Please ensure Javascript is enabled for purposes of website accessibility

Apple Shareholders May Have a Rotten Summer

By Cindy Johnson - Updated Apr 6, 2017 at 10:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Supply disruptions and an iPhone 5 delay are worrying analysts.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$137.44 (-2.98%) $-4.22
HP Inc. Stock Quote
HP Inc.
$34.44 (-2.60%) $0.92
Nokia Corporation Stock Quote
Nokia Corporation
$4.75 (-1.45%) $0.07
AT&T Inc. Stock Quote
AT&T Inc.
$20.61 (-0.82%) $0.17
BlackBerry Stock Quote
$5.74 (-1.03%) $0.06
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
$131.60 (3.48%) $4.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.