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‘Worst Kept Secret’ Apple Event Still Gets Attention: Tech Watch

‘Worst Kept Secret’ Apple Event Still Gets Attention: Tech Watch

(Bloomberg) -- Investors hoping that the introduction of a new line of iPhones will help Apple Inc. shares rebound to their January record may be in for a disappointment if history is any guide.

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The stock has fallen seven times on the day the company has launched a model in the past decade. When it announces the new iPhone Wednesday, Apple is likely to take shareholder-friendly steps such as higher prices to cushion its margins from inflationary pressures, analysts say. Such moves, though, come during a weakening economy that may make buyers reluctant to pay more for a handset.

“Apple’s fall iPhone launch event has always been the ‘worst kept secret,’ with investors aware of most of the product lineup to be announced heading into the event,” Samik Chatterjee, an analyst at JPMorgan Chase & Co., wrote in a note. “Investors will be keenly watching iPhone prices in the backdrop of an increasingly challenging macro with concerns around consumer spending.”

Historically, the shares tend to rebound a couple months after the event, as early sales figures trickle in. However, even that respite has evaded the stock after the last two iPhone announcements. Apple’s shares are down 13% this year, heading for their first annual decline since 2018.

Some analysts predict Apple will raise prices on its higher-end Pro models that cater to a more affluent customer base while lowering older phones to lure budget-conscious buyers.

Wamsi Mohan, an analyst at Bank of America Corp., expects to see a 20-cent bump in earnings per share if Apple hikes prices of its Pro models by $50.

Price increases are important because Wall Street is counting on Apple’s growth in earnings per share to outpace the increase in revenue. Analysts project that earnings will increase by 9% in 2022 and by 6% next year, compared to projections for annual sales increases of 7% this year and 5% next, according to data compiled by Bloomberg.

Apple is the top performing mega-cap technology stock this year because investors have faith in its ability to tap into its more than 1 billion customers to earn more on its services including apps, video, fitness and gaming subscriptions.

The next catalyst for the stock will be earnings for the September quarter, to be reported in late October, said Gene Munster, managing partner of Loup Ventures.

“At that time I expect Apple will reassure investors that while Apple is not immune to a slowdown, their products remain in demand and sales will grow year over year in the December quarter,” he said.

Tech Chart of the Day

Its been a rough year for technology stocks and that’s reflected in the 26% slump in the Nasdaq 100 Index. While the gauge is on course for its worst performance since 2008, it’s still outperforming another favorite of speculators, Bitcoin. The cryptocurrency, which is down almost 60% for the year, was trading slightly lower to around $18,888 as it inches closer to its 2022 low.

Top Tech Stories

  • Sundar Pichai, chief executive officer of Google parent Alphabet Inc., defended the internet-search giant against claims that it is anticompetitive, citing established rivals in the digital advertising market and upstart mobile app TikTok as examples of robust competition in technology.

  • Xi Jinping renewed calls for China to step up the development of technology critical to national security, issuing a forceful reminder just as escalating US sanctions threaten Beijing’s efforts to become self-reliant in semiconductors.

  • Tencent Holdings Ltd. is set to more than double its stake in Ubisoft Entertainment SA, forging its latest major overseas deal and giving the founding Guillemot brothers capital to get the video-game company back on track.

    • Ubisoft shares slumped as much as 17% because the investment means a full takeover of the company is unlikely.

    • Ubisoft will announce several new games in the Assassin’s Creed franchise Saturday, including one set in feudal Japan, according to media reports and people familiar with the company’s plans.

  • Twitter Inc.’s lawyers are using Elon Musk’s text messages to try to convince a Delaware judge that the billionaire wants to abandon his $44 billion deal to acquire the company because of buyer’s remorse, rather than concern about the social network’s spam or bot accounts.

  • An “incredible onslaught of money” against a landmark bill meant to rein in the power of the biggest US technology companies has been an obstacle to passing the legislation, according to Senator Amy Klobuchar, the primary sponsor of the bill.

  • Six Gulf Arab states have told streaming service company Netflix Inc. to stop broadcasting material that they said violates the region’s Islamic values, and threatened legal action if it didn’t act.

  • South Korea’s Samsung Electronics Co. is warning that the semiconductor industry could be in for a rocky close to 2022. A senior executive at the world’s largest maker of memory chips said the outlook for the second half is gloomy, and Samsung is not yet seeing momentum for a recovery next year.

(Adds moves in last paragraph.)

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