NEW YORK (TheStreet) It's no secret that Apple (AAPL) is increasingly becoming a one quarter company, generating a bigger portion of sales and profits during the holiday season than in any other quarter. What's not known, however, is just how big Apple's quarter was. Judging by some analysis on Wall Street, it could be much bigger than anyone imagined.
Canaccord Genuity analyst T. Michael Walkley, who rates Apple shares "buy" with a $600 price target, noted that his holiday surveys indicated "very strong iPhone 5s sales," and improved the supply level for all colors and sizes. Apple CEO Timothy D. Cook has said in the past that he was expecting an "iPad Christmas," but given the results of this survey and from others on Wall Street, the iPhone could top the iPad in revenue, units sold, and buzz created by a massive margin.
The smartphone market, particularly the high-end, is increasingly becoming a two horse race, with Apple going head-to-head with Samsung, which runs Google's (GOOG) Android operating system.
Other Android vendors, including Lenovo, ZTE, and others were "lacking the innovation to alter current market trends," Walkley noted, something that should bode well for Apple in the future. "We were disappointed with the lack of innovation from Android rivals at CES, and we believe a potential mid-year refresh for iPhone 6 and the upcoming larger-screen iPad position Apple for solid Y/Y F2014/15 sales growth," Walkley penned in his note.
(Full disclosure: I purchased a 16GB space grey iPhone 5s in December, and am loving every minute of it.)
Apple had a sluggish 2013 when it comes to sales growth, due largely to slowing iPhone sales and iPad growth, but Walkley expects that major innovation will happen in 2014, with the potential for a mid-year iPhone 6 launch. He also expects that Apple could release a larger version of its popular iPad tablet, rumored to be called the iPad Pro. As such, he's raised his 2014 and 2015 earnings estimates. He now expects Apple to earn $44.85 per share in 2014, up from $44.20, and $50.24 in 2015, up from $50.02 per share.
Analysts surveyed by Thomson Reuters expect Apple to earn $43.72 in fiscal 2014 and $47.88 in fiscal 2015.
The sluggish 2013 hurt Apple's share price, which had peaked past $700 in Sept. 2012 following the launch of the iPhone 5, and then struggled throughout 2013, amid concerns over lack of innovation and competition from companies such as Samsung.
Not only can the holiday results help propel Apple forward, there's the little matter of the deal with China Mobile (CHL). The Wall Street Journal reports that Foxconn, Apple's Chinese supplier, has shipped over 1 million iPhones (1.4 million) to China Mobile ahead of the official launch of the iPhone on China Mobile's network, the world's largest.
Apple and China Mobile announced the deal to bring the iPhone to China Mobile's 760 million users in December, following months and months of negotiations.
An order of 1 million+ iPhones for the initial shipment to China Mobile is a massive number, considering that Apple only ships about 2 million iPhones to China per month. Walkley believes that this deal could "offset some of the anticipated sharp decline in Western carrier iPhone sales post the holiday selling season."
Not only did the survey indicate strong sales for the iPhone, but it also did so for the iPad Air, which Apple launched in Oct. 2013. The iPad Air is considered an engineering marvel, no thicker than standard no. 2 pencil, and having the computing power and benefit of a 64-bit A7 chip.
Perhaps Cook will get the "iPad Christmas" he's expecting, after all. However, the iPhone won't go down without a fight.
--Written by Chris Ciaccia in New York
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