Increased talk of a September launch of the next iPhone, as well as a new, smaller iPad -- if accurate -- would make it easier for Apple to erase the bad taste of the second quarter and beat its own lowered expectations this quarter, a Wall Street analyst said today.
Brian White, of Topeka Capital Markets, said Apple would be smart to ship the new smartphone and tablet in September -- part of the third calendar quarter -- rather than duplicate its 2011 timetable, when it launched the iPhone 4S in early October, or the fourth quarter.
"A September launch for the iPhone 5 would be significant for the stock price, especially given the recent concerns around the June quarter weakness in the iPhone and a weak September quarter outlook," said White in a Monday note to clients.
Apple's stock took a hit last week after the company reported earnings below Wall Street's projections. In the same conference call with analysts, Apple pegged the third quarter's revenue at $34 billion, about $4 billion short of the Streets' expectation.
Since then, Apple's stock has recovered much of last week's losses: Monday's share price of $596 was nearing the $604 closing price on July 23, the day Apple released its second-quarter numbers.
An earlier launch date for the iPhone 5 would give the company a better chance of bringing supply closer to demand this year, said White in an interview today.
"If they're moving to a different form factor for the iPhone 5, which is what we expect, they're more likely to have yield issues," said White, referring to an anticipated change in the size of the new iPhone. "Just in general, it's always been somewhat more difficult to get good yields with a [design] change."
Apple has typically had trouble meeting demand for several months after the launch of a new iPhone; a new design would exacerbate that imbalance, in White's opinion.
A three-week jump over last year could also move up the date when supply meets demand, important because of the end-of-year holiday sales season in the West, and the start of buying for the New Year's holiday in China.
White was reacting to new speculation that Apple would introduce the next iPhone -- tagged as "iPhone 5" by most in the absence of an official name -- in September.
Earlier today, iMore.com, citing no specific source, claimed that Apple will unveil the new iPhone on Sept. 12 and begin selling the smartphone Sept. 21.
Those dates are three weeks earlier than the ones in October that many have assumed would be used in a repeat of the iPhone 4S's schedule. According to that theory, the new iPhone would debut Oct. 2 and go on sale Oct. 12.
White has been one of the few analysts who has long pegged the iPhone 5 launch for September, not October.
Like iMore.com, White also expects Apple to unveil a smaller iPad, called the "iPad Mini" by most pundits, at the same time it reveals the iPhone 5.
The consensus is that the iPad Mini will feature a 7.85-in. display and come in at a lower price -- perhaps $250, maybe $300 -- to better compete with the wave of Android-powered tablets of that size, including Google's Nexus 7 and Amazon's Kindle Fire.
As Van Baker of Gartner put it last week, "Apple owns the 10-in. tablet market, but because they don't compete in the 7-in. market, they've left a window of opportunity there for Amazon's Kindle Fire and Google's Nexus 7. They could be thinking that with a 7-in. iPad that they could own the whole thing."
In his note today, White reiterated his support for a smaller iPad, arguing that a Mini would fill a hole in Apple's lineup in developing countries, including China, and appeal to a segment in more mature markets like the U.S. that has so far declined to buy an iPad.
An iPad Mini would also be attractive to schools, a market Apple spent time boasting about during the earnings call.
"We believe the education market is well suited for an 'iPad Mini' as a smaller, more portable device would prove more suitable for younger children, while schools would appreciate the lower price point given the growing budget constraints," said White.
Last week, Apple CFO Peter Oppenheimer said the company had set a single-quarter record for iPad sales to educational institutions, selling nearly 1 million of the tablets, with the $399 iPad 2 "particularly strong" in the K-12 market.
White has projected iPhone sales of 21.9 million in the third quarter assuming Apple starts selling the new smartphone then, with an additional 39.4 million in 2012's final quarter, for a total of 61.3 million.
In the first half of this year, Apple sold 61.1 million iPhones.
Other hints that Apple may launch its next iPhone, and perhaps an iPad Mini as well, this quarter came from the company last week when Oppenheimer and CEO Tim Cook forecast a drop in gross margin to 38.5% for the period ending Sept. 30, and attributed the decline to "product transitions," Apple-speak for new or revamped hardware.
Apple usually predicts a lower gross margin during quarters of major product introductions to account for the increased expense of retooling assembly lines, as well as the products' development costs.