A report from global securities and investment group Jefferies suggests the latest generation of Apples best-selling iPhone will be 20 percent thinner, have a 4-in. screen and could get an improvement in its dots-per-inch (DPI) resolution. The note comes on the heels of weeks of speculation and rumors about the latest version of Apples sleek smartphone, which may sport liquid metal components and could debut sometime between June and October, depending on where the (unconfirmed) information is coming from.
Jefferies' report mentions that they do not think it matters economically to Apple when the phone is launched, and investors should not stress about it. We have penciled in 15 million iPhone 5 shipments for [the third quarter], out of their 40 million total estimate, and 50 million total iPhones in the fourth quarter, the report says. Beginning in September, Apple will have more than 175 million iPhone subscribers globally. Assuming a two-year replacement implies a base case of about 20 million iPhones a quarter.
The report says that assuming Japanese carrier DoCoMo, and possibly China Mobile, as well as a handful of other carriers, obtain the iPhone in the fourth quarter, there could be incremental geographic demand of 10 million in that quarter. Consensus' expectations for 20 percent smartphone market growth implies another 15 million units, the report predicted. We therefore expect Apple to beat estimates in Q4 (and in Q3, should it launch in September).
As for the upcoming Worldwide Developers Conference (WWDC), which takes place in June, Jefferies believes Apple will unveil the iOS 6 mobile operating system and an iCloud upgrade, matching much of the syncing functionality of services like Google Drive. Based on our coding and developer work, we also believe iOS 6 will focus on video, the research note said.
The note also commented on the long-rumored Apple TV, which they connected to better second-quarter outlooks from display-related companies, which could partially be due to early iTV builds. Also, of interest was the Time Warner Cable call where management acknowledged new entrants into the TV market and said they were ready to open their APIs. We view this as a departure and [it] opens up the possibility that Time Warner Cable could be a third distribution partner for iTV in conjunction with Verizon and AT&T.
The news cycle has been inundated in recent days with rumors about Apples plans. A provocative blog post by Forrester Research CEO George Colony suggested without the leadership of Apple founder and former CEO Steve Jobs, who passed away last year, the company was doomed to an eventual decline.
Whenever the release of the iPhone 5 actually occurs, Apples latest earnings support suggests the company is in a fine position to release new products at its own pace: Apples stock price ($602 as of 3:30 EST April 27) is an eye-popper, and its second-quarter earnings report, released April 24, shows that the world's richest company made $39.2 billion last quarter and banked $11.6 billion as profit. Apple sold 35.1 million iPhones in the quarter, representing 88 percent unit growth over the year-ago quarter. It sold 11.8 million iPads during the quarter, a 151 percent unit increase from the year-ago quarter.