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Apple Estimates Cut on iPhone Worries (Update 1)

Stocks in this article: AAPL CHL

Updated from 8:51 a.m. EST to provide analyst's comments in the next to last paragraph.

NEW YORK ( TheStreet) -- Apple (AAPL) is under attack again Friday as Credit Suisse cut its earnings estimates, citing iPhone worries.

Credit Suisse analyst Kulbinder Garcha cut his full-year 2013 estimates from $47.90 to $44.92 a share; 2014 went from $58.18 to $54.03 a share. However, Garcha kept the "outperform" rating, as he believes Apple will refresh its iPhone lineup in the second half of 2013, which will "return Apple to its growing ways."

Meanwhile, instead of 38.2 million iPhones, he now expects 30.6 million iPhones to be sold in the second quarter of 2013, due in large part to a mid-2013 iPhone refresh, which may cause some hesitancy on consumers.

In the past, Apple has blamed product speculation as a result of selling fewer-than-expected products and delaying purchases.

Garcha also mentioned impact from Samsung, which is set to launch the Galaxy S IV on March 14, in New York. Apple and Samsung have been battling for the top spot in smartphones, with various research firms citing one company or the other leading at various times. Garcha noted the Galaxy S IV is likely to gain share in the high-end, where Apple competes with its iPhone 5.

There's also the concern that larger smartphones are taking more market share. At Mobile World Congress, Garcha noted that approximately 70% of the phones unveiled are geared toward high-end consumers, with 60% of them having bigger screens than the iPhone 5, which is 4 inches.

Even with all of these concerns, the iPhone is still a growth story, and continues to be the major driver of profits for Apple. Last quarter, Apple sold 47.8 million iPhones, up from 37.04 million iPhones in the year-ago quarter. That amounted to 37.1% year-over-year growth, not counting the extra week in the fiscal first-quarter of 2012 because of the leap year.

"We would view the above reduction in volume forecasts as a reset and product transition impact rather than a structural concern long term," Garcha wrote in his report.

There are additional carriers, which could add as many as 65 million iPhones in fiscal 2013. China Mobile (CHL) has been in talks with Apple, presumably about the iPhone. "In the morning, Apple's CEO Tim Cook visited China Mobile's headquarters. China Mobile's Chairman Xi Guohua and Tim Cook discussed matters of cooperation," a China Mobile spokesman told Reuters last month, though a confidentiality agreement was signed.

Some on Wall Street wonder whether the iPhone is really in trouble from these potential near-term risks. One hedge fund analyst, who declined to be named, said the call might be short-sighted. "I feel like it is a little early in the year to make this call," the analyst said in a message. The analyst is long Apple shares.

Shares of Apple were lower in trading Friday, off 1.71%, to $433.86.

-- Written by Chris Ciaccia in New York

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