U.S. Carriers Subsidy Reallocation Could Help Apple (AAPL), Sees Possible WWDC iTV Surprise - Jefferies

June 6, 2012 10:18 AM EDT
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Jefferies' Peter Misek offered some commentary on Apple (NASDAQ: AAPL) Wednesday, saying U.S. carriers are reallocating subsidies from low/mid-end handsets to high-end LTE handets. Given iPhone 5 is expected to be LTE-enabled, subsidy reallocation will likely help rather than hurt Apple.

Misek also discussed the still unannounced iTV, saying he continues to believe there is a possibility of an iTV announcement at the June 11-15 WWDC.

"We believe Hon Hai has already begun production for the iTV and expect availability
in H2:CY12," he said. He also commented: "We believe iTV is in the labs at AT&T and Verizon, using U-Verse and FiOS TV, respectively. According to our supply chain work, we believe the iTV is also in labs at Bell and Rogers, Deutsche Telekom, and France Telecom."

On the iPhone, Misek said demand remains strong. Checks indicate that iPhone 4S sell-through remains virtually flat Q/Q with builds at 28M to 32M according to Asia ODMs and component players, he said. He reiterated his CQ2 iPhone estimates of 30 million and expects 25 million in CQ3. CQ3 could be increased by an additional 15M iPhone 5 units depending on the timing of the release.

On iPad, he said it remains stable with builds are around 15M-18M for CQ2.

Commenting in international carriers, Misek said European carriers fear market share loss as experienced by Telefonica after their subsidy cuts. In Asia, carriers have had mixed subsidy policies but Apple generally requires 2 to 3 year deals. In Japan, we DoCoMo will likely get the iPhone 5 and will heavily subsidize the device, he said.

The firm reiterated their Buy rating and price target of $800.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $562.83 yesterday.

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