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Sterne Agee cuts Apple targets on talk of less iPhones

updated 10:55 am EDT, Fri March 15, 2013

Apple drawing down ahead of refresh, analyst argues

Sterne Agee analyst Shaw Wu has reduced his expected iPhone shipment numbers and lowered his price target for Apple stock, citing "supplier checks" pointing to smaller iPhone build plans. "We are picking up from our supplier checks build plan reductions for iPhone likely due to an inventory drawdown ahead of refreshes in the 2H," he writes in a new investor memo. The analyst's price target has been slashed from $715 to $630.

"In addition, we see evidence of sourcing activity for what appears to be iPhone 5S and a lower-cost iPhone using composite material casing," he continues. "We are reducing our iPhone forecast but leaving iPads and Macs intact. With 2 weeks left [in the March quarter], we believe AAPL will likely hit the lower end of its guidance. The good news is this is better than most expecting a miss."

Rumors of a new but low-cost iPhone model have been increasing in the past few months. Also backing the idea of a composite case is KGI Securities analyst Ming-Chi Kuo, who expects the phone to have a "super-thin plastic casing mixed with glass fiber," making it stronger than normal plastic cellphone casings. Apple has allegedly contracted with Foxconn and the Jabil group's Green Point for the part; while Foxconn will both produce casings and assemble phones, Green Point is expected to hand off casings to Pegatron. Kuo also anticipates casings coming in a range of four to six colors, and having a thickness of 0.4 to 0.6mm, below a more typical 0.7 to 1mm.

The analyst also claims that Apple will stick with a 4-inch display for the low-cost phone, despite rumors of a move to 4.5 inches. The device's specifications were picked in 2011, he alleges, suggesting moreover that Apple is unlikely to switch tacks despite an industry shift towards screens closer to 5 inches.




by MacNN Staff

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Comments

  1. aristotles

    Grizzled Veteran

    Joined: 07-16-04

    Shawn "Often Wrong" Wu

    He needs to find a career in writing fiction. Why would he be lowering targets if he already understand that production of the iPhone 5 is winding down as the iPhone 5S is ramping up? How would supplier checks have anything to do with sales?

    Is this guy trying to short the stock?

  1. Constable Odo

    Fresh-Faced Recruit

    Joined: 08-22-07

    He was warned...

    by Tim Cook to not put too much stock in supply chain numbers. I don't think it matters whether this guy cuts target prices or not. I'm just thinking that these people do not know Apple's supply chain that well. They never talk about Amazon's Kindle supply chain or inventory or any number of other companies' supply chain. I think iPhone sales will be lower because it normally is after the Christmas quarter. How much lower is hard to tell. But, iPhone sales shouldn't fall any lower than the rest of the industry. Apple's retail stores are always pushing iPhones. I doubt any company can increase sales following the Christmas season, so what's the big deal.

    Apple's share price has already fallen 40% despite sales not falling 40% so $630 seems like an OK target price to me. I'd be happy if Apple finishes the year at $630 seeing the awful collapse Apple's share price is in right now.

  1. thinkman

    Fresh-Faced Recruit

    Joined: 01-04-05

    The most common grammatical error

    I think this one bugs me so much because I see it ALL THE TIME! Back when journalists (rather than the talking heads who've replaced these venerable stalwarts) actually studied grammar, this almost never happened. Regarding your headline, it should be "fewer" not "less"! Oh, and as regards the actual story - how many times do we have to hear the same old song based on a single "fact" rather than the whole truth. The internet is the future (and the present), but it is also the death of reliable journalism and analysis.

  1. thinkman

    Fresh-Faced Recruit

    Joined: 01-04-05

    Bitch, bitch, bitch

    Hey MacNN, what's with the unintended forward slashes in my comment? Perhaps it's time you find someone with more HTML experience (if, indeed, that is the problem - I'm a neophyte when it comes to coding, so my remedy may be completely off base).

  1. thinkman

    Fresh-Faced Recruit

    Joined: 01-04-05

    Bitch, bitch, bitch, bitch

    I meant backslash.

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    "fewer"

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