|Apple: Jefferies Sees ‘Enormous’ iPhone 5 Ramp, ‘iTV’|
By Tiernan Ray
Jefferies & Co.‘s Peter Misek this afternoon writes that his review of reports by various suppliers to Apple (AAPL) reinforce his view the company’s introduction of the next iPhone, the “iPhone 5,” will be “the biggest launch in handset history,” and that Apple is proceeding in building a television set.
Misek has a Buy rating on Apple shares and an $800 price target.
“Checks point to enormous CQ3 builds. Our guess is 50M to 60M units,” writes Misek, regarding iPhone 5, after looking at reported results of TPK, a Taiwanese maker of capacitive touch-screen technology, which on Wednesday reported Q1 results.
TPK seems to have lost business with Apple, he deduces from the company’s public remarks, from which he surmises the iPhone 5 will have novel features such as a thinner profile, and that it will be built in high volume come September:
TPK’s results [...] seemed to indicate a large customer was moving away from their technology. Given that Apple was working on inCell technology with two Japanese display companies we believe that TPK’s commentary and outlook as well as guidance from component makers into those two display companies indicate that Apple has unbelievably achieved yield on inCell. We thought this was a low probability event. Clearly this tells us a few things about the phone. First, it tells us that the iPhone 5 is likely to be materially thinner somewhere in the neighborhood of 20% thinner. We believe it also tells us that the screen is likely to be around 4? versus the current 3.5?. We also believe that the screen could get a further DPI bump thanks to oxide display technologies which promises up to 50% more DPI. Based on assumed retained sockets and guidance from supply chain companies (many of which report monthly), we see enormous September quarter builds. Our guess is 50M to 60M units. We believe that the iPhone 5 is shaping up to be the biggest launch in handset history.
InCell technology has been a topic of some speculation of late, as Eric Slivka of MacRumors mentioned on April 22nd.
Whether Apple puts the device on sale in September or October should matter little, he writes, as in either case it will beat results in its fiscal Q4 or fiscal Q1.
And Misek notes that display makers, includingSamsung Electronics(005930KS), have been cutting TV unit forecasts in their estimates, but they are at the same time “citing likely sequential improvements in glass demand as well as pricing that is likely better than in CQ1?:
How can this be? Some of these companies were actually asked, and AUO on their call answered that new entrants and technologies that have been in the works should launch in H2. These will improve the TV demand picture, which they felt could grow low double digits. Also, of interest was the TWC 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 opens up the possibility that Time Warner Cable could be a third distribution partner for iTV in conjunction with Verizon and AT&T. We have also had specialty component makers (that include specialty HDTV components) that guided
better than expected.
Misek thinks Apple will make $167 billion in revenue and $47.47 per share in profit this year, ahead of the Street’s $162.3 billion.
Apple shares today are down $3.15, or half a percent, at $604.55.
Copyright 2011 Dow Jones & Company