Apple (AAPL) shares are getting a substantial lift here this morning from the announcement a little while ago that CEO Steve Jobs will help unveil “next generation software” during the company’s Worldwide Developer Conference on June 6th in San Francisco, starting at 10 am, Pacific.

The stock is up $5.94, or 1.8%, at $343.35.

The event will feature discussion of “Lion,” the next version of OS X, which was previewed already; iOS 5, the next version of the iPhone and iPad and iPod Touch operating system; and also “iCloud,” Apple’s “upcoming cloud services offering,” a rather direct and frank admission by the company of what has been speculated upon for some time, namely, that Apple will host more capabilities in data centers rather than having them be simply a desktop affair.

Clearly, though, the notice of Jobs’s in-person appearance is doing the heavy lifting on the shares this morning. It can’t hurt that smartphone competitor Nokia (NOK) is down almost 15% this morning after cutting its Q2 and year view on smartphone weakness.

Update: Apple shares continued to build on the momentum throughout the session, ending the day up $9.93, or 3%, at $347.34.

Helps to see this morning’s rise in the context of the last two weeks:

Article courtesy of Tech Trader Daily

Piper Jaffray’s Gus Richard today reiterates a thesis he’s been making for several weeks now, namely that Intel (INTC) is gunning for Apple’s (AAPL) business to manufacture the iPhone maker’s custom processor, the “A” series of chips. 

Richard reiterated a Neutral rating on Intel shares. 

Richard repeats that Intel must find more contract business as it spends $10 billion this year beefing up its fabs, a doubling of last year’s capital spending.

Basically, the old PC business just won’t bring enough revenue to justify the business, but a deal to fab Apple’s chips would help a lot. (Richard doesn’t talk about how production of server chips and networking chips would help, but those are admittedly much smaller markets than the PC by volume.)

Richard thinks that with the leading contract foundries all investing in capacity, meaning Taiwan Semiconductor Manufacturing (TSM), Samsung (SSNLF), and Global Foundries, the spin-off from Advanced Micro Devices (AMD), Intel could hurt those competitors by denting their ROI if it wins Apple as a customer:

Intel is betting that it can fill its leading edge fab. The company continues to build capacity as if its silicon demand will stay on trendline. However, based on our analysis of the PC client market, this seems unlikely. We believe that Intel has also stepped up its efforts to get into the foundry business. In particular, Intel is vying for Apple’s foundry business. Apple is the largest buyer of leading edge silicon and a significant buyer of foundry wafers from Samsung. If Intel was Apple’s foundry partner and continued to supply baseband chips to Apple, Intel would start to impact leading edge volume growth at the foundries. This would impact demand for next generation process technology and slow the ROI of the foundries’ investment in process technology development at leading edge capacity.

A more certain result, however, is overcapacity: today he reiterated an Overweight rating on shares of Applied Materials (AMAT), but wrote that the company is likely to offer a weak forecast when it reports earnings on Tuesday, after the bell, given that Samsung appears already to be pushing out orders for equipment as customers re-allocate spending to other vendors. He thinks Apple is one of those customers, taking its DRAM dollars to other manufacturers:

We expect to see cancellations in CY11:Q3 as Samsung’s largest chip customers reallocate demand to other vendors. In addition, capital spending at the foundries has been too strong for too long and we expect to see a pause in this market as well.

Article courtesy of Tech Trader Daily

Piper Jaffray’s Gene Munster this morning writes of two “concrete data points” that he believes suggest Apple (AAPL) will introduce its next iPhone in September, rather than the usual summer introduction, as has been rumored.

He’s sticking with his estimate for 16 million iPhones to be sold this quarter, and 21 million in the September quarter.

One iPhone manufacturing equipment supplier with whom he’s spoken said that they had received orders for the equipment “several months later than usual.”

And secondly, the company has usually had a software event in the spring, followed by a hardware announcement at its summer developer conference. “There have been, on average, 79 days between the software event and the iphone hardware announcement,” he writes.

But it appears the summer conference, the Worldwide Developer Conference, is a focus on software, suggesting that a hardware unveiling is coming later on, in the fall. By the same day count, a June 6th introduction of a new iOS version should lead to a September 24 hardware announcement.

As for why the shift, Munster opines some features requiring software fine-tuning may not be fully baked yet. Also, Japan’s disaster and its impact on supplies could be a part of it. Deliberating over whether to include a 4G, or “LTE” modem in the phone may have delayed things. “Also, there has been chatter surrounding an audio codec socket in the next iPhone, for which a delayed product could have altered the iPhone development cycle.”

As for what it is, “We believe the fifth-generation iPhone, possibly branded the iPhone 4S, will have a similar form-factor to the iPhone 4 but a faster A5 chip, no LTE support, and possibly a larger 4″ display. And he opines, “Apple’s next iPhone could operate on Sprint’s [Nextel (S)] network.”

Apple shares today are down 97 cents, or 0.4%, at $339.56 in early trading.

Article courtesy of Tech Trader Daily

Well, it’s not even a confirmed fact, but since there’s already a rumor of a delay: DigiTimes’s Irene Chen and Steve Shen this morning cite anonymous sources in the electronics supply chain as saying that Apple (AAPL) won’t introduce a modified version of the iPhone 4, which has been dubbed an “iPhone 4S,” this year, “as originally planned, because of problems that Qualcomm (QCOM) has had producing chips for 4G wireless, or “LTE,” networks.

The same article, nevertheless, says China is “expected to reach an agreement with Apple” for an iPhone 4S by September.

Hmm. Sounds like an unconfirmed bit of speculation has now become suddenly a rumored delay in the unconfirmed bit of speculation. People, help me to understand this.

Apple shares this morning are up 32 cents at $336.46.

Article courtesy of Tech Trader Daily

Folks, I must admit that in the debate over “mobile payments,” I’ve been out of touch, of late.

Today, for example, I neglected to mention a longish note — 29 pages — that came out late Monday from Morgan Keegan, assembled by Tavis McCourt, who follows Apple (AAPL), as well as some colleagues of his, Matt McKee, who follows communications technology, and Roberd Dodd and Robert Ladyman, who follow transaction processing.

The note’s interesting, so I thought I’d mention it, even though I missed my chance earlier.

The authors offer the view that there is “substantial” potential for near-field communications (NFC) chips embedded in a phone as a mobile “digital wallet.”

But the obstacle is that the status quo is likely to prevail, basically because of the risk of fraud.

Merchants are likely to take awhile before they will move to NFC. Why? Because the most likely method of funding a mobile wallet, by tapping into a bank account, called “ACH,” doesn’t actually clear the funds till an overnight update happens, unlike traditional debit cards, where money is cleared right away. Which means merchants can be left hanging when there are insufficient funds.

Unless the banks can underwrite/insure the funds to protect against fraud, in a cost-effective manner for merchants, than the status quo will prevail, which means digital wallets will just be a thin layer riding on top of the current payment system of the “networks” — Visa (V), MasterCard (MA), etc.

And in that system, Visa and MasterCard still make most of the money. Which means little actual direct share of profit for Apple, Google (GOOG), and other smartphone vendors.

“The mobile payment opportunity is more of a cost burden than a real benefit” to Apple and others, they write. Putting an NFC chip in a handset can cost $2 to 4$ per handset, they note. Apple and others might not get any share of the actual transaction dollar amount, they argue.

One real beneficiary of any NFC buildout might be VeriFone (PAY), which already sells terminals for credit-card processing. They’ll have to supply merchants with point-of-sale terminals for the buildout of NFC. Morgan Keegan rates VeriFone’s shares Outperform.

The Morgan Keegan note echoes a lot of skepticism voice Monday by Toni Sacconaghi with Sanford Bernstein, who follows Apple. Among his concerns is that putting those NFC terminals in retail locations could take five years or more to happen.

And then putting an NFC chip in the iPhone could add $450 million to $900 million to the cost of goods for the thing Apple’s 2012 fiscal year, which could lower Apple’s gross margin by 0.4 to 0.7 percentage points. Then, too, it’s unclear if Apple and others could command a meaningful cut of the transaction, as McCourt and company point out.

Sacconaghi concludes we won’t see NFC in Apple’s next iPhone: “We do not expect the iPhone 5 to feature an NFC-based payments solution, and instead expect Apple to evaluate and come to market with partners or a complete solution later, perhaps when NFC infrastructure is more established.”

Then again, BoyGeniusReport’s Jonathan Geller speculates today Apple might actually be planning already to implement NFC terminals in its own retail network.

Article courtesy of Tech Trader Daily

Bloomberg’s Jonathan Browning writes that Vodafone Group PLC (VOD), which owns 45% of Verizon Communications’s (VZ) Verizon Wireless unit, will quantify tomorrow the cost of bringing the Apple (AAPL) iPhone to Verizon in the U.S. in February, a cost that at least one analyst pegs at $880 million.

Vodafone is expected to report preliminary results for its fiscal year ended in March tomorrow morning.

Browning cites one analyst, Steve Malcolm with Evolution Securities, as saying “The jury is out on whether these things [meaning, smartphones] create extra value for operators” given the high cost of subsidizing smartphones, including the iPhone.

Vodafone’s ordinary shares traded in London fell a fraction of a percent to 1.67 Great British pounds, while the American depository shares are down 9 cents at $27.26. Verizon shares were down 22 cents, or 0.6%, at $37.04.

Article courtesy of Tech Trader Daily

India-based smartphone and tablet application developer Sourcebits has raised $10 million in first round funding. The investors — the company’s first — are Sequoia Capital and IDG Ventures India, who each invested $5 million.

Sourcebits will use the funding to set up sales and engineering centers in the U.S and engineering teams in India and Europe. Outsourcing your app development to India will definitely get easier.

Sourcebits is a third-party application developer with 300 engineers and designers. The company claims it does application development for many Fortune 500 companies. Some of the most popular apps developed by Sourcebits include Robokill, Knocking Live, Daily Deeds, Night Stand, Skyfire, and Beast Farm. The company does app development for iOS, Android, BlackBerry, Palm Pre and Windows Phone 7 platforms.

The company was at number 38 spot on Lead 411’s latest Technology 500 list last December.

Tags: Android, iPad, iPhone, smartphone tablet

Companies: Idg Ventures, Sequoia Capital, Sourcebits

Article courtesy of VentureBeat » deals

Canaccord Genuity analyst Mike Walkley today writes that his “checks” of Apple’s (AAPL) business in April suggest iPhone 4 topped sales at AT&T (T) and Verizon Communications (VZ) last month. iPad 2 sales were also “very strong” in April.

Walkley predicts Apple customers will tend to stick with its “i” devices because of the Apple ecosystems’s “higher price points for tablet applications,” a phrase that is somewhat mysterious. I am assuming he is referring to the amount invested by consumers in amassing the various apps they have on the iPhone, etc.

Walkley is modeling Apple’s iOS device installed base to rise from 189 million currently to 246 million by the end of this fiscal year that wraps up in September, and 404 million by the end of next year.

Walkley thinks that the high stickiness, if you will, of Apple customers is complemented by the “higher-end markets” it is in, and that as result, replacement rate of iPhones should be about 40% per year, above the industry average of 35%. Walkley expects Apple “will maintain dominant value share of both the tablet and smartphone markets to drive healthy long-term earnings growth.”

Walkley maintains a Buy rating on Apple shares and a $480 price target.

Article courtesy of Tech Trader Daily

Joanne Feeney with Longbow Research, who follows Intel (INTC), today reflects on a story posted on SemiAccurate by Charlie Demerjian yesterday suggesting Apple (AAPL) may switch its laptop computers from Intel’s processors to its own chips based on designs of ARM Holdings (ARMH).

The story, “Apple Dumps Intel From Laptop Line,” is anything but tentative. Demerjian opines that Apple is waiting till the next version of ARM’s chips have full 64-bit memory addressing before making a switch. He points to remarks by another AMR licensee, Nvidia (NVDA), suggesting that that milestone will be in Q4 of next year or maybe Q1 of 2013. “It won’t be really soon, but we are told it is a done deal,” writes Demerjian.

Feeney observes that Demerjian is well-respected in tech circles and has been right in past observations, and so, “We view this as a reasonable possibility for Apple, but do not expect the Windows-based PC makers to follow suit.”

Apple, of course, has used its home-brewed A4 and A5 chips based on ARM modified CPU architecture to power its iPhone, iPod Touch, and iPad. The next version of Apple’s computer operating system, “Lion,” has some features that bring it closer to the look and feel of the iOS operating system on the iPhone, so it’s clear that Apple is trying to meld some aspects of its computers with its non-laptop, non-desktop machines.

But there’s enough uncertainty, in Feeney’s view, about a possible switch that it’s “not to be an immediate concern” for Intel’s stock.

Intel shares today are down 26 cents, or 1%, at $23.35. Apple shares are up $2.24, or 0.7%, at $348.99. And ARM shares are up $1.70, or 6%, at $29.21.

Article courtesy of Tech Trader Daily

Shares of Apple (AAPL) are up $8.59, or 2.5%, at $351 this morning following better-than-expected fiscal Q2 results last night, as price targets zoom and estimates rise almost across the board.

The highest price target I see this morning comes from Brian White of Ticonderoga, who previously had the highest as well. His new target is $612, up from $550.

White raised his Q3 estimate for revenue to $25.1 billion from $24.4 billion, and raised his EPS estimate to $5.63 from $5.43. For fiscal 2011, his revenue estimate goes to $106 billion from $102 billion, and his EPS estimate goes to $25.22 from $23.36.

“With the stock now trading at 10x our CY11 EPS estimate (ex-cash),” writes White, “we believe there is plenty of upside left in the stock price as we look forward to continued momentum from the iPad 2, a new iPhone 5 in September, growing adoption of Mac products and a bigger push in the TV market as the year progresses.”

• Abhey Lamba, ISI Group: Reiterates a Buy rating, while raising his price target to $425 from $400. “Given the company’s usual conservatism, we would not be surprised if it ended up delivering closer to $25b in revenues and $7.00 in EPS,” Lamba said of Q3, though he’s current estimating $24.4 billion and $5.67. “The quarter’s results and our field checks continue to indicate that the company has a significant near term upside opportunity that can be captured by continued execution. The biggest bottleneck in its sales currently is its production process for iPads, which we expect to be resolved over the next couple of quarters.” Lamba notes that iPhone average selling price in the quarter of $660 “was the highest it has been since Apple’s December 2008 quarter.” Although the iPad will reduce margins, “We note that the company has gone from unprofitability or barely breaking even in FY01 and FY02 to above industry average margins today.”
• Gene Munster, Piper Jaffray: Reiterates an Overweight rating and a $554 price target, up from $483. Munster raised his unit shipment estimates for Apple for all but the iPod. This calendar year, he sees Apple selling 17.7 million Macs, 79 million iPhones, 32 million iPads, up from 17.5million, 73 million, and 27.4 million, respectively. He now models 42 million iPods, down from 47 million estimated previously. Munster muses on the trajectory of the iPhone: “Because of the iPhone’s high price (~$660 ASP) sales over-index to postpaid markets where carriers offer subsidies. A longer-term question is whether or not Apple will successfully address the prepaid (unsubsidized) phone market, which accounts for about three quarters of the world’s mobile phone unit sales. The company mentioned on last night’s call that iPhone sales in China (about 90% of the China market is prepaid) were up over 3x y/y suggesting either prepaid customers are paying up for the iPhone or prepaid customers are becoming postpaid customers. While a $660 iPhone is too expensive for the broader prepaid market, early indications suggest that the existing iPhone is in high enough demand to tap into at least part of the prepaid market over the next two years.”
• Brian Marshall, Gleacher & Co.: Reiterates a Buy rating and a $450 price target, up from $400 previously. His fiscal 2011 revenue estimate goes to $103.9 billion from $99.5 billion previously, while his EPS estimate rises to $25.85 from $23.54. “Sometimes we have to step back from our AAPL financial model and simply shake our heads in awe…it is amazing how it developed over the years. In CY08, AAPL generated ~$38.9bil of revenue with ~$9.2bil in operating profits (23.7% operating margin) with the iPhone representing ~23% of total sales. Today, we are introducing our CY12 estimates of ~$132.5bil in revenue and ~$40.9bil in operating profits (30.9% operating margin) with the iPhone generating ~46% of total sales. Over this 5-year timeframe, AAPL will have grown its revenue base more than three-fold while simultaneously more than quadrupling its operating profits (assuming our assumptions prove accurate). Furthermore, AAPL is currently supply constrained and only has ~5% share of the global handset and PC market with considerable runway ahead for growth.”
• Bill Shope, Goldman Sachs: Reiterates a Buy rating, while raising his price target to $470 from $450. He raised his 2011 estimate to $104.4 billion and $24.83 in EPS from a prior $101.4 million and $23.10. He sees $127.4 billion next year and $140 billion in 2013. Shope notes that operating profit margin of 31.9% was the highest in Apple’s history. “With the stock now trading at 9X our revised 2012 ex- cash EPS estimate and many sources of uncertainty resolved with the print, we believe the stock should begin to break out of its recent range.”
• T. Michael Walkley, Canaccord Genuity: Reiterates a Buy rating and a price target of $480. For Q3, Walkley expects iPad unit sales of 6.2 million, and his EPS estimate remains at $5.04 per share for the quarter. “In addition to solid growth for the iPhone in leading smartphone markets such as North America, we were impressed by the iPhone’s rapid growth in China. Management indicated China accounted for roughly 10% of total Apple sales in H1/F2011 and we believe China and other emerging markets such as India, Vietnam and Indonesia could drive a multi-year product cycle for Apple with the iPhone and also the iPad in these fast growth markets.”
• Rob Cihra, Caris & Co.: Reiterates a Buy rating and raises his price target to $500 from $460. He raised his revenue estimate this year to $105 billion from $104 billion and raised his EPS estimate to $25.67 from $23.81 previously. He also lowered his EPS estimate for Q3 from $5.29 to $5.04, to meet Apple’s forecast. Cihra’s unperturbed by the potential lack of a new iPhone this summer. “We think it’s mostly noise, as a 1-qtr bump in iPhone cycling does NOT change our view of the investment, since we see Apple and iPhone/ iOS now much more about “platform” vs. “product cycles.” And as we’ve outlined previously, products last maybe a year, “platforms” last decades.” Cihra also reflects on the possibility for “near-field communications” technology in the iPhone — possible, but it may take time: ” if Apple does ultimately add NFC to its iPhone it isn’t likely to just slap in a chip/radio (like some peers) but we think would wait until it had a comprehensive Apple-like “strategy” for leveraging its massive iTunes sub base (and perhaps balance sheet).”
• Brian Blair, Wedge Partners: “We feel like we correctly identified the outperformance of the iPhone, especially relative to much of the recent commentary around lower than expected iPhone volumes at Verizon. We did however, significantly miss the lower iPad units as our checks have pointed to a run rate suggesting a plausible 7 million unit number for the quarter. Our view is that we will see a unit number in that range for June. Our expectation has been for a June launch [of the iPhone 5], keeping with the history of the handset, but we are slowly moving to a view that September is accurate given that we still don’t believe production has begun or that orders are in place for a new model.”
• Kevin Dede, Brigantine Advisors: Reiterates a Buy rating and a $400 price target. He raised his June quarter view to $25.2 billion in revenue and $5.70 per share in EPS, from a prior $21 billion and $4.15. “Almost embarrassing after reducing our June expectations in consideration of the Japan disaster to Apple’s supply chain, we are now reversing course and raising them, even above where our estimates stood before lowering them last week. Inconceivable to us was Apple’s ability to find alternative sources for more than 100 components otherwise sourced from the quake and tsunami damaged area of Japan, and yet the company believes it can meet expectations set just a tad (about 3%) below existing Street consensus for the June quarter.”
• Tavis McCourt, Morgan Keegan: Reiterates an Outperform rating and raises his price target from $441 to $462. “Q2:11 was another very positive quarter of momentum for Apple, especially for iPhone and Mac product lines. We aren’t too concerned about iPad weakness sequentially as this was the product’s first March quarter, so it was hard to forecast exactly what the seasonal dip would be. However, Apple still clearly dominates this category and should experience strong sequential growth off of the March quarter. At this point it is hard to see what trips up Apple’s strong growth for several quarters going forward except for an exogenous shock to the economy.”
• Shaw Wu, Sterne Agee: Reiterates a Buy recommendation and a $445 price target. Wu raised his EPS estimate for the year to $24.50 from $23.50, while keeping his $101 million revenue estimate intact. ” It appears that we and many others underestimated the transition to iPad 2, which is an entirely new design. We had heard from our Asia-Pacific supply chain checks of as many as 3-4 million iPads per month production capacity but apparently this is in the process of being retooled and ramped for iPad 2.”
• Ben Reitzes, Barclays Capital: Reiterates an Overweight rating while raising his price target to $465 from $450. Reitzes cut his fiscal 2011 revenue estimate to $102.3 billion from a prior $103.8 billion on lower iPad estimates, while raising his EPS estimate to $24.30 from $23.50. “We now estimate iPad unit sales of 6.6 million for the June quarter (was 7.4 million) which could prove conservative depending on the ramp of production. We now estimate 26.7 million iPad units for FY11 (was 28.8 million) and 39.8 million for FY12 (was 40 million). While we believe demand for iPad 2 remains strong, we are slightly lowering our iPad estimates given the product has been difficult to track and we prefer to remain conservative.”
• Matthew Hoffman, Cowen & Co.: Reiterates an Outperform rating on Apple shares. He raised his Q3 EPS estimate to $5.44 from $5.30, while reiterating a projection of 8.4 million iPads to be sold this quarter. Hoffman’s fiscal 2011 EPS estimate goes to $25.05 from $23.43 previously.
• Alex Gauna, JMP Securities: Reiterates the Market Perform rating he had put in place back on March 16th. “We continue to caution that slowing supply chain dynamics that accurately presaged lackluster iPod performance and an iPad shortfall could still play out further in a June quarter that will not benefit from a new iPhone refresh.” Gauna raised his fiscal 2011 EPS estimate to $25.89 from $24.44, but says that he’s not changing his 2012 estimate of $28.40 until he knows more about the trends for the iPad 2 and the trends in the iPhone following last quarter’s introduction at Verizon.

Article courtesy of Tech Trader Daily