of Statistics said.”
Guardian looks to digital future without printed newspapers – Telegraph
“The publisher of The Guardian and The Observer is preparing to axe the print editions of the newspapers, despite the hopes of Alan Rusbridger, editor in chief, to keep them running for several years.”
Newsweek to end print edition – latimes.com
“After nearly 80 years of publication, the news magazine will shift to a digital-only format, available online and on tablet computers, Editor in Chief Tina Brown said on the magazine’s website Thursday morning. Its last printed edition will be the Dec. 31 issue.”
La agencia Moody’s bajó la calificación de los bonos
Moody’s has downgraded regional Argentine debt to Caa3/Caa2 in the wake of a regional technical default due to pesofication of the Argentine economy. The Argentine government is cracking down on the use of the US dollar and that led to a municipal default on dollar bonds. Affected are the cities of Buenos Aires, Mendoza, Rio Cuarto and Cordoba as well as the provinces of Chubut, Mendoza, Buenos Aires, Chaco and Formosa.
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