Amit Daryanani, Analyst, RBC Capital
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So, we have two stories for the price of one, it just so happens they both came across the wire within minutes of each other. We’ll take the slightly better news first, and that’s centered around speculation as to who will get the new iPhone 7 20nm chip making business one Samsung is out of the picture? This is big business and it’s likely to disrupt whichever companies are in the running, because ramping up for such a task is monumental to say the least. I covered this story in some detail earlier this week, when it was speculated the TSMC would be the goto company because they are closest to getting ramped up.
Chip Switch
As Apple is now almost unanimously expected to abandon Samsung as its key iOS chip providers, analyst Amit Daryanani decided to more closely explore the company’s options. According to him, the process of moving CPU production away from Samsung may take between 12 and 18 months, meaning the transition would likely be compete only in 2014.
Daryanani points to Intel and TSMC as two most likely chip manufacturers to replace Samsung. While multiple publications have long suggested TSMC might become Apple’s new major CPU manufacturing partner, Intel has expressed its willingness to make iPhone and iPad processors as well.
SOURCE 1
The second story from RBC isn’t very pleasant as they have decided to downgrade Apple due to changes in Amit’s iPhone production capacity model. The downgrade is well below street consensus, and I suspect some of that has to do with the previous chip switch story that may lead to production slowdowns. Now, what get’s me is this speculation as if these are things that the best supply chain management company in the world (Apple that is) had not figured all of this out. This is a perfect example of analysts thinking too much inside their own heads and not enough in line with what Apple has demonstrated to do.
Downgrade
Analyst Amit Daryanani of RBC cut is price target for AAPL stock from $600 to $550, while reducing his projected sales for the March quarter. He has modeled for Apple to sell 35 million iPhones and 18.3 million iPads in the three-month span.
His new March projections of $41.2 billion in revenues and $9.59 earnings per share are below Wall Street expectations of $42.7 billion in revenues and $10.08 earnings per share.
Daryanani has also cut RBC’s estimates for Apple’s in-progress June quarter, when he believes the company will earn $37.3 billion in revenues and $8.72 earnings per share. Those numbers are also below market consensus, as the analyst believes Apple will be affected by product transitions during the quarter.
He sees iPhone units dropping to 28.6 million in the June quarter, while iPad sales are forecast to be around 19 million.
SOURCE 2