Apple Shareholders May Have a Rotten Summer

Apple (Nasdaq: AAPL  ) has a tradition of announcing iPhones in June and releasing them shortly thereafter. This year, there are rumors the upcoming iPhone 5 won't launch until the fall. The iPhone accounts for about 39% of Apple's revenues, so a delay should put earnings forecasts at risk.

What's more, a lot of AT&T (NYSE: T  ) iPhone contracts start coming up for renewal in June and early July. A fall iPhone 5 launch would open a window for smartphone competitors to poach iPhone owners. That could be good for smartphone competitors Research In Motion (Nasdaq: RIMM  ) , Motorola Mobility (NYSE: MMI  ) , Nokia (NYSE: NOK  ) , Hewlett-Packard (NYSE: HPQ  ) , and Samsung.

Two pieces of news are driving the rumor. According to a report out of Asia, Apple suppliers have not yet received parts orders, and the iPhone 5 won't contribute to fiscal 2011 revenue.  In addition, invitations to Apple's Worldwide Developer Conference in June went out on March 28th, indicating it will be "a preview of the future of iOS and Mac OS X."

Preview? The future of? Usually the new iOS is launched with the new iPhone at that conference. But there was no mention of the iPhone in the invitation.

Apple may intentionally delay the iPhone 5 to wait for second-generation Qualcomm (Nasdaq: QCOM  ) LTE chipsets. When Apple introduced the Verizon version of the iPhone 4, which began shipping in February, management said the first generation LTE chipsets would "force some design compromises" that the company wouldn't make. The aforementioned Asian report noted Apple is focused on adding Verizon customers.

Then again, maybe Apple is just trying to avoid another AntennaGate type of episode.

BMO Capital said it expects the iPhone 5 introduction "in the September quarter," which starts in late June. Jefferies & Company is taking the rumors more seriously, cutting estimates for Apple's fiscal year 2011, which ends in September. With three quarters left to report in the year, Jefferies cut its revenue forecast by 4% to $103 billion and its EPS forecast by 5% to $23.03.

Foolish takeaway
Apple shareholders may have a rotten summer. An iPhone 5 delay could cause earnings and revenue to fall short of current expectations. In addition, Pacific Crest recently expressed caution about June quarter forecasts due to supply disruptions in Japan. If true, that could bruise Apple's earnings call on April 20th.

To stay updated on all things Apple, add the company and its competitors to our free My Watchlist service.

Fool contributor Cindy Johnson does not currently own shares of any of the companies in this story. Apple is a Motley Fool Stock Advisor recommendation. The Fool has written puts on Apple. Motley Fool Options has recommended a bull call spread position on Apple. The Fool owns shares of Apple, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 07, 2011, at 10:11 AM, jesusgro9 wrote:

    I think it is not easy for a iPhone user to switch to a different brand of smartphone. Just think about the important amount of money that most of the users have spent in music and applications from the iTunes store, the so called iTunes ecosystem. In addition, many of the iPhone users have now big dependencies on that applications for the day to day activities. Maybe revenue for Apple will come a little bit late, but I think most of the iPhone owners will wait for the iPhone 5. All the above in addition to the fact that the iPhone is probably the best smartphone out there.

  • Report this Comment On April 07, 2011, at 10:29 AM, bobringer wrote:

    curlyhead... guess you didn't get the memo. Apple sold more iPad 2's in a few hours then MMI sold Xoom's in a month.

    Having received a test unit for my organization and being a developer of things that need to work on tablets... I know exactly why.

    I love it... "moments ago MMI was consider a good buy." I guess that moment has passed.

  • Report this Comment On April 07, 2011, at 10:30 AM, gslusher wrote:

    @ Ms Johnson:

    "A fall iPhone 5 launch would open a window for smartphone competitors to poach iPhone owners."

    Haven't you seen the surveys of owners of various phones? iPhone owners are the LEAST likely to switch to another phone. Why wouldn't they wait a month or so? They could even move up to an iPhone 4. (Any 2-year contracts expiring in June would be for iPhone 3G or 3GS.)

    You've also ignored one VERY important fact: in the last quarter, more than 70% of iPhones were sold OUTSIDE THE US, where "contracts" may not be applicable.

    If you're really "watching" Apple, you should do a bit more homework. You might start by reading Horace Dediu's commentary on asymco.com. He's far above any commercial analyst I've read.

  • Report this Comment On April 07, 2011, at 10:34 AM, ConstableOdo wrote:

    I'm not counting on good earnings results, anyway. Too many manipulating FUDsters are attempting to drive Apple shares down. Apple has never made any mention of delaying iPhone 5, but there are unscrupulous bloggers saying that Apple will do so. The bloggers said the said the same thing about the iPad 2 release being pushed back.

    I find this very interesting because it seems everyone needs to speculate about when Apple products are going to be released and any change will immediately cause analysts to downgrade Apple despite Apple not being able to keep up with current demand of products. So, basically increased revenue is thrown out the window. If Apple sells twice as many iPads it won't override an iPhone delay which is odd because revenue is revenue no matter which product it comes from.

    Apple shares seem to be easily manipulated on pure speculation. Speculation seems to be a better driver of Apple share price than revenue is.

  • Report this Comment On April 07, 2011, at 10:34 AM, Henry3Dogg wrote:

    Wasn't the iPad 2 also delayed to the summer?

  • Report this Comment On April 07, 2011, at 10:36 AM, xmmj wrote:

    "An iPhone 5 delay could cause earnings and revenue to fall short of current expectations."

    You have got to be kidding???

    You wanna make a bet on how far short it will fall? I am looking for some easy money.

  • Report this Comment On April 07, 2011, at 10:39 AM, xmmj wrote:

    @Henry3Dogg

    Yes Henry you are 100% correct. The iPad 2 will not be released until August of this year. Yet another terrible Apple delay.

    Better sell your stock now!

  • Report this Comment On April 07, 2011, at 11:16 AM, 1984macman wrote:

    Sigh. So much stupidity, so little time. Look, the iPhone 4 is selling like hotcakes. I just bought one myself. Why? Because my 2 year contract just ended. Take it from me, my old 3G was a great phone, but the 4 is better. It'll do me just fine for the next 2 years, at which time I'll buy the 6 or 7 or whatever iPhone is being sold.

    And BTW, Apple's revenue stream is about to see some serious improvement, thanks to the runaway success of the iPad. Yes, improvement. And considering its revenue stream is already stunning, that's saying something.

    There is, however, one serious cloud on the horizon. And that is the stupidity of the current leadership in the House. If they actually follow through on their threat to hold the economy hostage unless they get their way, then the economic repercussions could be catastrophic. Of course, those consequences will sink everyone.

    But if the last recession taught us anything, it's to trust Apple. Even now it's up 70% over it's price pre-recession, and the recovery is barely under way. If there ever was a stock that could weather the threatening Tea Party-enduced storm, it's Apple.

  • Report this Comment On April 07, 2011, at 3:27 PM, DefunctAcct wrote:

    Reads like trader manipulation is in full swing and even THe Fools are joining.

    What delay? Has it been confirmed by Apple?

    If there is a delay, how does that automatically mean people whose contracts run out will move away from Apple? I suppose that is possible for those who dislike the iPhone's but how about those who want another iPhone? YOu think they will just dump and move?

    What happens to all the media people have amassed on the iOS devices? Just dump them all and move to Android? Really?

  • Report this Comment On April 07, 2011, at 5:45 PM, EquityBull wrote:

    I am sad to see a Fool article focused on such a short term event. Let's say apple does delay the iphone to the fall. Big deal. We are talking a few months. I think Fool's want to look at 5 years or more of a company's prospects. Apple has some amazing momentum here and to even consider a slight delay as material to a Fool is not Foolish in spirit.

    As far as any lost sales. iPhone users will wait for new iphones. They are not switching. They know how much better the iPhone is then Droid. I own BOTH a Droid (on verizon) and an iPhone on ATT. Guess which one I use and take with me? The iPhone is so far ahead in elegance and almost every other area over the Droid. The droid for me is just an also ran always trying to catch up. If the iPhone did not exist then it would be the best out there. But the iPhone does exist, period.

    For non iphone users a potential delay is also not material. Their choice is simple. They can wait for an iPhone 5, buy an iPhone 4 immediately or buy a 2nd rate smartphone from another vendor.

  • Report this Comment On April 08, 2011, at 5:02 PM, hellomojo wrote:

    @ curlyhead46..

    Google "xoom sales" and read all the results... not a single article has any good news about their sales figures.

    Here's the first one, from todays news..

    http://uknewsreporter.co.uk/motorola-xoom-sales-disappoint-i...

    Summary-

    Deutsche Bank analysts have confirmed poor sales for the Motorola Xoom, within the first two months of release.

    Motorola had high hopes for the Xoom, its new project, seeing it as a natural competitor for the iPad, but it has only sold 100,000 units since its release in February.

    In comparison the Apple iPad 2 sold 300,000 on its first day of release in March. It has now topped 2.5 million sales in March alone.

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