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HTC and RIM (NSDQ: RIMM) may be cautioning investors about more choppy economic times ahead, but that is not the story, it seems, for all handset makers, as forecasts go up for Apple (NSDQ: AAPL) based on strong iPhone sales. However, iPad tablets are not getting the same treatment, and are seeing forecasts reduced on the back of increased pressure from Amazon’s Kindle Fire as well as a competitive force from within Apple’s own stable of products…
In a research note from Sterne Agee, analyst Shaw Wu notes that he is raising his forecasts for Apple’s quarterly earnings and now expects the company to sell 28 million iPhones, up from a previous estimate of 26 million. He also raised his figures for Mac computers to 5.2 million from five million.
However, he also reduced the number of iPad tablets to 13.5 milion from 15 million.
Wu attributes the higher iPhone figure to a couple of factors. First, there is the launch of the 4S device, which has a faster processor than its predecessor and some notable new features, including the Siri voice assistant that could well set off another new direction for what we will be seeing in phones in the year ahead. He’s not the first to point out an increase in sales for Apple based on the 4S: stats from Kantar Worldpanel the other week noted that the 4S has been stealing the show among smartphones in the UK.
But what is also driving iPhone sales, he notes, are the reduced prices for the earlier models, the iPhone 4 and 3GS. Some carriers are even offering the latter model free on contracts, a first for the iPhone. If anything, Wu notes that demand is still outstripping supply for all models, even though there has been some improvements in production capacity.
The numbers provide a stark contrast to the woes of companies like HTC and RIM, which are struggling to find buyers for its products during this crucial holiday sales season.
In tablets, Wu, like others, believes that the Kindle Fire is putting pressure on the rest of the tablet market. In Wu’s case, he thinks that it will mean Apple will not hit previously-set sales targets for its iPad. The device from Amazon (NSDQ: AMZN) is selling for $199, compared to iPad models starting at $499.
The Fire is only currently being sold in the U.S., which Apple’s largest market for tablets at the moment. But Apple could be seeing some tablet sales problems in another market where it plays big, China, where it has just lost a trademark case over using the name iPad, a name that was registered by Taiwanese company Proview Electronics in several countries between 2000 and 2004. As the FT notes, while Apple and Proview signed a deal for the name in 2006, they were disputing whether that deal covered China. That could now mean potential injunctions on devices across the country if Apple does not sign a settlement with the company.
Ironically, the other big force that will keep down iPad sales, predicts Wu, will be something a little close to home: another Apple product. The MacBook Air, the smallest version of Apple’s laptop, sells for twice as much as an iPad but Wu believes that despite this price difference, there will be enough Apple fans out there ready to purchase it over the tablet to get the extra features such as Flash storage and a physical keyboard.
Overall, Wu expects Apple to post quarterly revenue of $37.7 billion with $10 in EPS against his previous forecast of $37.1 billion and $9.52 in EPS. Apple’s guidance is $37 billion in revenue and $9.30 in EPS.