EFTA02624354

From: Richard Kahn < Sent: Friday, September 7, 2018 12:52 PM To: jeffrey E. Subject: Fwd: Apple, Inc.: Muted Expectations and Services Momentum Keep Us Positive into iPhone Launch Richard Kahn HBRK Associates Inc. 575 =exington Avenue 4th Floor New York, NY 10022 tel fax cel Begin forwarded message: From: =/b>"Morgan Stanley" a> Subject: =/b>Apple, Inc.: =uted Expectations and Services Momentum Keep Us Positive into iPhone =aunch Date: =/b>September 7, 2018 at 12:24:30 =M EDT To: =/b>< > Reply-To: =/b> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> Wealth =anagement <http://www.morganstanley.com/> <http://www.morganstanley.com/img/cs/spacer.gif> Apple, Inc.: Muted =xpectations and Services Momentum Keep Us Positive into iPhone =aunch <http://www.morganstanley.com/img/cs/spacer.gif> EFTA_R1_01834542 EFTA02624354 Katy L. Huberty, CFA— Morgan Stanley September 7, 2018 4:01 AM =MT Apple will launch 3 new iPhone models on Sept 12th. The =iggest investor debates around the product launch center on the =ossibility of further ASP expansion and re-accelerating unit growth. =mportantly, consensus expectations are muted on both fronts, providing =n attractive set-up. What should we expect from Apple's =Gather round' event next week? Apple will hold an event next Wednesday, =eptember 12th at 1pm EST in the Steve Jobs Theater at Apple Park. While =onfirmed details are scarce, we expect the event will be headlined by =he introduction of 3 new iPhone models - a high-end 5.8" OLED model =imilar to the iPhone X (recently referred to as the iPhone Xs), a =igh-end 6.5" OLED "plus" size iPhone Xs, and a lower-priced 6.1" LCD =Phone (more on this below). We also expect Apple to introduce an Apple =atch Series 4 (Series 3 was introduced at last year's September event), =n updated 11" bezel-less iPad Pro with FacelD functionality, and an =pdate to the Mac portfolio. Whether or not Apple finally unveils the =irPower wireless charging mat next week is unknown at this point, =owever they provided a sneak peak of it at last year's Sept event, so =he timing could make sense. While the launch of the Watch, iPad, Mac =nd potentially AirPower are a net positive, we expect the focus of the =vent to be the new iPhone model launches.Recent lengthening of =martphone replacement cycles driving muted FY19 iPhone unit =xpectations... We estimate that over the last 12.24 months, smartphone =eplacement cycles have elongated from - 2 years to - 3 years (1) as =arriers have largely done away with 2-year contracts and high =ubsidies, and overall device quality, even from lower-end vendors, has =mproved. Global smartphone shipments have reinforced this fact, with =he market posting unit declines in 3 consecutive quarters through June =fter over a decade of growth, led by the two largest smartphone =arkets, China and EMEA (2 & 3). Investors fear the trend of =engthening replaceme This alert is sent from: Andrew Atlas You received this because =ou requested that you receive content and reports from: APPLE =NC. Please contact your FA if you want to unsubscribe from the =lerts. <http://www.morganstanley.com/imecs/spacer.gif> <http://www.morganstanley.com/imecs/spacer.gif> <http://www.morganstanley.com/imecs/spacer.gif> <http://www.morganstanley.com/imecs/spacer.gif> Disclosures: Please see =he full report for risks, disclosures and other important =nformation. Important disclosures regarding the =elationship between the companies that are referenced in Morgan Stanley =esearch and Morgan Stanley Wealth Management research are available on =he Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures. 2 EFTA_R1_01834543 EFTA02624355 Morgan Stanley Wealth Management Not Acting as Municipal =dvisor Morgan Stanley Wealth Management is not acting as a municipal =dvisor to any municipal entity or obligated person within the meaning =f Section 158 of the Securities Exchange Act (the "Municipal Advisor =ule") and the opinions or views contained herein are not intended to =e, and do not constitute, advice within the meaning of the Municipal =dvisor Rule. Copyright The =opyright in materials provided by Morgan Stanley is owned by Morgan =tanley & Co. LLC. Morgan Stanley Wealth Management is the trade =ame of Morgan Stanley Smith Barney LLC, a registered broker-dealer in =he United States. © =018 Morgan Stanley Smith Barney LLC. Member SIPC. <http://www.morganstanley.com/imecs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> 3 EFTA_R1_01834544 EFTA02624356