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April 09, 2009

Apple: New iPhone Rumors Heating Up Ahead of Earnings

Pretty much everyone is now expecting a June introduction of a new iPhone model. Most people expect an upgrade to the 3G but a few hold out for a second form factor that would have a lower price and allow cheaper data plans. Rumors are rampant about upgraded production schedules in the Far East. Most of these articles indicate that the production increases are dedicated to building inventory for the new product. That is most surely the case but I have been wondering lately about demand trends for the current version. Anecdotally, I see iPhones everywhere. I have to admit I look for them and I own one myself. I am also long Apple. I also live in the north suburbs of Chicago where Macs are hugely popular and every kid has an iPod. Apple reports 2Q09 shortly. As usual, guidance is what will drive the stock. But the quarter itself hinges on demand for iPhones and Macs. No doubt now that iPods are saturated and will suffer a significant sales decline (possibly next quarter due to new shuffle pipeline fill but ASP will be down). Many analysts have been expecting a weak quarter for iPhones and Macs. Could it be that iPhone 3G demand is strong and some of that production is to meet current demand? RIMM certainly indicates that smartphone demand is good. I believe smartphones are a rising tide lifts all boats story for 2009. Could Apple be in for beat and raise? OK, that is asking too much but how about a beat and guidance that matches analyst estimates?

Posted by Steve Birenberg at April 9, 2009 08:18 AM in AAPL