According to Associated Press, Apple Inc. (AAPL - Analyst Report) surprised buyers by offering its two latest versions of iPhones — iPhone 5C and iPhone 5S — at discounted prices at Walmart Stores (WMT - Analyst Report). The retail giant will sell iPhone 5C at $79 instead of its list price of $99. Similarly, iPhone 5S will be available at $189 compared with the list price of $199.
Although Walmart is selling the phones at a discounted price, it will pay Apple its full selling price, thus not affecting the manufacturer’s revenues.
Apple launched the two versions of iPhone – iPhone 5S – an upgrade to its existing iPhone 5 – and a low-cost phone, iPhone 5C a couple of days back.
iPhone 5S comes in three colors – dark gray, silver and gold – and is targeted at premium consumers. The phone features a faster processor, a new fingerprint scanner (Touch ID) and a smarter 8-megapixel camera, which can capture 10 frames a second in “burst” mode. The phone is also equipped with a chip that tracks movement as customers carry it around.
iPhone 5C, available in five colors – blue, green, pink, yellow and white – targets medium- and low-end consumers. The devices come with a polycarbonate cover instead of aluminum. The phone is equipped with most of iPhone 5’s technology.
Apple is conscious of the fact that although the iPhones are affordably priced, many customers will not part with their cash readily. Thus, it is experimenting to see if providing the goods at discounted prices results in faster and profitable deals.
The discount offer for iPhone 5C will last till Sep 25, and pre-orders will be served on a first-come, first-served basis. iPhones 5S, however, are not available for pre-orders.
The investor community and shareholders were disappointed with AAPL as the pricing of the so called low-cost smartphones did not match their expectations. The move to offer them at discounted prices may help the company to regain investor’s confidence.
The discounted iPhones are also expected to boost Walmart’s sales in the coming quarters. In its recently concluded second-quarter fiscal 2013 earnings, Walmart missed both the earnings and revenue expectations for the second time in a row. Amid the challenging retail environment, WMT also lowered its fiscal 2014 earnings and revenue guidance.
Other Stocks to Consider
Both Walmart and Apple carry a Zacks Rank #3 (Hold). Other retailers that are presently doing favorable business include Delhaize Group. (DEG - Snapshot Report) and Koninklijke Ahold N.V. (AHONY - Snapshot Report). While Delhaize carries a Zacks Rank #1 (Strong Buy), AHONY carries a Zacks Rank #2 (Buy).