iPhone 5 to affect Apple’s future earnings: Sterne Agee

iPhone 5 to affect Apple's future earnings: Sterne Agee

Sterne Agee’s analyst Shaw Wu discusses how Apple Inc. (NASDAQ:AAPL) hotly anticipated iPhone 5 will affect future earnings of the company based on the timing of its release. The report also discusses how Apple is making its new iPhone China-Mobile-friendly.

The analysis discusses how the reports of a September 12 release for both the iPhone and iPad mini have strengthened, and remarks that the release would be sooner than expected. If the gadgets are indeed released on the set date, the old version iPhone 4S and iPhone 5 would be less than a year apart. Apple’s earnings for the third quarter of 2012 were less than energetic, as the tech giant itself admitted that all the iPhone release rumors and iPad mini speculations negatively impacted the earnings. As the consumers were washed over with multiple release dates, possible specs, possible size rumors, and leaked photos, the sales of older models of iPhones significantly declined and the company was only able to sell 26 million iPhones in this quarter, as opposed to 35 million in the corresponding quarter of the last fiscal year. The demand for iPhone 5 multiplied by volumes while there was actually no product in the market, and consumers held back on their purchases while they waited for the new iPhone. The iPhone 5 rumors began spreading around in May, and there is still a new one coming out every other day.

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Moving on to the earnings period that the latest iPhone will have impact on, the report discusses that a September release essentially means that Apple will only see revenue in December, when it will start shipping to carriers like Verizon Communication Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T). The reports forecasts a sale of 23 million  units in the September quarter and 45 million units in the December quarter.

Apple Inc. (NASDAQ:AAPL) is also making its iPhone compatible with the technologies offered by the world’s largest wireless network provider, China Mobile. Earlier this year, Apple Inc. (NASDAQ:AAPL) announced its newly forged partnership with China Telecom, which had launched iPhone 4S in mainland China on March 9, 2012.  Apple is making iPhone5 compatible with the TD-SCDMA 3G network, thus making it a “true world phone”.  The report speculates that the actual impact of Apple’s alliance with China Mobile will take effect in 2013,as Apple does not have the direct capacity to handle the large product demand that this partnership entails. The analysis also predicts that the brand new in-cell touchscreen technology will take the product’s demand so high, that the company will only be able to meet them in the March and June 2013 quarters.

The analysis rates the Apple Inc. (NASDAQ:AAPL) stock as ‘Buy’. Sterne Agee  is a 100 year old firm that provides brokerage services, investment advisory, trust services, asset managements, and various other financial services.