Be Careful What You Wish For, Apple Shareholders

The day of reckoning has arrived. Will the 3G iPhone live up to its lofty expectations?

It is time for Apple, Inc (AAPL-NASDAQ) to put up or shut up. As Research in Motion's Jim Balsillie said nearly 18 months ago, everyone's brave in the locker room.

But now it is time to take the field, and Apple has a little bit of work ahead of them, at least if they are going to catch up with the industry stalwarts:

...to date Apple has sold just 5.4m iPhones, a tiny fraction of the 1.2bn global mobile phone market that is dominated by manufacturers such as Nokia, which alone sold 437m phones last year. Telegraph

Nokia might sell a lot of crappy phones, but most American's still cannot pronounce its name correctly. But their shareholders do not believe they are infallible, unlike some people I know. Are the following expectations too bullish?

The median AAPL Monday closing price readers guessed is $197, which would be a 6% increase from Friday's $185.64 close; not unreasonable. (But that includes one crazy guess of $150; without it, the median is $200, a 8% jump.) Only 10% of entrants think the stock will drop. SAI

Yes, the technology savvy readers of Silicon Alley Insider seem to be cocksure of their prospects later today, with only 10% willing to concede the stock might actually fall. However, while the geeks live in a world of black and white, Wall Street is often shades of gray.

Based on the results on the iPhone Prediction Game, which is open until noon EST, I get the sense that everybody who wants to be long the stock already is.

Given the prevailing sentiment, it is not surprising hedge funds are looking to shoot against the geeks. But is their research on the money?

Short sellers are whispering there are problems in Apple’s supply chain. Indeed, one of Apple’s 3G iPhone component suppliers might have signaled an issue at the end of May, which was duly noted here at the time:

May 29th
Infineon Technologies (IFX-NYSE) earnings shortfall today might be a problem, and not just for their shareholders, who are watching thes stock trade down 12% in early trading.

Their guidance is looking tepid, in part due to lower than expected orders for its new 3G HSGPA chips. And on Wall Street, the name of the game is connect the dots. These dots lead directly to Apple, Inc, (APPL-NASDAQ) and the legendary 3G iPhone, which is incorporating the chip into its design. Were the rumors of a delay in the 3G iPhone last week unfounded? Maybe so, but now the speculation is that sales of the phone might ramp slower than expected 1440 Wall Street

Mark Veverka of Barron’s must have gotten the memo and is trying to take away the punch bowl just hours before the party gets started, citing unknown hedge funds who are betting against the stock:

But what the fanboys won’t tell you—as won’t many unabashed boosters in the press—is that the iPhone’s production rollout is behind schedule.

That’s what a number of tech hedge-fund managers are saying, attributing their information to investigative research outfits that talk with engineers and supply-chain managers at the contract manufacturer and component suppliers in Asia.

These sources say that Apple has slashed its internal expectations for iPhone unit sales by up to 16%. They report that Apple had planned to ship 12 million 3G units by the end of the third quarter, but now expects to ship about 10 million to 10.5 million by the fourth quarter, owing to production delays. Barron’s

Veverka intimates that the Infineon news is behind a large part of the short thesis. Old news?

The stage is set, and while transparency is not Steve Jobs strong suit, he should provide enough information to keep the rumor mill buzzing well into the week. Production delays are short term issues, and it is doubtful that Jobs has met his Waterloo, although RIM is certainly a bee in his bonnet.

Particularly in the enterprise market, at least if you believe what Changewave’s Research survey’s show.
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Smartphones are one brightspot in a tough enterprise spending environment, and 82% of buyers prefer RIM

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If i can’t add any value to this debate I might have to give it a rest, although I would hope to bring some badly needed impartiality to the smartphone battle of the titans.For the moment, Apple bulls had better hope Veverka is wrong, and if he is indeed on the mark, that Wall Street has already discounted it and looks at the long term big picture.

Of course, a rally in RIM, coming at Apple’s expense, is the nightmare scenario for Apple bulls, especially given how much trash talking they have been doing. Perhaps the geeks need to be introduced to an old saying, that may or may not have originated on Wall Street.

Money talks and bullshit walks

Game on!
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Apple ready to unlock 3G iPhone
Telegraph

Your 3G iPhone Predictions: GPS, Camcorder, On Sale Monday
Silicon Alley Insider

Delay to Cut 3G iPhone Sales
Barron’s (Subscription required)

Is Infineon’s Weakness a Worm in Apple’s 3G iPhone?
1440 Wall Street
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Positions

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