Neil HughesIn a note to investors issued Monday, analyst Peter Misek with Canaccord Adams said the issues could limit the initial launch to be in the U.S. only. He also speculated that Apple could even delay the launch of the iPad by a month due to alleged production issues.
"The upcoming iPad launch may be somewhat limited as a manufacturing bottleneck has impacted production of Apple's newest device," Misek wrote. "An unspecified production problem at the iPad's manufacturer, Hon Hai Precision, will likely limit the launch region to the US and the number of units available to roughly 300K in the month of march, far lower than the company's initial estimate of 1,000K units."
"The delay in production ramp will likely impact Apple's April unit estimate of 800K as well. It is also possible that, given the limited number of units available in March, the launch will be delayed for a month."
Given the potential constraints, Misek believes Apple will sell 550,000 units in its third financial quarter of 2010, which ends in June. The lower numbers do not reflect lesser demand, but are simply due to the prospect of a production delay.
Misek believes that Apple will sell 1.2 million iPad units in its 2010 fiscal year after all production issues are alleviated. He has forecast sales of 3.5 million iPads in the company's 2011 fiscal year. Those predictions fall in the middle of Wall Street's expectations of between 1 million and 5 million iPad sales in the first calendar year.
"We believe that the only material impact from the iPad delay could come in the form of frustrated consumers and some modest loss of lustre for the company's product launch," he wrote.
Misek also checked with key global carriers and found that iPhone sales are currently higher than many had anticipated. The analyst has raised his forecast for handset sales in the current quarter to 7.9 million units, up from his previous prediction of 7.2 million iPhone sales. In the holiday quarter, Apple sold a record 8.7 million iPhones.
He also reduced his forecast for iPhone sales in Apple's fourth fiscal quarter of 2010 by 800,000, because he expects the multi-touch handset will not arrive on the Verizon network until Apple's 2011 fiscal year.
"While the end date of AT&T's iPhone exclusivity agreement is not publicly available, as we have previously stated, we believe there is a reasonable chance that a new iPhone capable running on Verizon's CDMA network is in the works," Misek wrote. He has shifted his predicted launch timeframe from the fourth financial quarter of 2010 to the first quarter of 2011.
Speculation of a Verizon-capable iPhone launching in June has quieted since Apple introduced the iPad in January. It was then that Apple revealed that only AT&T would provide a 3G data plan for the device in the U.S.
Only days before the iPad event, Apple executives defended AT&T, its exclusive partner for the iPhone, during their company's quarterly earnings conference call. Apple Chief Operating Officer Tim Cook called AT&T a "great partner," and said that multi-carrier deals are not necessarily inevitable in every market where the iPhone is available.
Canaccord Adams has maintained its 12-month price target of $250 for AAPL stock, and reiterated its buy rating.
-m.jpg)
Chip Loder
Wesley Hilliard
Marko Zivkovic
Mike Wuerthele
Andrew O'Hara
William Gallagher
Christine McKee
86 Comments
What do you expect now that the Kids uh, er employees get recess AND lunch...
If there are only ~300,000 units, there are going to be a lot of unhappy people. I predict that there will be enough demand for around 1 million sold in the first week. Not good for product constrictions.
Availability of Apple's forthcoming iPad may be limited when it launches later this month, ...
This is turning out to be just like the 3Gs launch.
It's almost guaranteed that no one outside of the USA will hold one of these things in their hands until Xmas 2010-11.
What happened to all those awards Apple won in recent years for managing their supply chain better than any other company? I know they are a much bigger company now, but they are screwing up big time over the last couple of years. They can't seem to produce a single product without delays and major flaws.
There seem to be several gaps in logic in his assessment. Firstly, that Verizon would impact total sales by ~10% two quarters out, yet preliminary numbers for this quarter are up 10%. Global unit growth should easily overshadow what Verizon would bring to the table, and if his estimates are based on rumors of unannounced products he is worse off than us...
The other major flaw is his price target. If he thinks that Apple's (historically) weakest quarter is almost on-par (down 15%) with its best quarter in iPhone sales, yet EPS forecasts are 64% lower. Apple also has the benefit of a significantly lower P/E ratio than historic, with a PEG of a mere 0.67 (based on consensus)!
Just letting the PEG trend toward unity should see AAPL much closer to $300 than $250, and as earnings surprises kick in we should see it much higher.
Do analysts just think they lose credibility if their price target is more than 20% growth?!
..." ... far lower than the company's initial estimate of 1,000K units."...
Isn't 1,000K also known as "1 Million"?
Why not just say a million?