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Doug Kass: iPhone 7 Is Latest Reason to Sell Your Apple Stock

Doug Kass: iPhone 7 Is Latest Reason to Sell Your Apple Stock

Apple's iPhone 7 has a wireless audio system that uses "Airpod" earphones. (Source: Apple)

By    |   Friday, 09 September 2016 01:14 PM

Apple Inc.’s stock is more likely to decline as its iPhone 7 turns out to be a disappointing dud, says Doug Kass, president of Seabreeze Partners Management Inc.

“Apple is a mature cash cow that will not likely match its 2015 record earnings per share for many years — if ever,” he writes for TheStreet.com. “Apple's valuation level remains significantly exposed as the company faces a period of disappointing sales, earnings and cash flow.”

Apple chief executive Tim Cook this week showed off the newest version of the iconic smartphone, which is available Sept. 16 with a list price of $649. Newspapers such as The Wall Street Journal voiced disappointment with the iPhone 7, saying it lacked the wow factor of earlier models.

Apple removed the phone’s headphone jack, replacing it with a wireless system that requires the purchase of new equipment. The phone includes improvements to its camera, battery life, speakers, display and water resistance.

“I see little product innovation that will prompt the company's large installed customer base to upgrade its smart phones, computers or Apple Watches,” Kass says. “Nor do I see any new-product categories on the horizon that will move the company's earnings ‘needle’ over the foreseeable future.”

Kass disclosed that he sold Apple short with the expectation that shares will fall from the recent price of about $106 a share. He estimates the stock will decline about 15 percent to $90 with an upside risk to $115. Apple hit a 52-week low of $89.47 in May.

“I expect a surprisingly large number of consumers to hold off on buying the iPhone 7, waiting instead for the the next product upgrade and the line's 10th anniversary in 2017,” he says. “This further elongation of the iPhone's upgrade cycle will raise the risk of continued earnings disappointments for Apple in the quarters ahead.”

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StreetTalk
Apple Inc.'s stock is more likely to decline as its iPhone 7 turns out to be a disappointing dud, says Doug Kass, president of Seabreeze Partners Management Inc.
iPhone, Apple, Doug Kass, technology
307
2016-14-09
Friday, 09 September 2016 01:14 PM
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