A lot of factors could be baked into Apple's iPhone XR halt, says CNBC's Kovach By CNBC Television

This one feels super thin to me. It's based on one source. There could be a lot of factors in here. Maybe they were told not to ramp up production as high. It could mean they're getting indications that the act of the 10s is more popular than they initially thought the 10r was going to be so there are a lot of factors that could be baked into here and again. I think Jim Crater is on earlier this morning and he just said it was: did it smell right, Nina? The timing of this report, though, couldn't be worse for apples stock price, given that it follows Friday's, disappointing earnings guidance, but as well as that, the change in having a report going forward making many analysts think that they're trying to hide the decline in volumes of iPhones going forward.

What do you make of that change, and do you think it's fair? This share price is sold off so much in the last couple of days right. So, first, the key thing that we need to know as investors on Apple is: how is that I phone unit installed base growing or is it growing at all right? We didn't get that information in the first place, but getting unit data gives you a view into whether that's going to happen or not so the withdrawal of unit information on a forward basis. Now we don't know whether it's going to happen or not. What we did get on the last earnings call was that the overall device install base is growing double digits, but that's likely largely due to wearables. We think that the iPhone install base is growing low, single digits.

Now going back to a data point that we just had here today. I agree with Steve that you can't put a lot of stock into these data points, especially because you usually have no baseline to go off of right. But the one data point that was in there was that there was talk of laying off workers on two production lines, which then does signal that you're. You are going to have your declines because you're not going to be laying off workers unless, if you're actually going to have to your of your declines. So that is a perspective until hey look, iPhone units are likely going to be declining year-over-year in a pretty significant way, maybe five to ten percent year-over-year.

What does that mean for an installation base? We don't quite know, but my suspicion is that it's probably going to be growing low, single digits so just to play devil's advocate if the whole premise it sounds like that you're saying, and you're not alone here is that they're not going to give us unit growth, and therefore it must be slowing, and it's not doing well and in fact that's what's happening. Haven't they just proved this quarter that that happened? They barely grew unit growth with iPhones, but as long as average selling prices go up, and they can come up with new flashy gadgets like Steve has to get people buying, they can drive record profit and revenue. So how long do you think, and you can keep on increasing prices? What's not just about increasing prices? The hardware they're building services around it so part of the story they're trying to tell on top of saying. Okay, we sold this many iPhones. We made this much money off each I phone.

What they're saying is we're packing and more they're, adding different services like that new subscription. That's coming next year, video on top of that they're dumping, a billion dollars into our original programming. All this is going to be a way to drive more revenue out of each iPhone user, and it's also I guess with the change in how they're reporting it Steve an attempt to try and continue that narrative they've been pushing for a long time that we are a services company, we're not just a hardware company, but how close are they to truly achieving that, regardless of how they report the amount of iPhones they sell? How close are they to achieving it and to the market? Actually, believing it will this not take quite a few years, it could end, but what we're going to find out, starting when they report for this quarter, is the margins on those services, so we're going to get maybe we're getting West data on unit sales, but we're getting more data on how much the margins are in this services' argument. Well, look services now, I think somewhere around 20 percent of revenue. So it's still a pretty small percent, but it's been growing as a percent of revenue, and we have been hearing a narrative, there's a higher margin business which it must be.

Otherwise, they wouldn't be saying that story, but look at the overall gross margins. It hasn't been going up and then, on the other point there that you're saying Steve is that what they're bundling in more services and try it try and drive up our poo. So first leg has been a drive up. Our poo by a higher price speeds right now. The next leg, maybe two years out, is that you're going to bundle in more services.

It's not even clear if we're going to get that as a standalone service or if it's going to be bundled in directly into the phone remember. They said that they are going to now be including the effective price of iCloud Siri and one other app into services when it was traditionally actually already priced into the iPhone. What about the video and the news? Is that going to be actually embedded in the price, but then they're getting reported in services, and is that going to be part of their ASP increase, but at the end of the day, if your units are declining year over year, but your revenue is effectively constant, then you're, basically getting more revenue per user. Your revenue is flattish, but your annuity base is declining right. That's the wrist! Now I, don't think that's actually happening, but that is a risk.

Yeah, just quickly. You've downgraded your price target and the rating to hold, but still above the current price, It's modestly above the current price, 5% upside, so that to me that plus or minus 15% as a hold rating, okay and there's a blue phone, there is a blue phone. We got the 10 our. This is the one everyone thinks is going to be the big seller. It packs a lot of the technology from the 10 and the 10s into a cheaper form factor.

It's got these cool colors on it. I never get the colors because you always put a cover on it anyway. Nobody's here clear cases now yeah, but you just buy a colored cover. I want mine, you.

Source : CNBC Television