Strong quarter expected, but Apple's 'antennagate' could hurt iPhone sales
Wall Street expects Apple to report another impressive quarter this afternoon, but future iPhone sales could be lower because of publicized antenna issues with the iPhone 4.
Oppenheimer
Analyst Yair Reiner has reduced his projected iPhone sales for the next quarter to 8.5 million, down from 11 million, citing well publicized signal drops that can be replicated with the iPhone 4 in weak signal areas. He expects others on Wall Street, which average predictions between 11 million and 11.5 million, will also reduce their estimates.
"We worry that the wave of negative publicity surrounding the new iPhone's wireless reception will continue to pressure AAPL's shares and potentially impact sales," Reiner wrote. "We believe the iPhone 4's antenna problem is comparable to that of other smartphones, but in the court of public opinion, perception is reality. And the perception -- created by a scoop-hungry media and Apple's newly emboldened wireless adversaries -- is that the 4 is faulty."
"For now," he continued, "the Lilliputians have Gulliver in a tangle."
Despite the lower iPhone sales estimates, Reiner has maintained an overweight rating for AAPL stock. But he has also reduced his price target from $345 to $330.
"We continue to be bullish on Apple's long-term position as the definer of the modern, mobile media consumer experience," he wrote. "But we are growing concerned that if Antennagate cannot be contained, the stock could face near-term pressure and potentially trade down to the low $200s."
Apple announced last week that it will give away free cases for every iPhone 4 sold through Sept. 30. But some would rather see Apple implement a more permanent hardware fix for the issue, in which users can cover the bottom left corner of the iPhone 4 and see their bars of signal strength drop dramatically.
Kaufman Bros.
Analyst Shaw Wu said that Apple will likely issue its vintage conservative guidance in this afternoon's earnings report. Typically, he said, investors will largely ignore the guidance because it has proven so conservative.
But this time, Wu said, the well-publicized iPhone 4 antenna issue may lead investors to think otherwise. "Given continued concerns around iPhone 4 antenna issues, it will be interesting if that stance remains," he said.
Earlier this month, Wu already lowered his sales projections for the June quarter by 1.5 million. Wu believes Apple sold 7.5 million iPhones in the previous quarter, a lower-than-expected number due to screen supply constraints and inventory drawdown. That number is well below Wall Street's consensus of 8.4 million.
Wu, however, still expects Apple to ship 40 million iPhones in calendar 2010. Lost sales due to supply issues in the last quarter will be made up in the following quarters, he said.
Wu said investors will be closely watching the reported gross margin from Apple. Kaufman Bros. is modeling 39 percent, in line with consensus, but the numbers could skew lower due to the introduction of the iPad and its aggressive $499 starting price point.
Wu still expects Apple to beat consensus estimates of $14.7 billion in revenue and $3.10 in earnings per share. He said the upside may not be as significant as previous quarters, however, when the company beat revenue by at least $1.5 billion, and topped EPS by 48 cents.
Oppenheimer
Analyst Yair Reiner has reduced his projected iPhone sales for the next quarter to 8.5 million, down from 11 million, citing well publicized signal drops that can be replicated with the iPhone 4 in weak signal areas. He expects others on Wall Street, which average predictions between 11 million and 11.5 million, will also reduce their estimates.
"We worry that the wave of negative publicity surrounding the new iPhone's wireless reception will continue to pressure AAPL's shares and potentially impact sales," Reiner wrote. "We believe the iPhone 4's antenna problem is comparable to that of other smartphones, but in the court of public opinion, perception is reality. And the perception -- created by a scoop-hungry media and Apple's newly emboldened wireless adversaries -- is that the 4 is faulty."
"For now," he continued, "the Lilliputians have Gulliver in a tangle."
Despite the lower iPhone sales estimates, Reiner has maintained an overweight rating for AAPL stock. But he has also reduced his price target from $345 to $330.
"We continue to be bullish on Apple's long-term position as the definer of the modern, mobile media consumer experience," he wrote. "But we are growing concerned that if Antennagate cannot be contained, the stock could face near-term pressure and potentially trade down to the low $200s."
Apple announced last week that it will give away free cases for every iPhone 4 sold through Sept. 30. But some would rather see Apple implement a more permanent hardware fix for the issue, in which users can cover the bottom left corner of the iPhone 4 and see their bars of signal strength drop dramatically.
Kaufman Bros.
Analyst Shaw Wu said that Apple will likely issue its vintage conservative guidance in this afternoon's earnings report. Typically, he said, investors will largely ignore the guidance because it has proven so conservative.
But this time, Wu said, the well-publicized iPhone 4 antenna issue may lead investors to think otherwise. "Given continued concerns around iPhone 4 antenna issues, it will be interesting if that stance remains," he said.
Earlier this month, Wu already lowered his sales projections for the June quarter by 1.5 million. Wu believes Apple sold 7.5 million iPhones in the previous quarter, a lower-than-expected number due to screen supply constraints and inventory drawdown. That number is well below Wall Street's consensus of 8.4 million.
Wu, however, still expects Apple to ship 40 million iPhones in calendar 2010. Lost sales due to supply issues in the last quarter will be made up in the following quarters, he said.
Wu said investors will be closely watching the reported gross margin from Apple. Kaufman Bros. is modeling 39 percent, in line with consensus, but the numbers could skew lower due to the introduction of the iPad and its aggressive $499 starting price point.
Wu still expects Apple to beat consensus estimates of $14.7 billion in revenue and $3.10 in earnings per share. He said the upside may not be as significant as previous quarters, however, when the company beat revenue by at least $1.5 billion, and topped EPS by 48 cents.
Comments
Okay Apple apologists. Your turn now.
We should stop putting gate at the end of any little ol controversy. That whole "climategate" crap was so annoying to listen to.
As far as how their numbers will be affected, I'd be interested to see a survey of 100 people buying an iphone 4 to see if they even know about the "issue", and if they do, whether or not it was even a thought in their mind to consider not getting an ip4 because of it. My guess is, most people won't know about it, and those that do won't care (obviously since they're still buying the darn thing.)
This isn't funny and doesn't clarify anything.
Analysts need to Analyze and stop Analogizing.
Apple and the iPhone have a bad image with the normal general public right now. Only Apple fanbois are walking around with a "just get a case" mentality. The iPhone 4 is perceived as not being able to hold calls, whatever the reason. This makes Android look like a pretty good option.
Okay Apple apologists. Your turn now.
Not true. I for one would take a bumper or a case rather than return the whole phone, and I'm no fanboy. Far from it actually lol
The Apple "fanbois" are actually saying there is no issue, and a case or a bumper isn't needed
Not true. I for one would take a bumper or a case rather than return the whole phone, and I'm no fanboy. Far from it actually lol
The Apple "fanbois" are actually saying there is no issue, and a case or a bumper isn't needed
And yet you have over 1000 posts on AppleInsider.
The general public does not go to AppleInsider or Engadget or blogs to read their tech news, they hear what the hear from friends and the media.
And you may not be a fanboi, but you are more interested in Apple and what goes on with Apple than general public. So I think his point still stands, as I really don't think what anyone on here decides to do or think about the issue will reflect the general public. I think a more correct way to look would be at what friends and family see from this. But beyond that, we have to just wait for earning reports as they come and see if there is a drop or not.
As an iPhone 4 owner i'm still getting the impression from people who don't spend time on forums asking what all the fuss is about. I know it's been on the main news channels but they didn't go into any great detail. Most people who i have spoken to seemed to be more interested with how scruffy and skinny Mr Jobs looked.
I'm not sure these issue's have really sunk in to the minds of the general public. It'll soon blow over anyway as it always does and once production ramps up and a few more phones appear it'll just take off and be forgotten, at least by the masses anyway.
This is a great phone and great products will always win out in the end.
Apple and the iPhone have a bad image with the normal general public right now. Only Apple fanbois are walking around with a "just get a case" mentality. The iPhone 4 is perceived as not being able to hold calls, whatever the reason. This makes Android look like a pretty good option.
Only in your wet dreams. Your post is total fantasy, wishful thinking. Apple doesn't need any apologists on this. I actually know lots of members of the "general public" who are family members and work colleagues (both iPhone users and not) and their reaction is just the opposite of your wet dream. To a person they laugh at the overblown nature of this thing. "Just get a case" is the general public's actual mentality, no need for any fanbois on this one.
A german octopus can predict better than these dudes.
Antennagate lol
We should stop putting gate at the end of any little ol controversy. That whole "climategate" crap was so annoying to listen to.
I can?t stand the suffix. With this it?s more absurd because this isn?t even a scandal. We need a new term. Any ideas?
Hasn't the iPhone always had a bad reputation, rightly or wrongly, when it came to reception anyway? I don't think it'll be much of a problem; it's not as if people are returning them in droves.
Right? The way this should read is: ?Apple?s iPhone 4 will only be backordered by one week instead of two week due to this antenna issue.?
Apple and the iPhone have a bad image with the normal general public right now. Only Apple fanbois are walking around with a "just get a case" mentality. The iPhone 4 is perceived as not being able to hold calls, whatever the reason. This makes Android look like a pretty good option.
Okay Apple apologists. Your turn now.
That may all be true and may affect long-term sales of the phone, but in the short term, they are in such high demand that you can't buy one. There's a 3-week wait listed in the Apple online store and the white phone is going to be in very limited supply even when it's released. So from my perspective, if one considers the ip4 to be faulty or defective, the sales are even more impressive...imagine how many they would be selling if it wasn't supposedly defective.
Also, there is no "just get a case" mentality because Apple is (smartly) giving away a case with every purchase until at least September 30th.
So when the numbers come out and it's seen that Apple is breaking records again, Wall Street will punish the stock only slightly and the general public will eventually pretty much see that this was an over-reaction, unless one uses the phone in a weak signal area. Will some people use this as an excuse to buy a competitor's phone? Sure. So what? That was always the case.
At the point when you can walk into any AT&T or Apple Store and buy a phone and there are no takers, then there will be an issue. And if that ever happens, my belief is that Apple will simply rush out the next phone model early.
Apple and the iPhone have a bad image with the normal general public right now. Only Apple fanbois are walking around with a "just get a case" mentality. The iPhone 4 is perceived as not being able to hold calls, whatever the reason. This makes Android look like a pretty good option.
Okay Apple apologists. Your turn now.
Typical Fandroid trolling. The EVO has a serious grounding problem allowing use of the device's touchscreen only when held. Android has had a number of well-publicized malicious applications distributed to its user base. Fandroids go on and on and on about phone hardware specs, but rarely ever consider the actual usability of the entire package for any particular purpose, or any particular use case. HTC and Moto come out with, perhaps, six new phones a year -- essentially, planned obsolescence on a roughly quarterly basis -- which causes serious financial and product churn in the Fandroid community...
And, yet, Apple comes out with a single new platform every summer like clockwork, and still manages to outsell, outperform, and innovate beyond all of the other manufacturers. Those are facts born by the financials, adoption rates, and customer sats. If you don't want the iPhone, don't buy it. If you bought the iPhone and don't like it, take it back. The only people that perceive the Antennagate as a real issue are the Fandroids that desperately want to strike down the industry's leading company, Apple. It's always easy to take shots at the leader...
Teddy Roosevelt once conveyed the following wisdom, which holds true today about Apple's innovation and occasional slight missteps:
?It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.?
Apple and the iPhone have a bad image with the normal general public right now. Only Apple fanbois are walking around with a "just get a case" mentality. The iPhone 4 is perceived as not being able to hold calls, whatever the reason. This makes Android look like a pretty good option.
Okay Apple apologists. Your turn now.
I want the new Droid X that has the bad screen. Much better than the IP4!
"Just don't touch it that way"!
http://www.ozcarguide.com/technology...?sms_ss=reddit
http://nexus404.com/Blog/2010/07/20/...ut-of-the-box/
Let's here these quotes again from the Droid fans: "How could they let this come out of production like this", "what a bunch of idiots", "the company just made the biggest mistake ever".
Not true. I for one would take a bumper or a case rather than return the whole phone, and I'm no fanboy. Far from it actually lol
The Apple "fanbois" are actually saying there is no issue, and a case or a bumper isn't needed
No fanboy but 1200+ posts on AppleInsider?
Apple and the iPhone have a bad image with the normal general public right now. Only Apple fanbois are walking around with a "just get a case" mentality. The iPhone 4 is perceived as not being able to hold calls, whatever the reason. This makes Android look like a pretty good option.
Okay Apple apologists. Your turn now.
I don't have to bare my whiteness to you! Who are you anyway?! Nobody to me.
I have the iphone 4 and there is nothing wrong with it.
Besides, it's a f***** phone!!!!!!!!!
typical fandroid trolling. the evo has a serious grounding problem allowing use of the device's touchscreen only when held. Android has had a number of well-publicized malicious applications distributed to its user base. Fandroids go on and on and on about phone hardware specs, but rarely ever consider the actual usability of the entire package for any particular purpose, or any particular use case. Htc and moto come out with, perhaps, six new phones a year -- essentially, planned obsolescence on a roughly quarterly basis -- which causes serious financial and product churn in the fandroid community...
And, yet, apple comes out with a single new platform every summer like clockwork, and still manages to outsell, outperform, and innovate beyond all of the other manufacturers. Those are facts born by the financials, adoption rates, and customer sats. If you don't want the iphone, don't buy it. If you bought the iphone and don't like it, take it back. The only people that perceive the antennagate as a real issue are the fandroids that desperately want to strike down the industry's leading company, apple. It's always easy to take shots at the leader...
Teddy roosevelt once conveyed the following wisdom, which holds true today about apple's innovation and occasional slight missteps:
?it is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.?
daaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aam*********************!!!
Cause they continue to put out innovative products, and continue to show devotion right back to their customers. Missteps are corrected, and they move on.
Fanboy? Why yes, thank you.