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.