In a new research note to clients, Jefferies analyst Peter Misek says recent supply chain checks indicate that Apple (AAPL)’s initial production of the iPhone 5S will begin in March, for a launch in June or July of this fiscal year.
“Our checks indicate that preliminary builds for the iPhone 5S will start in March for a launch in June/July”, Misek writes. “As word of the earlier production schedule starts to spread, we believe we could see a slight slowing of demand CQ1 in anticipation of the new product launch and Apple will likely start curtailing channel inventory.”
The analyst adds that he is reducing his CQ1 iPhone shipment estimates from 48 million to 44 million units in the current March quarter, a number he notes “is still well above widespread fears of shipments in the mid-30Ms.”
If Misek’s projections are accurate, Apple may unveil the iPhone 5S at its annual Worldwide Developers Conference in San Francisco, which is usually a launching pad for the tech giant’s next big thing.
Misek also added his thoughts on rumors of an entry level iPhone, noting that Cupertino could release a less-expensive iPhone made of polycarbonate with no LTE and a 4″ non-retina display:
“Similar to the iPad mini, we expect a concentrated low-cost iPhone rather than a “cheap” one”, Misek writes. “Likely specs: polycarbonite case with 4″ non-Retina display and no LTE. We believe a new low-cost iPhone would increase Apple’s share, decrease [gross margins], but have little impact on [EPS].”
Misek believes Apple’s low-cost iPhone, that has been the subject of a number of rumors in recent weeks, would be geared toward emerging markets like China, and that such a device “looks close to being greenlit or may already have been,” he said.
As for the rumors on recent reports that Apple has halved component orders for the iPhone 5 in Q1 due to “weaker-than-expected demand”, Misek, who has a Buy rating on Apple and a $800 price target, believes that the primary drivers causing the decline are not related to a reduced demand for the popular handset. Instead, Misek thinks the order cuts are largely driven by three factors:
“1) an assembly bottleneck caused component inventories to rise in CQ4;
2) new iPhone builds starting in March;
3) demand being in line to slightly below optimistic expectations.”
Apple this morning is up $2.07, or 0.43%, to $487.99 in premarket trading / 6:14AM EST – Nasdaq Real Time Price.
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