Despite a big jump by tech behemoth Apple (NASDAQ: AAPL ) this morning, the major U.S. stocks are down slightly this morning, with the S&P 500 (SNPINDEX: ^GSPC ) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES: ^DJI ) down 0.12% and 0.21%, respectively, at 10:05 a.m. EDT.
Follow-up: Michael Dell's phony ante
Michael Dell and Silver Lake Partners have raised their bid for PC maker Dell (NASDAQ: DELL ) after the board postponed last week's shareholder vote on the previous offer (indicating thereby that it had not received the necessary support from investors). The raised offer would put an extra dime per share in shareholders' pockets -- an improvement of less than 1% over the $13.65 Mr. Dell and Silver Lake Partners had been offering.
Furthermore, the would-be acquirers want something in return for that dime: They want the deal to go through if it receives a "yea" from a majority of shares that were voted, rather than a majority of all shares (i.e., disregard abstentions). The new bid is seriously underwhelming. It's a tactic to push the deal through wrapped in a pro forma increase in the acquisition price. This is not altogether surprising, as it was known that Mr. Dell and, particularly, Silver Lake were reluctant to raise their bid (in fact, the former had to finance the last increase on his own).
The shareholder vote has been postponed until Aug. 2. The spread between the current price, below $13, and the $13.75 bid price highlights the market's significant skepticism that the deal will be successful.
Wall Street has begun digesting Apple's latest earnings report, and despite a second consecutive decline in quarterly revenue and profit, investors are sending the shares up this morning. Here are three numbers that caught my eye as I reviewed the results.
$581: The average price at which Apple sold an iPhone. Let me emphasize that this figure is not the average price for Apple's high-end iPhone 5 (which is sold to telecom carriers at more than $600); it's the average price across all iPhone models. That hints at the extraordinary margins Apple is able to achieve on the phones it sells.
$32: The decrease in the average iPhone price relative to the previous quarter -- a 5% decrease in the space of three months (that's what I call deflation!). The iPhone's price has been consistent since its launch six years ago, but massive profits attract competition, and Apple is in a fight with other device makers, notably South Korea's Samsung. The company expects gross margins to be 36% to 37% this quarter -- flat to slightly lower.
500,000: The number of software developers in China developing apps for Apple's mobile devices -- a 70% increase from a year earlier. That's comparable to a city the size of Atlanta, Miami, or Sacramento entirely devoted to churning out apps for Apple's paltform. No wonder CEO Tim Cook told analysts, "I continue to believe that in the arc of time here, China is a huge opportunity for Apple."
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