Apple Stock This Week -- T-Mobile Fights Back and the iPhone Turns 7

Apple stock underperformed the S&P 500 again this week and has fallen nearly 4% over the past two weeks. During the same period, the S&P 500 basically remained flat. Apple's underperformance comes after six months of outperformance -- a stretch in which Apple stock gained about 27% compared with the market's 14% gain. With nothing concrete to attribute Apple's pullback to, it could just represent investors' taking gains after a nice run-up.

Looking back at the week, here's a summary of the most important news and analysis for Apple stock.

iMac. Source: Apple.

U.S. Mac sales
Two reports of estimated Mac shipments paint very different pictures. The disparity between the two estimates shows just how unreliable preliminary estimates for Apple's unit shipments are.

First, Gartner: Though it's no surprise that Apple's Mac business continues to outperform its peers, the extent of Apple's recent outperformance is startling -- at least according to Gartner. Despite a 7.5% year-over-year decline in PC shipments in the U.S., Mac sales soared 28.5% in the fourth quarter, according to Gartner. In terms of growth, Dell and Lenovo came in second and third, respectively, with single-digit percentage gains. Apple's gain as reported by Gartner is quite impressive, since the global PC market actually suffered its "worst decline in PC market history."

But as Fortune's Philip Elmer-Dewitt points out, investors should keep in mind that Apple's Mac sales in the year-ago quarter were supply constrained. So if Gartner's estimates were correct, the year-over-year gain is not as impressive as it looks.

Further, the disparity between Gartner's estimate and IDC's basically renders them both useless. IDC's preliminary estimates report that Apple's PC shipments declined 5.7% from the year-ago quarter, giving the company a 9.7% share of shipments during the quarter, versus Gartner's estimated 13.7% share.

And that's why investors shouldn't jump to any conclusions when they see preliminary unit shipments.

Original iPhone anniversary
Seven years ago this week, Steve Jobs introduced the original iPhone. In hindsight, the evolution to a smartphone looks obvious. But an excerpt from technology journalist's Fred Vogelstein's new book Dogfight: How Apple and Google Went to War and Started a Revolution, paints a vivid picture of exactly how forward-thinking the iPhone was. Vogelstein recounted Google Android chief Andy Rubin's experience when he initially saw Apple's new iPhone. At the time, Rubin was a part of Google's mobile phone project, a concept dubbed "Sooner."

On the day Jobs announced the iPhone, the director of the Android team, Andy Rubin, was six hundred miles away in Las Vegas, on his way to a meeting with one of the myriad handset makers and carriers that descend on the city for the Consumer Electronics Show. He reacted exactly as [Google engineer Chris] DeSalvo predicted. Rubin was so astonished by what Jobs was unveiling that, on his way to a meeting, he had his driver pull over so that he could finish watching the webcast. 

"Holy crap," he said to one of his colleagues in the car. "I guess we're not going to ship that phone."

Today the iPhone accounts for more than half of Apple's revenue and even a larger portion of its operating profits. Apple has guided to report record quarterly revenue in its fiscal first quarter of 2014.

T-Mobile fights back
After AT&T's assault on T-Mobile , offering up to $450 in credits to customers who switched from T-Mobile's platform, T-Mobile is striking back. The carrier is now offering up to $650 in credits per line (up to $350 per line in early termination fees and up to $300 in credits for phone trade-ins) for families who switch from any of the three major national carriers.

"We're giving families a 'Get Out of Jail Free Card,'" said T-Mobile CEO John Legere. "Carriers have counted on staggered contract end dates and hefty early termination fees to keep people bound to them forever. But now families can switch to T-Mobile without paying a single red cent to leave them behind."

To qualify, customers must hand in eligible devices at a participating T-Mobile location, switch to a postpaid Simple Choice Plan, purchase an eligible device, and sign up for T-Mobile's interest free 24-month device financing.

The value proposition sold me. My family and I upgraded to the iPhone 5s from our 6-month-old iPhone 5 we had subsidized by a Sprint plan.

For Apple investors, the heated competition is good. Even if subsidies slowly disappear, competition like this will at least keep reasonable financing for smartphones around. In my family's case, we were all able to purchase a new iPhone that we otherwise probably wouldn't have bought.

Meaningful news?
Among this week's stories, the most notable for investors was T-Mobile's assault on the other three national carriers. Apple looks like it will continue to benefit from credits, subsidies, and interest free financing for its costly devices for a very long time. T-Mobile's offer to pay up to $350 in termination fees is one of the most aggressive plans to get customers to switch to its platform and upgrade to new phones that any carrier has implemented in a very long time.

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