This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Apple Estimates Cut as Samsung Unveils Galaxy S4 (Update 1)

Updated from 9:19 a.m. EDT to provide price target cut in the fourth paragraph and iPhone estimates in the sixth paragraph.

NEW YORK ( TheStreet) -- Another day, and more cuts to Apple's (AAPL) earnings estimates, as the iPhone maker's chief competitor Samsung unveiled its Galaxy S4 Thursday night.

UBS analyst Steven Milunovich said the Galaxy S4, or Samsung's "life partner," raises the bar for Apple. "The S4 introduction continues the drumbeat of negative news," Milunovich noted in his report. As a result, Milunovich cut his fiscal second-quarter earnings estimates on Apple to $9.66 a share from $10.05 a share, and reduced his estimate on iPhone shipments by 1.5 million to 35.5 million. He also cut third-quarter iPhone numbers by 1 million to 28.5 million. The price target went to $550 from $600, but the "buy" rating remains unchanged.

The recent rumors out of Apple's supply-chain are making Milunovich more cautious on the near-term, though he noted he isn't sure whether it's anything related to demand or not. Samsung is stepping up its game with the Galaxy S4, and that, along with the rumors that Apple may release a new iPhone later this summer, have Wall Street more cautious than it's been previously on Apple.

Samsung Galaxy S4: Disaster 101

Another Apple bull, Sterne Agee's Shaw Wu, also cut his Apple estimates ahead of the potential product refreshes in the second half. He cut his revenue forecast to $41.3 billion from $42.9 billion for the March quarter, and lowered his earnings estimates to $10 a share, down from $10.25. Both fiscal 2013 and 2014 were also cut, with 2013 revenue being reduced to $180.5 billion, down from $187.4 billion. Fiscal 2014 was cut to $206.8 billion in sales, down from $213.6 billion, as Wu believes the bigger iPhone refresh is not likely to happen until 2014. Wu cut his price target to $630 from $715, but kept his "buy" rating.

"In our supplier checks, we are seeing evidence of a larger form factor iPhone being worked on but given its early stage, we don't believe we will see it ship until 2014," Wu wrote in his note.

Wu cut his iPhone estimate for the upcoming quarter to 32.5 million units, down from 35 million units. He kept iPad and Mac units the same, however.

With the Galaxy S 4 coming in at 5 inches, many believe Apple has to offer a larger iPhone to innovate and show that it's not behind Samsung, Google (GOOG) and a few others when it comes to innovation. Wu thinks Apple is "leaving money on the table" by not introducing a larger iPhone, given the demand for phones 4 inches and above. The iPhone 5 has a 4-inch screen, a half inch bigger than Apple's previous iPhones.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs