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AAPL Stock: 97.67 ( + 0.64 )

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Analyst: Apple stock hampered by worries about 4G transition

updated 12:45 pm EDT, Fri June 24, 2011

iPhone rivals have lead on 4G

Apple stock is suffering because of worries about the company transitioning to Qualcomm receivers for the iPhone, argues Barclays Capital's Ben Reitzes. The analyst notes that Apple shares have declined 9 percent this year versus just a 5 percent slip in the NASDAQ. The situation is compared to that of 2006, when investors were worried about Apple switching from PowerPC processors to ones made by Intel.

Reitzes suggests that the Qualcomm issue is specifically related to 4G technology. Whereas some competing smartphones are already using LTE, the iPhone 4 is stuck on 7.2Mbps HSPA (3G), not even the HSPA+ sometimes marketed as 4G. Apple stock is dependent on the "Next Big Thing," says Reitzes, and that may be more difficult to guess. He doubts that an Apple-branded TV will be involved.

"We think the next big thing is really a combination of China (the next US or bigger?) and increasing the utility of the iPhone with 4G connectivity -- creating the next 'mega upgrade cycle' (usability that fuels 200 million units/year like volumes) -- we think Apple is laying the foundation for this type of cycle to start in mid-CY12 with new partners in China and new iPhone products," the analyst writes. In the meantime he has lowered his iPhone estimates for FY2011 from 70 million to 67.7 million units, given the prospect of people waiting for a delayed next-gen iPhone launch in September. A FY2012 forecast is being kept at 92.5 million phones.

FY2011 revenue and EPS predictions have been adjusted downwards from $102.3 billion and $24.30 to $101.3 billion and $24.07. For the current quarter though Reitzes has raised his iPad unit estimates from 6.5 million to 7, claiming that Apple is selling every tablet it can produce.




by MacNN Staff

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Comments

  1. testudo

    Joined: Dec 1969

    +11

    makes no sense

    First, since the NASDAQ is an average of a load of stocks, very few companies will perform the same as it.

    Second, could there also not be some profit taking going on?

    Third, it sounds more like the analyst isn't worried ABOUT the transition to 4G (or the use of qualcomm chips) as much as WHEN it will occur. The reasoning seems to be that the next big reason for mass upgrades of iphones is the 4g version. And since that doesn't seem likely until next June, there's some downgrade to the stock price due to expectations of not HUGE sales with the next release.

    Price dropping because of near-term sales' drops is not the same as saying "Apple stock hindered by Qualcomm!" as you imply.

  1. Bobfozz

    Joined: Dec 1969

    +3

    analytical idiots

    How many big investors really "know" what they think they know? Not many, their "job," if you want to call it that, is to keep buying and selling so it looks like they are doing something.

    I think more likely it was one-time investor profit taking. Stock, in general, seems to go up and down depending on whether Greece is wetting its pants, what is going on in Libya, BP oil spill, whatever. There is NO really rhyme or reason because if you wait a day or two, it goes back up... then in a couple days it goes down. Analysis genius thinks he sees a trend... FACTOID... many people are not spending money the way we all want them too. In my own business, sales were better LAST year!

    It IS predictably insane.

  1. yticolev

    Joined: Dec 1969

    +6

    Theory unsupported

    Use of Qualcomm's chip in the Verizon iPhone 4 did not seem to hinder sales, and call reliability increased (although that is much more likely carrier dependent). That same chip also does GSM HPSA +, and will like mean the next iPhone will be a single model for both GSM and CDMA.

    It is silly to equate a baseband chip with the CPU. Not at all like the PowerPC to Intel transition which required complete new OS coding. More like replacing one WiFi supplier for another, something that consumers never recognize, even when it make a performance difference.

  1. SockRolid

    Joined: Dec 1969

    +2

    Hair-trigger lemmings

    The big AAPL shareholders all try to be the smartest guy in the room. By knowing what Apple will be doing in the next 3 months, 12 months, 5 years, etc. But as we all know, Apple is very good at keeping their plans secret. Analyze that.

    The flip side to the need to be smart is the need to react instantly to random catastrophes, physical or virtual, by selling AAPL at a moment's notice. Just because everyone else is, like hair-trigger lemmings. And unfortunately for the lemmings, computer trading is billions of times faster than they are. A quarter of a second makes all the difference:

    http://www.investopedia.com/terms/f/flash-trading.asp

    Oh, and there's one more thing. AAPL has skyrocketed in the last few years. And that inevitably leads to shorting. AAPL has subsequently become one of the most heavily manipulated stocks out there. Just look at AAPL a few days before any major anouncement (WWDC, media events, quarterly earnings calls, etc.) The #1 AAPL investor tip seems to be "Buy on rumor, sell on news."

  1. DerekMorr

    Joined: Dec 1969

    -1

    Now wait just a minute

    Here we go, commenters are already calling the analysts clueless idiots.

    Yet earlier today, folks seemed to like analysts when they said the iPhone would trounce Android phones in Europe - http://www.electronista.com/articles/11/06/23/yankee.claims.iphone.to.outpace.android.in.europe/

    Which is it folks? I think I smell a double standard.

  1. gprovida

    Joined: Dec 1969

    +1

    They have no clue

    There a million hypotheses and I could image saying Aaple stock went because Apple did not foolishly leap at 4G. Especially given the customer surveys that show Eurpoean future buys overwhelmingly want iPhones.

    These guys sound like astrologers making guesses and then justifying the events afterwards.

  1. iphonerulez

    Joined: Dec 1969

    0

    Another day...

    Another excuse as to why Apple stock is down. 4G will probably kill a smartphone's battery life very quickly. I think it would be better to improve batteries and roll out a solid 4G infrastructure before just jumping headfirst into it. Let Android go after 4G users, but I'll bet there won't be that many of them due to the additional cost of the carrier contract.

  1. testudo

    Joined: Dec 1969

    0

    Re: Now wait just a minute

    Here we go, commenters are already calling the analysts clueless idiots.

    Yet earlier today, folks seemed to like analysts when they said the iPhone would trounce Android phones in Europe -

    Which is it folks? I think I smell a double standard.


    It's not a double standard. It's just people on MacNN know good analysts vs. the clueless ones. The ones that state positive, glowing things about Apple understand the marketplace. Those like the above have no clue what they're talking about.

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