Says it will draw new customers to better devices

At least so far, reports JP Morgan analyst Mark Moskowitz, Apple is not feeling the heat from the low-cost Amazon Kindle Fire e-reader tablet. In a private meeting with top Apple executives, including CEO Tim Cook and CFO Peter Oppenheimer, Moskowitz and others from the investment firm said the iPad maker expressed strong confidence in its "position of strength" in the tablet market, AppleInsider reports.

Moskowitz also said that iPhone sales were not losing momentum, and that iPhone 4S sales had not yet "plateaued." The iPhone 3GS, now available for free with contract, had hit a price point with some markets that the iPhone previously had not reached, expanding the audience and acting as an introduction to eventual upgrades. Apple's eco-system of iTunes, iOS devices and the App Store tends to keep consumers "locked in" to the system once they begin using it, giving Apple a strong incentive to find ways to make iPhones more affordable.

In his note to investors, Moskowitz gave the impression that his recent raising of December quarter iPhone sales from 25.3 to 28 million units sold was "reasonable" -- but after meeting with Apple executives, he said he thought his recent lowering of iPad estimates "might have been too cautious." The analysts talked with the leadership of Apple in order to get a better view of where the company sees itself in the longer-term.

He reported that the company is not yet "feeling any pressure" from the popularity of the Kindle Fire, considering it a device that is low-priced enough to bring "incremental" new customers into the tablet market but ultimately making them want to upgrade to a more full-featured tablet, like the iPad. Moskowitz also asked the leaders a popular question among analysts and financial market-watchers, namely what Apple planned to do with its enormous reserve of cash. Investor groups and shareholders often express frustration with Apple's reticence to use the money to pay dividends and generally give the money to stakeholders, or at least invest it in higher-yield opportunities.

He said that Cook and Oppenheimer continued to tow the company line, discussing Apple's cash hoard in terms of strategic investments in the supply chain, retail stores and product pipeline, dismissing talk of a stock buyback or dividend payout. Investors, Moskowitz predicted, would forget all about the "use of cash issue" when they saw the December quarter's results, which Apple has already told analysts it expects will take the company to record territory on several fronts. [via AppleInsider]

by MacNN Staff