The past week was an interesting one for the mobile sector. Both Verizon (NYSE:VZ) and AT&T (NYSE:T) announced their respective smartphone sales for Q4 which were a record for each carrier. The iPhone led from the front at both Verizon and AT&T, implying another blowout holiday quarter for Apple (NASDAQ:AAPL).
Nokia (NYSE:NOK) also revealed its Lumia guidance for Q4, positively surprising the markets and removing uncertainties around a potential supply crunch. Research in Motion (NASDAQ:RIMM) also stepped up to the plate, giving strategy insights ahead of the BB10 later this month. The BlackBerry maker said that it plans to launch six new BB10 devices this year which will help it cater to different price points and compete effectively in not only developed regions but also the international markets where the BB brand is still very popular.
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Apple received a shot in the arm ahead of earnings as two of its biggest carrier partners in the U.S. announced record smartphone sales for the holiday quarter, driven primarily by the iPhone. AT&T arrived on the scene first, announcing a record 10 million smartphone sales for the fourth quarter 2012 and beating its previous guidance. Verizon also dropped by a day later with a guidance of 9.8 million smartphone activations during Q4 2012, which helped it not only record a 27% growth over the year-ago quarter (as against AT&T’s 6%) but also closed the gap with AT&T. While Verizon’s superior LTE coverage may have helped it narrow the smartphone gap with AT&T last quarter by shifting the iPhone mix towards itself, the introduction of the high-speed technology in the iPhone 5 means that Apple will have had a yet another blockbuster Q4 nevertheless. This will be driven by sales not only in the U.S. but also international markets seeing as this iPhone rollout was the fastest ever in Apple’s history.
Taking into account the historical iPhone mix of smartphone sales for both the carriers and each of the carriers’ contribution to overall iPhone sales, we see Apple could have garnered anywhere between 47 and 50 million iPhone sales last quarter. (see AT&T’s Smartphone Sales Point To A Strong Holiday Quarter For Apple and Verizon’s Q4 Smartphone Sales Imply Another Big Holiday Season For Apple) This still leaves a significant scope for upside if Apple has managed to benefit more than usual from its fast iPhone roll-out this holiday season. For example, Apple’s holiday quarter sales in 2012 will include those in China as against the iPhone 4S rollout when China received the iPhone after December.
With a only a few weeks remaining for the launch of the new BlackBerry 10 OS, RIM is giving some valuable insights into its 2013 strategy as it looks to stem its incessant slide in the smartphone market. The BlackBerry maker has revealed plans to launch at least six BB10 devices this year in a shotgun approach that will help it target as many price points and market layers as it can in BB10’s debut year. While RIM will initially launch only two BB10 devices – one touchscreen smartphone and the other with a QWERTY keypad – the other four (and possibly more) devices will be launched over the course of the year as the company not only looks to win over customers in the developed markets but also target those regions in international markets where the BB brand is still pretty popular.
In order to reach as many customers as possible, RIM has garnered the support of as many as 150 carriers across the world that are testing out the BB10 devices in their labs for approval. With BB10 launch nearing, RIM’s shares have risen more than 50% in the last three months and are currently trading at $12 levels, which we believe is fair value for the company’s stock at the current stage. We see most of this value coming from RIM’s huge subscriber base and the unique value propositions it can make in push email and security. An upside/downside to our price estimate completely hinges on the kind of success and market share gains that BB10 sees in the coming months.
Nokia’s second run with Microsoft’s (NASDAQ:MSFT) Windows Phone seems to be off to a flying start. The Finnish handset maker issued a very positive fourth quarter guidance Thursday, beating its expectations on both the feature phones and the Lumia front. Lumia shipment volume was 4.4 million units, more than 4 times the same in the fourth quarter of 2011. While there seemed to be high demand for the new Lumia Windows Phone 8 smartphones with various retailers and carrier partners in the U.S., Europe and China reporting stock sell-outs throughout Q4, it wasn’t clear if the same was due to a limited supply of the Lumias. The Q4 guidance does lift a fair bit of that uncertainty and with Windows Phones finally outselling Symbian and Meego models (by 2:1), a new era at Nokia seems to have finally begun. Moreover, as a result of the solid performance, Nokia expects its devices division to regain underlying profitability in Q4 2012.
The rising optimism surrounding Nokia’s comeback bid with Windows Phones saw its stock rising by close to 20% Thursday, bringing the share price closer to our $4.50 price estimate. However, it still remains to be seen how much of the Lumia mix was driven by Windows Phone 8 volume and if the shipment volume was propped up by some of the older Lumias that were deeply discounted. Further, the coming months will be very important for Lumia since Nokia will need to work hard to ensure that the demand doesn’t fizzle out post the initial euphoria in order to stage a turnaround in its smartphone business.