Credit Suisse lowers its 2013 and 2014 earnings estimates for Apple

Kulbinder Garcha of Credit Suisse this past week joined a growing number of analysts who are lowering their iPhone sales and earnings estimates for Apple.

Kulbinder Garcha of Credit Suisse this past week joined a growing number of analysts who are lowering their iPhone sales estimates for Apple in 2013. Specifically, Garcha adjusted his second-quarter iPhone sales estimate to 30.6 million, down from an initial estimate of 38.2 million.

Consequently, Garcha's lowered his 2013 EPS estimate for Apple from $47.90, a share down to $44.92 a share. Looking ahead to 2014, Garcha lowered his EPS estimate from $58.18 a share down to $54.03 a share.

Garcha also mentioned impact from Samsung, which is set to launch the Galaxy S IV on March 14 in New York. Apple and Samsung have been battling for the top spot in smartphones, with various research firms citing one company or the other leading at various times. Garcha noted the Galaxy S IV is likely to gain share in the high-end, where Apple competes with its iPhone 5.

There's also the concern that larger smartphones are taking more market share. At Mobile World Congress, Garcha noted that approximately 70% of the phones unveiled are geared toward high-end consumers, with 60% of them having bigger screens than the iPhone 5, which is 4 inches.

Indeed, there is no denying that larger smartphones are much more than a passing fad. Consumers seem to love the large screens, and while the gigantic screen on the Galaxy Note, for example, may not be for everyone, there's clearly a large market for such devices. Incidentally, there have been rumblings that Apple is toying with a 4.5-inch iPhone behind its secretive walls in Cupertino. What's interesting is that Apple was previously concerned with preventing phones on the lower end of the quality spectrum from usurping its marketshare. But now it also has to worry about premium phones with larger screens from the likes of Samsung as well.

Nevertheless, it's important to remember that Apple's iPhone is stil a growing entity. While Apple's plummeting stock price may indicate otherwise, remember that iPhone growth in 2012 jumped 37.1% from 2011.

With Apple already selling tens of millions of iPhones each and every quarter, maintaining stellar growth is admittedly a challenge. That said, the ace up Apple's sleeve may very well be emerging markets such as China and India where Apple currently has very little marketshare. Not surprisingly, Apple's iPhone 5S is rumored to be compliant with China Mobile's proprietary networking technology, which if true would open up a huge and relatively untapped market for Apple. Note that China Mobile is the largest cell phone carrier on the planet. 

via The Street

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