Customers trying to pre-order Apple Inc.’s (AAPL) iPhone 4 yesterday were disappointed due to a technical glitch. Error messages kept interested customers from placing orders for the iPhone 4 as they waited to process their requests at the websites of AAPL and its exclusive carrier, AT&T (T).
According to the company, both AAPL and AT&T stores were unable to order new phones for customers due to unmanageable demand. As a result, AT&T said that the customers who pre-ordered their phones would receive their phones after June 24 (the first day the phone hits the stores). AAPL’s site lists July 2 as the new shipping date for pre-orders.
For AAPL, this was not a new experience. AAPL had earlier struggled to meet customers’ orders due to an uncontrollable surge in demand when it launched its iPhone in 2007. All three generations of the iPhone and the new iPad were launched amid frenzied demand. AAPL has a huge fan following, but these production problems could be a blow to its image.
In spite of all the technical obstacles, AAPL announced enhancement to its Mac mini, entry-level desktop line with better and powerful integrated graphics and a faster processor. The new Mac mini is priced at $699 in the U.S.
The new Mac mini (the company’s least expensive desktop) is $100 more than the company’s previous model which was priced at $599. The current model is also $200 above the original model (introduced in 2005).
Although the new Mac mini has a host of new features, it is quite expensive at $699, which may lead to reduced sales. In order to lure customers, Apple might consider reducing its price. Then again, AAPL targets high-end clients and customers for its revenues.
Since Mac mini has a small share of AAPL’s total business and is not as popular as the MacBook and iMac, we believe that its high price is not a major concern.
The updated Mac mini features the NVIDIA’s (NVDA) GeForce 320M graphics processor, making it ideal for graphics intensive applications and games. The new generation delivers doubly enhanced graphics performance compared with its previous version.
The new Mac mini also uses lower power, attributable to its completely built-in power supply and is by far the most energy-efficient desktop, drawing less than 10 watts of power when idle.
Apple Remains Outperform
Apple has undergone a total turnaround from a loss of $0.07 per share in 2001 to a profit of $9.07 per share in fiscal year 2009. AAPL has established a history of beating its own expectations. The year 2009 is evidence of this trend, with both revenues and earnings exhibiting growth. Moreover, AAPL continues to gain market share with its Macintosh and smartphones.
We maintain our Outperform rating on AAPL.
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