Walter Piecyk of BTIG has downgraded Apple’s stock two weeks before the company is scheduled to report their second fiscal quarter earnings. The reason he downgraded the stock from “buy” to “neutral” is because of the new wireless subsidy policies.
?Subsidies by post-paid wireless operators have fueled the growth of Apple?s $600 iPhone since its inception,? stated Piecyk. ?Wireless operators have been happy to subsidize smartphones to new and existing customers in order to provide a lift to the average monthly bill (ARPU) of their customer base, a metric which had been falling for the past three decades.?
The wireless companies are making it harder for people to receive a new iPhone every year at a cheaper rate. He believes that iPhone sales will drop to 27.5 million in the third quarter for revenue, which would bring in $1 billion less than the consensus on Wall Street.