Apple: Street Ponders iPhone, iPad Clues - Barron's (blog)

By Tiernan Ray

Shares of Apple (AAPL) are up $15.54, or 2.6%, at $610.57 today, perhaps lifted in part by talk of the shares being included at some point in the Dow Jones Industrial Average (DJIA), and speculation about a stock split that might be implied by such a possibility.

But a greater focus at the moment is what will happen in the next several months, as analysts try to handicap potential introductions of new iPhone, iPad and other product introductions in the fall.

Yesterday, you’ll recall, the Web site iMore predicted that the company will host a special event on September 12th to unveil the next iPhone model, and, possibly, a smaller, cheaper version of the iPad, the so-called iPad Mini.

Speculation intensifies today following the fiscal Q1 report last night from chip maker Cirrus Logic (CRUS), which gets the vast majority of its revenue selling audio encoders and decodes for Apple’s products.

Cirrus forecast that revenue will rise about 70% this quarter from last quarter’s level, well above what the Street has been modeling to date. Some analysts are taking that as a sign the company expects a bigger-than-usual order for parts from Apple.

Cirrus shares are up $6.97, or over 23%, at $36.81 on that forecast.

Today, Jefferies & Co.’s Peter Misek, who has a Buy recommendation on the shares and a $750 price target, writes that several sources have confirmed to him the iMore date, though he thinks it will be just the iPhone that is unveiled on the 12th, with Apple possibly hosting a separate event for an iPad Mini, and a separate event for the much-rumored Apple-branded television set.

Raymond James’s Tavis McCourt, who has a Buy rating on Apple shares and a $730 price target, writes today that the Cirrus results are in contrast to more modest forecasts in recent weeks from other Apple suppliers such as TriQuint Semiconductor (TQNT), Skyworks Solutions (SWKS), and Qualcomm (QCOM).

As McCourt sees it, the disparity can be explained as a disparity between the different companies’ reporting schedule, and by differences in how they make revenue off Apple preducts:

First, Cirrus’ CEO mentioned that it is not atypical for the company to start shipping product one-half quarter to one full quarter before launch of a consumer product. As it relates to Qualcomm, we believe Qualcomm booked no material revenue from Apple in last year’s September quarter even though the iPhone 4S shipped within a couple weeks of quarter close. Therefore, we suspect Qualcomm has a revenue recognition policy that may be quite different than Cirrus’ policy. Secondly, Cirrus also ships into iPads (including Wi-Fi-only), whereas Qualcomm, TriQuint, and Skyworks largely do not for their big ASP components. Cirrus’ guidance may be explained by a 7-inch iPad/iPod launch this quarter, as this device would likely have meaningful Cirrus content in it, but not necessarily the other three mentioned.

McCourt concludes that the “drumbeats of the Apple supply chain have started” and he thinks the Cirrus results point to a”large build” for the next iPhone, whether in September or later, and “likely guarantees a meaningful 7-inch iPad/iPod launch as well,” though he doesn’t speculate as to what the time frame may be.

On a related note, Morgan Stanley‘s Katy Huberty, picking through the details of the 10-Q filing from Apple, notes that Apple’s “off-balance sheet commitments” grew 44%, year over year,” in fiscal Q3, “an acceleration from the March quarter and above the 23% revenue growth in June.”

Huberty, who has an Overweight rating on Apple stock and a $720 price target, writes that based on historical patterns of correlation between Apple’s, Huberty thinks the build-up in component and other expenses presages a surge in revenue in the calendar Q4, Apple’s fiscal Q1:

if revenue to off-balance sheet commitments were consistent with historical trends since the first iPhone launched, it suggests $45.2B of revenue. Given we expect some of the commitments are for the unannounced iPhone 5 and potentially iPad Mini which could come as late as October, some of the revenue strength could be pushed into the December quarter as we saw in 2011.