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



) -- Another day, and more cuts to


(AAPL) - Get Apple Inc. Report

earnings estimates, as the iPhone maker's chief competitor


unveiled its

Galaxy S4 Thursday night.


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

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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,


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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.

Apple shares have fallen drastically in the past six months amid innovation concerns and competition worries. Wu noted that the recent supply chain rumors are likely due to weaker demand cause by an inventory drawdown ahead of the iPhone refresh later this year, and that's affecting investor sentiment.

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surpassing $700 a share

in September, Apple is off nearly 40%.

That doesn't mean all is lost for Apple, however. Apple's $137 billion in cash has

come under attack

, with David Einhorn and others asking for Apple to return some of it to shareholders. Apple has noted in the past it's in active discussions about returning more cash to shareholders, something Milunovich noted is a positive.

There's also the


for a deal with

China Mobile

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, as "the increase in China Mobile's capex to $31bn this year in support of a 4G network that suggests coming support for the iPhone," Milunovich noted.

Lastly, investor sentiment is so bearish on the stock, and with so many analysts cutting estimates left and right it seems as if all hope is lost for Apple. Not so, said Wu.

"With 2 weeks left, we believe AAPL will likely hit the lower end of its guidance. The good news is this is better than most expecting a miss," Wu said.

Apple shares are higher in early Friday trade, up 1.73% to $439.99.


Written by Chris Ciaccia in New York

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