Apple Updates Key iPhone Line to Try to Reignite Sales Growth

Jan 10 2017 Published by under pennystock


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Apple Inc. rolled out updated products and new features Wednesday that mostly relied on an old strategy. The most-valuable technology company is targeting pent-up appetite for new iPhones to reignite sales growth amid mounting investor concern that its pace of innovation is slowing.

The iPhone 7 line includes camera upgrades, a faster processor, longer battery life and a new water and dust-resistant design, the company said during an event at San Franciscos Bill Graham Civic Auditorium. Apple also ditched headphone jacks to make room for other features and the company showed off new $159 headphones called AirPods that connect wirelessly to the new iPhones.

This is the best iPhone weve ever created, Chief Executive Officer Tim Cook told an audience of reporters and Apple employees.

First Look at the New iPhone 7 and iPhone 7 Plus

Others werent so enthused and Apple shares ended up less than 1 percent in Wednesday trading, leaving the stock up 3 percent so far this year. The Nasdaq Composite index has gained 5.5 percent in the same period.

In the past theyve had a brand new user experience, and we havent seen that today, said Gartner Inc. analyst Brian Blau. I dont think its going to change peoples opinions of smartphones. Its not going to jack up interest but its not going to reduce it either.

Apple, based in Cupertino, California, also announced a new water-resistant Watch with GPS tracking, a faster processor and brighter screen, along with an iPhone payments service for Japan, updated work software and the addition of a Nintendo Co. Super Mario mobile game to its App Store.

The
The new Apple Watch 2.
Photographer: David Paul Morris/Bloomberg

Apples previous CEO Steve Jobs introduced the iPod, iPad and original iPhone at similar events in the past, helping revenue and profit surge. Yet sales this fiscal year are forecast to decline for the first time since 2001, prompting questions among some investors and analysts about Cooks ability to deliver such innovations. Hes trying to increase sales of software and services, while greater investment in research and development has yet to yield new product lines such as an Apple car or virtual reality offering.

Muted Expectations

Expectations for the iPhone 7 had been muted, with anticipation instead mounting for the model to be introduced in 2017, when Apple celebrates the devices 10th anniversary. Apples smartphone market share is likely to slip to 13.9 percent this year, compared with 15.8 percent in 2015 and an estimated 14.2 percent in 2020, research firm IDC estimated before Wednesdays event. It also forecast slower growth in overall smartphone sales as consumers upgrade less frequently.

The latest iPhone is similar in design and size to its predecessor, the iPhone 6S. The larger 7 Plus handset has a back-facing dual camera which allows for crisper images, particularly in low light. It also comes with a new pressure-sensitive Home button that provides a vibrating sensation in response to button presses instead of an actual physical click.

QuickTake Apple

The smaller of two models, the iPhone 7, will cost $649 and the larger 7 Plus will cost $769. Both are available for pre-order on Sept. 9, and come in silver, gold, rose gold colors and two new black finishes.

Theres a big enough pool of iPhone 6 users waiting for an upgrade and there was enough new technology in there to make us comfortable about growth heading into next year, said Gene Munster, a Piper Jaffray analyst who has an overweight rating on Apple stock.

The
The dual cameras on the Apple iPhone 7 Plus.
Photographer: David Paul Morris/Bloomberg

Apples failure to completely overhaul the design, as it has previously done every two years, shouldnt hurt sales, said Lauren Guenveur, an analyst at Kantar Worldpanel.

Most people upgrade because theyre looking for better battery life, better storage capacity, and a faster processor and thats everything that they highlighted today, she said.

China Upgrade

China has been a drag on Apples performance this year as local rivals introduce cheaper handsets with similar functionality. 

Apple said Wednesday that its iPhone Upgrade subscription program — where users pay a monthly fee to get a new phone each year — will be extended to Asias largest economy. That could help it boost future revenue in China, where the third-quarter sales decline was bigger than the revenue drop in the Americas and Europe combined.

To make inroads with the next 500 million Chinese consumers, they need to find a way of making their devices affordable without compromising on their premium brand — this might help them do that, Julie Ask, a Forrester Research analyst said. The program, introduced in the U.S. last year, will also be extended to the U.K.

Tough Cell

The new Apple Watch may disappoint customers who had been hoping for a cellular chip that would have given it mobile network connectivity and un-tethered it from the iPhone. Apple had been in talks with mobile phone carriers earlier this year to introduce such a version, but the plans hit hurdles on concern about reduced battery life, people familiar with the discussions said last month. Samsung Electronics Co. unveiled its own smartwatch with cellular connectivity last week.

The model unveiled on Wednesday — dubbed the Apple Watch Series 2 — targets fitness fanatics. Waterproofing down to 50 meters has allowed Apple to build swim tracking into the device, while GPS means joggers can plot their runs without carrying an iPhone. Apple also teamed up with Nike Inc. to release a version the two companies call the Apple Watch Nike+. The partnership will let Apple sell products with the worlds largest sport brands well-oiled marketing machine and sales network.

First Look at the Series 2 Apple Watch

When the Apple Watch first reached stores in April 2015, some hoped it would become a new revenue source to match the iPhone and early iPad sales. Apple still doesnt break out sales of the smartwatch, lumping it with “Other Products” in financial reports. That segment generated $2.2 billion of revenue in the three months through June — less than half the sales from iPads and an even smaller fraction of the $24 billion in iPhone sales that quarter. IDC estimated Apple shipped 1.6 million Watches in that period, down 55 percent from the same period a year earlier.

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Read more: http://www.bloomberg.com//news/articles/2016-09-07/apple-updates-key-iphone-line-to-try-to-reignite-sales-growth


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Heres Who Profits From the Wells Fargo Scandal

Dec 31 2016 Published by under pennystock


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If there are any winners in the Wells Fargo & Co. scandal, it may be the mega-banks’ not-for-profit country cousin, the credit union.

When “establishment” banks are seen as ripping off the little guy, credit unions benefit. Their most recent growth spurt began in 2011, when Bank of America’s (eventually abandoned) move to charge debit-card users a $5 fee on purchases, together with the Occupy Wall Street movement, spurred more people to flee the big banks. The Wells Fargo scam could help make 2016 a banner year for the nonprofit financial institutions.

The chief executive of The National Association of Federal Credit Unions (NAFCU), Dan Berger, issued a blistering statement on Sept. 9. Here’s a sample:

“Wells Fargo’s illegal sales practices are an egregious violation of consumer trust. To open more than 1.5 million likely unauthorized deposit accounts and more than 500,000 credit card accounts is despicable, and it’s flat-out fraud. Someone needs to go to prison…Did the banks not learn anything from the financial crisis they caused?” 

“The frustration the American consumer has is: Here we are, we’re just out of the financial crisis, and here we go again,” Berger said in an interview. He said the fact that Wells let go 5,300 employees in connection with the scandal shows that it’s a problem with the bank’s corporate culture. Wells Fargo Chief Executive Officer John Stumpf has defended the company’s culture as putting customers first and has said some employees simply didn’t hew to it.

Protesters
Protesters wear pig masks as people participate in an Occupy protest in Vancouver, on Oct. 15, 2011.
Photographer: Jeff Vinnick/Getty Images

Whatever the case, credit unions have a compelling story to tell.

Customers are members in a sort of collective in which there’s no pressure from Wall Street for unrelenting growth. Earnings get returned to members via a combination of lower and/or fewer fees, lower interest rates on loans, and higher rates on savings accounts, so consumers can often get a good dealOn the other hand, credit unions don’t have ATMs on every corner and hours on Saturdays. Members do have online banking and access to tens of thousands of fee-free ATMs through various agreements, and some credit unions waive part of the fee charged by other ATMs.

You can find a credit union, and compare rates against banks’, at the NAFCU website.

Millennials have been flocking to credit unions. A quarter of their members in the first quarter were millennials, according to TransUnion data, up from 20 percent in 2013. That’s making the institutions work harder on an area in which they tend to lag behind the big bankstechnology and the ease of use with banking apps on smartphones and tablets, for one thing. While financial technology companies are also in hot pursuit of millennials, Berger’s opinion is that they don’t have the same level of trust that credit unions enjoy.

Credit unions appeal to millennials “because they like a cause and being part of something bigger than themselves,” said Berger. “They like the individuality, like the credit union movement.”

Apparently, some of them also see banks vs. credit unions in political terms, as the Twitterverse made clear on Tuesday, with sentiments such as this:

And this:

The credit unions themselves took to Twitter: 

Yes, that’s Multiplicity

Well, they’re not Apple. They’re credit unions.

Read more: http://www.bloomberg.com/news/articles/2016-09-14/with-wells-fargo-scandal-there-s-blood-in-the-water-here-s-who-profits


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These Are the Charts That Scare Wall Street

Dec 15 2016 Published by under pennystock


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Forget scary clowns.

For finance professionals, Corporate America’s credit cycle and the U.S. economic outlook  not to mention Brexit-induced stresses and debt dynamics in Asia are all spookier than a deranged-looking Bozo.

With Halloween just around the corner, we asked top analysts around the world for charts about things that go bump in the night  and we’re not just talking about the daily yuan fix. Here’s what they said scares them.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank AG.

“Wealth to income is near an all-time record high,” LaVorgna points out. “When this has happened in the past during the late 1990s NASDAQ and mid-2000s housing bubbles it was an ominous sign for the economy and the asset markets.”

David Schawel, portfolio manager at New River Investments.

“A rise in delinquency rates for commercial and industrial loans has previously preceded recessions,” says Schawel. “Although the recent rise in delinquencies is coming from a historically low base, the credit quality of banks’ loan books continues to bear watching.”

Michael Feroli, chief U.S. economist at JPMorgan Chase & Co.

Source: JPMorgan/Bloomberg

“We are investing less than four cents of every dollar we earn back into our nations productive capacity,” Feroli notes. “The economic possibilities for future generations will not be promising if we stay on this path.”

Neil Dutta, head of U.S. economics at Renaissance Macro Research.

Shobhana Chandra/Bloomberg

“With profit growth contracting over the last year, business cash flow concerns have increased,” says Dutta. “This is largely the result of weak global growth, a strong U.S. dollar, and falling commodity prices. The good news is that the drag from these factors have ebbed, which should push profits up. However, should profits continue falling, we would be worried.”

Lichoo Tay, head of credit sales in Asia at MUFG Securities. 

“Leverage in the Chinese economy in general is high and might be higher than available statistics show, says Tay. “If some of this starts to unravel in the form of increased defaults, the impact on debt markets in general could be very negative and the impact wouldnt be limited to China or even just Asia.”

David Doyle, economist at Macquarie Capital Markets Ltd.

Source: Macquarie/Bloomberg

“Here is one chart we find unsettling on the U.S. In the near-term it actually bodes well,” Doyle caveats. “Wage growth accelerating in cyclical industries like construction and manufacturing are a positive development. The scary part relates to the potential for it to be suggesting we are nearing an overheating (and an unfriendly, more aggressive policy response). While not our base case, the latter development could result in the conclusion of this long durable U.S. expansion (and the associated market tumult) earlier than we are anticipating.”

Torsten Slok, chief international economist at Deutsche Bank AG.

Deutsche Bank

“Most conversations in financial markets at the moment are about what the Fed hiking in December will do to stocks and credit and financial stability more broadly,” says Slok. “But the Fed doesnt seem particularly worried about financial stability at the moment. This disconnect between the narrative in the markets and the narrative from the Fed is worrying.”

Conor Sen, portfolio manager at New River Investments.

Sen chooses “the CPI medical care index measures price growth in consumer out-of-pocket healthcare expenses. It’s now growing at almost a 5 percent rate. Wage growth for workers is finally accelerating, but if that additional income all gets eaten up by healthcare costs it’s going to hold back a more robust economic expansion.”

Brian DePratto, economist at Toronto Dominion Bank.

Source: TD/Bloomberg

“Canadians seem to love housing, with real estate near its highest-ever share of the economy (although the history is quite short),” notes DePratto. “With new measures to cool the housing market in play, it can be scary to think what might happen if Canada were to lose this driver of growth.”

Peter Tchir, head of macro strategy at Brean Capital LLC.

“History may not repeat itself, but it is interesting that in May 2013 Treasury VIX was about where it is today and the 10-year yield was 1.76 percent  right around where it is today. I am not an alarmist on Treasury yields by any means, but this is a bit disturbing,” says Tchir. “Going back all the way to 2003, the only other time Treasury VIX got this low in May 2007.”

Nikolaos Panigirtzoglou, global market strategist at JP Morgan Chase & Co.

JPMorgan Chase & Co

“Retail investors bought bond funds and sold equity funds over the past few weeks in continuation of a trend that characterized most of this year,” begins Panigirtzoglou. “This strong preference for bond over equity funds is illustrated in the chart, which shows that the current pace of this trend line, at minus $10 billion per week, is very negative by historical standards and it matches levels previously seen in early 2009, during the depths of the Lehman crisis, or in 2012 during the depths of the euro debt crisis.”

Kit Juckes, global strategist at Societe Generale SA.

Societe Generale/Bloomberg

Juckes puts it succinctly: “What the FX market thinks of the U.K. economy’s prospects” as shown by the Bank of England’s calculated exchange rates for sterling.

Jordan Rochester, foreign-exchange strategist at Nomura.

“What’s scary is that what we’ve seen strong signs in October of a fall in market confidence that makes trading sterling of late resemble that of an emerging market currency,” says Rochester. “For the U.K., with its reserve currency, very rarely does the currency fall when yields in the U.K. are rising faster than its peers. Typically investors purchase the pound to benefit from the rising yields but as the chart above shows with the red line we are deeply in the negative territory of late. Going forward, either the U.K. has to have a large economic rebalancing or U.K. assets need to become more attractive to foreign investors via either higher yields or a continued fall in the currency.

Alberto Gallo, portfolio manager at Algebris Investments.

“Sterlings depreciation will push up inflation in the U.K., which imports nearly 50 percent of its food and energy,” notes Gallo. “Yet [the] 10-year gilt yield remains around 1.1 percent, well below 10-year inflation expectations. In our view, gilts are the most overvalued bond market in the world and could be the next victim of a likely hard Brexit, following sterling. The 10-year gilt yield could rise towards 1.5 percent.”

Barnaby Martin, European credit strategist at Bank of America Merrill Lynch.

Bank of America Merrill Lynch

For us, the story of negative-yielding assets is not just about government debt,” says Martin. “The phenomenon has taken over the European credit market. There is almost 400 billion euros of negative-yielding corporate debt now in Europe. Our fear is that this is far too tempting for companies not to take advantage of. If we are right, then the risk we think is a rise in ‘bad’ M&A, leverage buyouts, and more generally a misallocation of capital across European credit markets. Central bank quantitative-easing policies may ultimately be sowing the seeds of the next default cycle in Europe.”

Fielding Chen and Tom Orlik, economists at Bloomberg Intelligence.

“Based on the official numbers, Chinas non-performing loan ratio is a very manageable 1.75 percent,” begin Chen and Orlik. “The trouble is, with helter-skelter credit expansion in the last eight years, many analysts believe the official data understate the extent of the problem. A dive into the data for listed companies provides an alternative read. Looking at the entire universe of Chinese listed companies, based on the latest data for the first half of 2016, 8.4 percent of loans are to companies without enough earnings to cover interest payments. That methodology, also used by the IMF, provides a scarier, and more perhaps more realistic, read on the state of bad loans in Chinas banks.”

Frederik Ducrozet, economist at Pictet Wealth Management.

ECB, Eurostat, Pictet Wealth Management

“The euro-area credit impulse is weakening, this needs close monitoring,” according to Ducrozet. “Bank lending remains key to the macro outlook, especially for investment in small-and-medium enterprises and hiring decisions. If credit flows fail to pick up more strongly in coming months, the risk is that the ECB needs to step in again, possibly expanding on previous measures, such as as targeted longer-term refinancing operations, to try and boost the credit cycle again.” 

Richard Koo, chief economist at the Nomura Research Institute. 

Nomura Research Institute

“Governor Kurodas quantitative easing has had zero impact on Japans money supply and credit growth,” says Koo.

George Pearkes, macro strategist at Bespoke Investment Group.

Source: Bespoke Investment Group

“Current 12-month forwards are pricing in a 2.13 percent depreciation to 6.9356 versus 6.7877 spot. If markets are going to get ‘scared’ by USDCNH (spot weakening much faster than forwards), depreciation will need to quicken further,” writes Pearkes.

Read more: http://www.bloomberg.com/news/articles/2016-10-27/these-are-the-charts-that-scare-wall-street

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