THE APPLE INVESTOR: The Analysts Weigh In – Next iPhone Simply Evolutionary With Minor Upgrades

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AAPL Mixed With The Market
Stocks are mixed in early trading over euro zone uncertainties as well as fears that the struggling U.S. housing market won’t recover in the near future. Shares of AAPL are swinging this morning as well, currently down nearly two points. Upcoming catalysts include the WWDC starting June 6; iPad 2 sales updates; the iPhone launch this fall (see below); smartphone push into China and emerging markets (see below); iTunes and other cloud initiatives; the continued evolution and adoption of Apple TV; and new platforms such as video, books / publishing and social (Ping). Shares of Apple trade at 11x Enterprise Value / Trailing Twelve Months Free Cash Flow(incl. long-term marketable securities).

iPhone To Be Launched This Fall To Be Evolutionary With Minor Upgrades (Various)
The analysts weigh in:

  • Just A Minor Upgrade (Various via iDygest): Jeffries & Co. analyst Peter Misek claims that Apple’s next generation iPhone will not be the iPhone 5 after all. Peter states that Apple will go with iPhone 4S as the name, following in the footsteps of the 3G to 3GS upgrade, and will not support LTE because the Qualcomm chipset isn’t ready just yet. It will reportedly be a minor revamp of the iPhone including “minor cosmetic changes, better cameras, A5 dual-core processor, and HSPA support.” He believes this iPhone will be available on all carriers in the U.S. including Sprint and T-Mobile.
  • Evolutionary Not Revolutionary (Barron’s): BMO Capital’s Keith Bachman expects the next iPhone to be “evolutionary not revolutionary,” with perhaps a better camera and a different casing, but no 4G, or LTE, wireless modem. Because of poor battery performance for LTE, Bachman thinks the LTE phone will come in 2012.
  • No NFC Functionality (Business Insider): Toni Sacconaghi at Bernstein says that Apple’s next iPhone will not have the mobile payment support through NFC (near field communication). For the most part, the technology isn’t that widespread yet in the U.S. So, Apple’s decision to skip NFC on this iPhone probably isn’t a big deal. However Android is making strides in that arena.

Apple’s iPhone And iPad Dominating Enterprise Activations (Apple Insider)
A new survey of ActiveSync-based smartphones in the enterprise found that Apple’s iPhone is the market leader with a 61% share and growing, while Android owns just 17%. The business user data was released this week by Intermedia, which, ironically is the world’s largest Microsoft Exchange hosting provider. In addition a strong lead for the iPhone, the data also shows market dominance for the iPad, with a 99.8%.

Apple’s Patent Filing Shows Nuance-Like Technology For New iPhone (Patently Apple)
Apple has filed a patent application for a system that could convert text to speech and vice versa on the iPhone. Handling the conversion would be an iPhone’s logic board; the technique stands in contrast to a common one, used by companies like Nuance, in which conversion is processed through a remote service. The Apple system would be able to detect ambient noise using a microphone, and prompt a person answering a call to use text-to-speech instead of their own voice. Perhaps partnering with Nuance isn’t happening, Apple will build the technology itself.

Supplier And Retail Partner To Double Exclusive Apple Stores In Asia This Year (DigiTimes)
Apple component supplier and retail partner Foxlink reportedly plans to double its number of stores in China, Taiwan, Hong Kong and Korea that exclusively sell Apple products from 50 locations to 100 by the end of the year. Separately, Foxconn and its retail chain brand Cybermart plans to open a new, broader electronics store in Changchun, China.

Legendary Investor Quadruples Down On Shares Of Apple (Business Insider)
Apple has not been a big winner lately, having peaked in February, and underperforming since then. But it is still a big favourite of money managers, so it will be interesting to see what investors did during the latest quarter, as filings roll out. The first out of the gate is an odd one. Last year, the well known investing “legend” Ken Heebner dumped virtually his entire Apple stake. But in February he was up to 60K shares. Now in the latest filing, he has more than quintupled his stake.