Apple began 2019 warning investors of weaker demand for the iPhone XS and XR phones in China, but 2019 finished as a record year for the company and CEO Tim Cook, pictured here. (Photo: Apple)
The iPhones Apple released in 2019 weren’t exactly revolutionary. The company didn’t introduce any brand-new product lines. It’s final new product launch of the year, the AirPods Pro, was sold out to holiday shoppers, depriving Apple of a more lucrative windfall.
Yet, 2019 was Apple’s greatest ever, financially, with several record days on Wall Street. The stock is up 87% for the year; shares were priced at $154.89 when the Nasdaq Stock Market openedJan. 2. On the year’s last day of trading, the stock is selling for over $290 a share.
Trade war with China? That’s not spooking Wall Street, relative to Apple, which manufactures the iPhone in China.
Apple had begun the year on a downbeat note, warning investors of weaker demand for the iPhone XS and XR phones in China, when sent the stock down to $142 a share on Jan. 3.
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Apple iPhone sales are down. Daniel Ives, an analyst with Wedbush Securities, projects shipments of 185 million units, down from the 200 million-plus of previous years. He attributed that to consumer indifference over the XS and XR series, first introduced in 2018 and available to consumers for the first nine months of the year.
However, the company bounced back, not with new gadget hits, but by working its base of 900 million iPhone owners, Ives says.
“That’s been the formula for success, and it’s why the stock is up,” he says. “This is one of (Apple CEO Tim) Cook’s finest hours, putting a fence around their install base.”
Apple made up the shortfall by selling apps, movies, music and software backup via its Services division, collecting those huge 30% commissions from every app and game sold through the App Store, and tweaking older products like the Apple Watch and iPad that continue to sell millions of copies.
“This is a strength investors didn’t think Apple had,” says Ives. “It’s not just about the iPhone.”
Speaking of the flagship device, analyst and investor Gene Munster from Loup Ventures predicts there will be five new iPhones for 2020, beginning in the spring with the release of an update to the iPhone SE, the low budget model with a 4-inch screen that was discontinued in 2018.
The phone had been selling for about $400 before Apple pulled it. Currently, the entry-level contemporary iPhone is the 11, which starts at $699. You can also buy an iPhone 8, first released in 2017, for $449.
Munster says there will be two editions of the updated SE model, and three new 12 edition iPhones, similar to year’s past, with an entry level phone, a “Pro” model and a larger “Max” version.
Some of the phones will be equipped for new 5G wireless networks, which will help Apple sell more phones to people who want to upgrade to the faster service, says Munster. “Without a new phone, they won’t be able to get 5G,” he says.
He and Ives both expect Apple will end up selling more phones next year, thanks to 5G and the normal upgrade cycle.
Not everything Apple delivered in 2019 was a hit. Apple TV+, the company’s answer to Netflix and Hulu, was a critical joke when it launched with only four scripted series, compared to over 7,500 on the new Disney+ streaming service, which also debuted in November.
Still, one new program, “The Morning Show,” is nominated for 3 Golden Globe awards.
Munster believes that within a year, Apple TV+ will gain momentum and reach “critical mass” with some 40 shows: “They’ll spend $3 (billion) to $5 billion on content.”
Ives believes Apple will eventually buy a studio or media company to augment its library. His choice of suitors include Lionsgate, MGM or Sony Pictures.
Apple sold more gadgets to consumers than any other company, with the 185 million iPhones, 65 million AirPods, 45 million iPads and 25 million Apple Watches, Ives says.
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