FBR Capital Markets is out with some fairly cautious comments on Apple (NASDAQ:AAPL) saying that in short, their contacts now say 2Q11 iPhone production estimates were revised downward for 2Q11.
2Q iPhone build estimates revised downward on weak CDMA sell through. For the iPhone, FBR’s contacts suggest calendar 2Q11 iPhone production has been revised downward since their last checks by 16% to 20.1M units. The majority of this negative revision was due to lower CDMAbased iPhone production, which was reduced from 5.0M builds to 2.1M builds. This negative -58% revision was on the back of lower than expected CDMA sell through at Verizon where they hear Apple faces steep competition in the CDMA-based smartphone market from Samsung and HTC — both firms that address many price points from smart-feature phones to smartphones. Net, they now see 43M iPhones built in 1H11, suggesting Apple will build closer to 90M iPhones this year, down from their previous estimate of 100M-105M iPhones in 2011. Given the channel build and production estimates for 2Q, they estimate Apple could sell as many as 21M iPhones in the second quarter (below FBR’s previous maximum of 25M units) before inventory levels reach hand to mouth.
Importantly for the iPhone 5 (codenamed N94), FBR’s contacts have confirmed that Qualcomm is replacing Intel as the baseband supplier, selling an integrated CDMA/WCDMA baseband that allows Apple to streamline production. The iPhone 5 will also use an 8MP camera with OmniVision’s CMOS sensors, with Sony possibly being a backup image sensor supplier in 2012.
For the iPad, devicebuilds remain constrained as Japanese earthquake related supply chain shortages and manufacturing bottlenecks hamper production. iPad2 builds in 2Q are unrevised at 6.2M units, but early 3Q estimates reflect a sequential drop of 1M builds to 5.2M builds due to the aforementioned factors (though these could still get resolved and iPad production could get ratcheted up). Unless something were to change dramatically, Apple’s internal iPad production goal of 40M-45M units for 2011 now seems out of reach.
3Q iPhone build estimates now flat sequentially, somewhat lower than expected. FBR’s first look at 3Q11 iPhone production shows total iPhone production remaining roughly flat sequentially at 20M units, with 8M of these units being the long awaited iPhone 5, 1.8M units being CDMA-based iPhone 4, and 10.3M units being traditional iPhone 4 devices. They note that sequentially flat production is slightly worse than expected, and suggests Apple could sell as many as 22M iPhones in 3Q11 if it were to draw inventories down to hand-to-mouth levels.
Notablecalls: It is possible that the Android based phones are starting to take market share from Apple’s iPhone? The answer is yes, according to FBR.
There has been so much hype & hope tied to the Verizon oppty that I can’t believe the stock would go unpunished following FBR comments.
And the iPad scare, back again?
Not good. Not in this tape.