What's Important in the Financial World (9/21/2012)

iPhone 5 Sales Forecasts

The launch of the Apple Inc. (NASDAQ: AAPL) iPhone 5 began in Asia and has moved toward the United States, where it will be available for sale today. The evaluations of the effects of its sales and the level of sales are preposterous. Some experts still hold that sales will make a significant addition to fourth-quarter gross domestic product. However, they do not know what the profit margin is on the smartphone or what the costs are for carriers to sell it. Another set of forecasts that are improbable is that Apple will sell as many as 20 million iPhone 5 units over the weekend, which begins today. However, several carriers and Apple itself are out of the handsets. How can something that is not available be sold. According to Barron’s, one analyst was particularly aggressive:

Sterne Agee Analyst Shaw Wu predicts: “Apple will likely ship 27 million iPhones for the September quarter, up from our recently raised view of 26 million.”

Canadian Auto Workers Deals

The three large American auto firms have to hope that their negotiations with the United Auto Workers will be as easy as the ones they have had with the Canadian Auto Workers. The CAW have set deals with Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM). These almost certainly will be ratified. Since Chrysler is the smallest of the three companies, it does not want to be the only one that could be harmed by worker slowdowns or strikes. It is on a hot sales streak it cannot afford to have interrupted. According to the AP:

CAW President Ken Lewenza called it a difficult few days but said GM ultimately agreed to the framework of a deal that the union reached with Ford Motor Co. earlier this week.

The union decided to keep working past a midnight Monday strike deadline after reaching a deal with Ford and extending its contracts with GM and Chrysler.

Workers stayed on the job as talks continued, but the union warned it could go on strike after giving GM and Chrysler 24 hours’ notice. They wanted the Ford contract to serve as a template for the other two companies.

Like the Ford deal, the GM agreement cuts wages for new hires and freezes pay for current workers. But it also gives them lump-sum payments to cover inflation and for ratifying the deal.

Luxury Car Sales Slump in Europe

Even the luxury end of the car market has begun to suffer in Europe. Apparently, the 1% have begun to feel the pinch of recession. They must have decided to hold their current cars longer, or go down-market to buy cheaper vehicles. Both Daimler, owner of Mercedes-Benz, and Porsche cut forecasts. Fortunately, recent car sales data in the U.S. shows each continues to do well in the world’s second-largest car market. And the appetite for luxury cars in China, the world’s largest market, has been good. Bloomberg reports:

“If a downturn lasts for longer, which this one is, premium is not immune from pricing trends,” said Arndt Ellinghorst, a London-based analyst at Credit Suisse Group AG with an outperform recommendation on BMW, Porsche and VW, and a neutral on Daimler. “The pricing environment in Europe is the biggest problem,” with incentives spreading from Italy, Spain and France to Germany.

Douglas A. McIntyre