Apple profits 'have become hostage' to iPhone

Several financial analysts have raised their estimates for Apple following the company's second-quarter results. Among these is Canaccord Genuity's Michael Walkley, who has raised his target for Apple stock from $740 to $775. "While our checks indicate slowing iPhone sales ahead of the iPhone 5 launch, we believe very strong international iPhone sales position Apple for very strong sales of an LTE iPhone 5 in the December quarter and beyond to drive strong F2013 earnings growth," he writes in a new memo.

Walkley is moreover incorporating reports of an Apple TV set into estimates for the first time. "We maintain our belief Apple is well positioned for strong sales and earnings growth driven by new product introductions across its portfolio, including iPhone 5 during this fall and iTV during F2013. Given our increased confidence of an iTV launch, we are adding iTV sales to our higher F2013 estimates."

Sterne Agee's Shaw Wu has pushed his stock target from $750 to $780, but made more complex adjustments to other estimates. "For its outlook, AAPL reverted back to its vintage conservative style. For the June quarter, the company is looking for $34 billion in revenue and $8.68 in EPS vs. consensus at $37.4 billion and $9.93 in EPS. While we found this conservatism surprising in light of China Telecom recently launching in March as a new carrier, we believe AAPL is being prudent in setting realistic expectations. In addition, we believe it is smart to reflect a potential pause and inventory drawdown ahead of the next-generation iPhone 5 launch likely in the September-October timeframe," he notes.

"As a result, we are reducing our near-term revenue but raising our EPS estimates reflecting our expectation of favorable component pricing. For FY12, we are now at $158.1 billion in revenue and $46.00 in EPS (from $160.1 billion and $44.75 in EPS) and for FY13, $187.2 billion and $53.00 in EPS (from $187.3 billion and $52.00 in EPS). We are modeling 28 million and 25 million iPhone units for the June and September quarters (from 29 million and 28.6 million respectively)."

Needham & Co.'s Charlie Wolf has simply raised a FY2012 EPS prediction from $41.25 to $44.25, and a FY2013 figure from $53 to $55.25. He comments, though, that "To an increasing extent, Apple’s fortunes have become hostage to the iPhone in part because of the phone’s superlative gross margin." The iPhone generated $22.69 billion in revenue for the company during the March quarter, accounting for most of the $39.2 billion Apple pulled in as a whole.

by MacNN Staff