Strong RIM guidance seen as positive for Apple
Research In Motion painted a rosy outlook for its fiscal fourth quarter on Thursday, offering a positive read-through for rival smartphone maker Apple.
The BlackBerry maker said third quarter sales rose more than 66 percent, fueled by shipments of approximately 6.7 million mobile devices. It expects per share earnings of $0.83 to $0.91 on sales of $3.3 billion to $3.5 billion for its fiscal fourth quarter ending February, well ahead of analyst consensus estimates of $0.83 on $2.97 billion.
The company was able to net approximately 2.6 million new BlackBerry subscriber accounts during the third quarter but said it expects current fourth quarter additions to be even greater at approximately 2.9 million. This surprisingly strong guidance, which RIM attributed to new product demand, trends favorably for similarly-poistioned Apple, according to UBS analyst Manyard Um.
"Our checks continue to indicate operators are pushing newer devices at the expense of older handsets, which should be positive for Apple (3G iPhones are still new)," he wrote in a note to clients on Friday. "[The] main risk we see for RIM and Apple is end demand (given data plan requirement and economy slowing) and competition."
Still, the analyst believes current quarter iPhone sales will slip some 1.9 million units sequentially to 5 million units as Apple works down channel inventory. He's also concerned that the iPhone maker's above-average average selling price and gross margin will come under increase pressure as competition in the smartphone space intensifies.
Um maintained his Buy rating and $110 price target on shares of Apple, citing a lack of near term developments that would serve to move the stock, including Macworld.
"With notebooks, iPods and the iPhone all seeing fairly recent updates, we believe product announcements/enhancement will likely revolve around desktops and/or peripherals," he wrote. "We do not expect Macworld to be a material catalyst for Apple."
Shares of Apple were trading down $0.17 to $89.26 on relatively low volume Friday afternoon.
The BlackBerry maker said third quarter sales rose more than 66 percent, fueled by shipments of approximately 6.7 million mobile devices. It expects per share earnings of $0.83 to $0.91 on sales of $3.3 billion to $3.5 billion for its fiscal fourth quarter ending February, well ahead of analyst consensus estimates of $0.83 on $2.97 billion.
The company was able to net approximately 2.6 million new BlackBerry subscriber accounts during the third quarter but said it expects current fourth quarter additions to be even greater at approximately 2.9 million. This surprisingly strong guidance, which RIM attributed to new product demand, trends favorably for similarly-poistioned Apple, according to UBS analyst Manyard Um.
"Our checks continue to indicate operators are pushing newer devices at the expense of older handsets, which should be positive for Apple (3G iPhones are still new)," he wrote in a note to clients on Friday. "[The] main risk we see for RIM and Apple is end demand (given data plan requirement and economy slowing) and competition."
Still, the analyst believes current quarter iPhone sales will slip some 1.9 million units sequentially to 5 million units as Apple works down channel inventory. He's also concerned that the iPhone maker's above-average average selling price and gross margin will come under increase pressure as competition in the smartphone space intensifies.
Um maintained his Buy rating and $110 price target on shares of Apple, citing a lack of near term developments that would serve to move the stock, including Macworld.
"With notebooks, iPods and the iPhone all seeing fairly recent updates, we believe product announcements/enhancement will likely revolve around desktops and/or peripherals," he wrote. "We do not expect Macworld to be a material catalyst for Apple."
Shares of Apple were trading down $0.17 to $89.26 on relatively low volume Friday afternoon.
Comments
A strong RIM result giving added hope for Apple, coming from an analyst, is a surprising conclusion given how some analysts try to go out of their way to find reasons to downgrade Apple.
Analysts go out of the way to upgrade Apple as well.
While I do love my iPhone, I do miss the service Verizon offered.
Is this the "What's good for the goose is good for the gander" type of analysis?
I dont think that word means what you think it means....
Analysts go out of the way to upgrade Apple as well.
Shaw Wu seems to be the only one that does that. Maybe I am mistaking him with Gene Munster, but I only remember one of the two doing that. In this case, I think the conclusion makes sense, it shows that people are still buying high end phones and data plans despite the noise that tells us that people aren't because of the money crunch, unemployment figures and such. Not that I really needed to know that to believe that Apple can still sell a lot, 1% more of the US labor force out of a job in the last 12 months still leaves more than 90% of the labor force with a job.
We're not going to hear any of Apple's results until maybe Macworld keynote, and I think in mid-January we'll see more details.
Still, the analyst believes current quarter iPhone sales will slip some 1.9 million units sequentially to 5 million units as Apple works down channel inventory. He's also concerned that the iPhone maker's above-average average selling price and gross margin will come under increase pressure as competition in the smartphone space intensifies.
Um maintained his Buy rating and $110 price target on shares of Apple, citing a lack of near term developments that would serve to move the stock, including Macworld.
"With notebooks, iPods and the iPhone all seeing fairly recent updates, we believe product announcements/enhancement will likely revolve around desktops and/or peripherals," he wrote. "We do not expect Macworld to be a material catalyst for Apple."
I agree. Apple will have to offer competitive products and competitive prices for the Apple brand to recover and expand its market. Otherwise, a 12 month stock price target of $110 is very optimistic.
It is always a tragedy when the illness of a CEO translates into a near paralysis for the company involved. Let's all hope that either Steve Jobs resigns, or Apple issues a detailed statement on Steve Jobs' health and his ability to discharge all his duties, including showing up at MacWorld Expo to meet showgoers, Mac customers and developpers.
I dont think that word means what you think it means....
Inconceivable !
It is always a tragedy when the illness of a CEO translates into a near paralysis for the company involved. Let's all hope that either Steve Jobs resigns, or Apple issues a detailed statement on Steve Jobs' health and his ability to discharge all his duties, including showing up at MacWorld Expo to meet showgoers, Mac customers and developpers.
You don't seem to understand the law with respects to publicly traded companies, CEO's, and their health. If a CEO is not capable of fulfilling his duties for the company then the company is legally obligated to state that fact publicly and name a replacement. If they don't you can assume the CEO can function at his position.
On top of that, if they are found to withhold information that a CEO had not been capable of handling his duties for the company they are subject to serious lawsuits, fines, and possible prosecution depending on the circumstances.
Don't hold your breath for a statement from Apple, they are not required to tell you anything about Steve Jobs health or his abilities unless he cannot perform them.
We'll see what Apple does this January when it lowballs itself down to $80 a share. Investors will just love to hear that. Let's keep lowering that guidance so we can fool WS next quarter when revenue will really be much lower.