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Bernstein Disappointed with Lack of Lower-Priced iPhone, But Won't Rule Out Chance of More Economical Device

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Apple (NASDAQ: AAPL) shares continued lower to start this week's trading session, falling more than 3 percent to close Monday's session at $450.12. The stock fell nearly 7 percent over the course of last week's trading.

Bernstein's Toni Sacconaghi this morning expressed disappointment regarding the lack of a lower-priced iPhone. While the call may have shaken traders early on in the session, the analyst's note did end up being more or less leaning toward the optimistic side of things.

Sacconaghi noted a model focused at lower-priced units would enable the electronics giant to penetrate new markets.

Sacconaghi said he wouldn't rule out Apple being "philosophically opposed" to selling a low price smart phone, pointing out the company could have produced the iPhone 5C with iPhone 4 capabilities and priced it below $400. With such a model, Apple could have still maintained the established 30 percent gross margins. To support this idea, Sacconaghi pointed toward the recent success of discounted iPhone 4 models in emerging markets.

In Apple's sights looms a deal with China Mobile Ltd. (NYSE: CHL), a wireless operator with seven times the subscriber base of Verizon Communications Ltd. (NYSE: VZ), the largest American counterpart. Sacconaghi feels there is demand for a high end phone among Chinese consumers, enough for the iPhone 5C to gain some traction in this huge new market. However, he feels Apple could release a lower-priced model in another three to six months, further engaging the China Mobile subscriber base.

Sacconaghi maintains an Outperform rating and $600 price target on shares of Apple.

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