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Michael Holt, Morningstar analyst, weighs in on Apple’s worth ahead of the company’s earnings.
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Right now the big story today course investors awaiting Apple's earnings after the bell but after a week of sharp losses is it's still a good -- for the long term our next guest seems to thinks out joining us now Michael hall analyst with Morningstar.
Look at Michael let's get down to the nitty gritty here everyone wants to know if they can -- -- iphones right because that's pretty much 50% of the revenues of can they do that.
Iphones and ipads is really two product company we looked at gross profit.
And what we think is in this short term their momentum is is sustainable but there are questions and you start looking in three years down the road.
Staffing side at this valuation is the stocks -- be more attractive.
Are you worried then about you know competitors like Samsung -- worried about windows coming out Microsoft coming out some new phones it does that bother you at all.
Absolutely there's more android device sold every date and there are IOS devices so Apple's not gonna have a dominant market share they're gonna have critical mass -- gonna.
Carve -- a quarter of the market and -- to sustain that but.
Nice to be more -- devices out there.
In the future.
I had dried up and you and that has -- -- -- -- -- -- -- So -- it you can get eight women talking about AT&T and then not wanting to pay the subscriber fee anymore.
We have -- rise in coming out of course with new windows phones you know news from AT&T and Verizon could potentially hurt the stock to going forward.
Well I think in the long run the carriers who loved us if that -- -- power back towards them away from apple.
And they're gonna support other platforms enjoyed in Yahoo! and Microsoft to try to make that happen because they're not -- position to do that yet though.
It's not about margin pressure I know especially on the high end phone the margins are really small on -- iPhone.
How did they come back that -- put it cheap so now.
So I guess the real question is that the margins are great on high end phones but are they gonna compete -- enjoy attacked by offering up much lower price phone and I think over time we're gonna see a lot more these cheaper iphones.
-- out in the market and that's gonna have a material impact on Apple's ability to deliver such a high gross margin.
You know we -- we -- -- earlier talking about how China sales in China for these products is really part of the picture here but.
Getting global sales up -- tough when the costs of these products are so high how did they do that.
But Apple's strategy is to to keep older devices around so right now they're -- of miles iPhone for us and that's you know maybe 650 dollar phone.
They're competing institutions 300 dollar android phone so what they do is they keep the iPhone for an iPhone 3GS out on the market and lower the price -- and those devices.
The downside -- is that they're gonna have a lower gross margin on those devices even though it might help their market share.
So opponent earnings and everybody wants -- -- -- buy it now -- -- wait till after the release.
Well we we do think it's -- undervalued but we'd like to see.
More upside before we -- and -- attractive entry point.
The same time -- you have ITV coming out you have the iPad potentially many iPad you -- being used in schools.
Seems like it's not going anywhere anytime soon.
Well we agreement is because the iPhone and that Dodd had out I'm not yet convinced on ITV here.
Or some of the other devices they might lines.
-- -- Got on apple products my house on real life Michael on the morning -- thank you so much.
