Cramer on Apple: Not as Bad as the Analysts Say
Jim Cramer recently presented his view on Apple’s (NASDAQ:AAPL) third-quarter results as well as analyst reactions on his Mad Money program. Cramer notes that despite the fact that Apple sold 31.2 million iPhones compared to 26 million in the year-ago quarter, the overwhelming consensus is that the high-end smartphone market is reaching saturation and that there is little growth left.
The widely expected upcoming launch of a budget iPhone, or “iPhone Lite,” is not alleviating analysts’ concerns about the high-end smartphone market slowdown either. Cramer notes that these are “the wrong phones” in many analysts’ views since Apple is primarily known as a premium smartphone maker, and the upcoming low-cost iPhones are made of plastic and brightly colored.
Besides being the wrong type of phone, in his opinion, Cramer also noted that many analysts are worried that Apple’s low-cost and low-profit iPhone will actually harm Apple’s bottom line by cannibalizing sales of its higher-profit flagship iPhone. Apple’s third-quarter results revealed that the Cupertino, California-based company’s gross margins slipped from 42.8 percent in the year-ago quarter to 36.9 percent this year’s quarter.
But many of the same analysts that are skeptical about Apple’s upcoming lower-cost iPhone are pushing Apple to increase its sales in China, a country where a lower-cost smartphone could possibly help the company gain market share. In the March quarter, greater China accounted for 19 percent of Apple’s total sales. However, this market only accounted for 13 percent of Apple’s sales, or $5 billion, in the June quarter.
Cramer said on Mad Money that many analysts seem hyper-focused on the Chinese market to the exclusion of other emerging markets where Apple is showing significant growth. “Apple’s blowing the doors off sales in Russia and India, as well as Turkey, Poland, and many Asian countries,” he said.
Overall, Cramer believes, “Things aren’t as good as Apple says and things aren’t as bad as the analysts say.” Unfortunately, as he notes, Wall Street sentiment plays a large role in determining share price. As long as analysts believe Apple has lost its innovative touch, it will be viewed as a “low to no-growth stock.”
However, Cramer also believes that new product launches in the fall will begin a more positive discourse that will in turn affect Apple’s share price.
Here’s how Apple traded on Thursday:
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