Apple iPhone, iPad sales slow as iPhone 5 hits Q3

By Jonny Evans

Even as Apple [AAPL] plans tenth birthday celebrations for its retail stores, a little rain falls on the Cupertino parade, with another iPhone 5 release rumor: FBR Capital Markets is jumping into the fray with its own speculation, claiming not only that iPhone sales are slowing but that the next-generation device won't appear until Q3, (broadly in line with consensus expectations).


Rumor reprise

The iPhone 5 will include an 8-megapixel camera and a single baseband chip that will work on both GSM and CDMA networks, the analysts said.

"Qualcomm is replacing Intel as the baseband supplier, selling an integrated CDMA/WCDMA baseband that allows Apple to streamline production."

That's also in line with my conviction the device will be a world phone, capable of running on both networks. The iPhone 4 has a 5-megapixel camera.

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The bad news is in Apple's current quarter, where a combination of component supply hurdles and slowing iPhone sales could impact predicted growth.CDMA slip slidin' away

FBR (via Wall Street Pit) expects second quarter iPhone production to have been reduced by 16 percent to 20.1 million units, mainly on CDMA sales shortfalls (though I do consider a debut on CDMA networks in China and India may have been planned for the current quarter, but delayed). Competing CDMA devices from Samsung and HTC are attributed for these lower-than-anticipated numbers.

The analysts expect Apple will sell/build 43 million iPhones in the first half of this year, reducing sales estimates for 2011 to c.90 million, down from a previous 100 million to 105 million estimate.

These revelations follow a rash of reports claiming the iPhone will offer an edge-to-edge screen (and likely the disappearance of the physical Home button) in order to facilitate more usable on-screen space.

Some analysts meanwhile continue to insist the next version of the device will only be an "incremental" upgrade. Jefferies & Co. analyst Peter Misek said earlier this month:

"According to our industry checks, the device should be called iPhone 4S and include minor cosmetic changes, better cameras, A5 dual-core processor, and HSPA+ [Evolved High-Speed Packet Access] support."

Oh, and will also run on Sprint, T-Mobile and China Mobile.

Component problems continue

iPad production remains problematic, with the Japanese earthquake causing supply chain shortages and manufacturing bottle necks, FBR said. This has caused them to trim a million off of Apple's third quarter iPad sales estimates, though the analysts do inform us that Apple may resolve these component supply problems.

These factors seem likely to impact Apple's bottom line in the current quarter, assuming no new product launches appear to compensate for these problems. This could just be a patch, with Apple also reportedly preparing low cost iPhones. We wait and see.

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