Apple Inc. (NASDAQ:AAPL)’s first quarter results are expected to come at the low end of guidance and for the second quarter a weak guidance is expected owing partly by product push-outs, says Jefferies analyst Peter Misek. The analyst expects the product weakness at Apple Inc. (NASDAQ:AAPL) to profit rival Samsung, resulting in higher shares of the Smartphone industry. Commenting on the stock, analysts held, “the stock is ignoring positive secular fundamentals in DRAM/NAND and foundry advantage vs. TSMC.”
Apple Inc. (NASDAQ:AAPL)’s Product Weakness
Apple Inc. (NASDAQ:AAPL)’s iPhone 5S July’s availability may be at risk due to various pre-production issues, also the launch of a low cost iPhone from the company may get postponed to the fourth quarter from the third quarter currently, believes Peter Misek. Not only this, but iPhone 6, which is expected to be launched in 2013, may get delayed to mid-2014 owing to supply chain issues, including display-related challenges.
In more bad news for Apple, the analyst expects Samsung’s new 5″ Galaxy S4 to ramp nicely starting this month. According to analysts, Samsung’s 5.5″ Galaxy Note II is out-selling its 4.8″ Galaxy S3, reflecting the importance of a larger display size in premium smartphones.
Apple Inc. (NASDAQ:AAPL)’s Loss – Samsung’s Gain
Peter Misek expects an increase in Apple’s manufacturing cost as it makes a foundry transition to TSMC. The increased cost will provide a cost advantage to Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) relative to Apple Inc. (NASDAQ:AAPL). The analyst expects Samsung to lose about 50 percent of its Apple AP business in 2014. Though the iPhone maker has started its transition to TSMC now, it would likely ramp at TSMC with the iPhone 6 launch, believes the analyst.
The analyst expects Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) to grow its share of industry Smartphone profits in 2013 from 30 percent in 2012 owing to a timely production and delivery of premium new mobile products and Apple Inc. (NASDAQ:AAPL) transition and production issues.
Samsung’s first quarter OP upside was driven mainly by higher Dataram Corporation (NASDAQ:DRAM) and Nandan Cleantec PLC (LON:NAND) prices resulting in higher gross margins. Commenting on Samsung’s stock, analysts said, “Our conversations with investors suggest Samsung stock is ignoring large upside potential from DRAM/NAND.”
For the year 2012, Apple Inc. (NASDAQ:AAPL) and Samsung together accounted for 95 percent of the profits made in the global mobile phone market, says a report issued by Counterpoint Technology Market Research. In a separate research, it was found that the two companies together own half of the 700 million smartphones that were shipped out in 2012.
