Shares in iPhone maker Apple’s shares dropped by more than five per cent yesterday as investors reacted to the launch of the company’s two new models.
At least three brokerages downgraded the stock and the share price ended on a one month low of $467.24
It is thought that investors are not impressed at the high price of the new handsets – particularly the new plastic-backed “cheap” iPhone 5C which starts at £469 in the UK.
The fear is that the price point is too high for large numbers of new customers to be attracted – especially in the emerging Asian markers such as China where Samsung dominates with its less expensive handsets.
The iPhone 5C had been widely rumored before this week’s unveiling from Apple and it has been heralded as the company’s first move into the budget handset market. However to be fair to Apple it never claimed that it was going to produce a budget model and that has never been part of its marketing strategy in the past.
The iPhone 5S is a high-end successor to the current iPhone 5 model and comes in gold, silver and slate, with a fingerprint scanner built into the ‘home’ button and starts at £549.
The iPhone 5C features the same screen and camera as the current iPhone 5 (which will be discontinued once the replacement handset goes on sale on September 20) but its big selling point is that it now comes in a range of colours with contrastingly coloured cases to make them really stand out.
Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia said: “Investors were put off that Apple’s price point didn’t go low enough to attract a new market.
“It doesn’t have the same range in price that Apple’s competitors have. We believe Apple is foregoing a valuable and relatively easy way to return to earnings growth.”
Via: Daily Mail