Martin Hajek

This according to France Telecom CEO Stephane Richard, who told Bloomberg that his customers are increasingly searching out cheaper wireless plans and less expensive handsets. With consumers demanding lower prices, Richard says, smartphone manufacturers like Apple may have to consider offering new devices targeted at the price-sensitive end of the market.

“We are in a period of changing consumer behavior,” Richard said. “Selling a phone for $600 is getting more and more difficult.”

Richard stopped short of calling for Apple to introduce a cheaper version of the iPhone, but his implication could hardly be more clear. The premium smartphone market is reaching saturation, and if the company wants to sustain growth and increase market share it should consider rolling out a lower-end version of its flagship handset.

“There are fewer early adopters, and probably with the next release of the iPhone this will be evident,” Richard said. “Except for a few hundred thousand people who will buy the latest iPhone — except for that category of people — the majority of the market will be difficult.”

Interesting theory. But a few hundred thousand people? The iPhone 3GS sold more than one million units during its first weekend at market. The iPhone 4 sold more than 1.7 million. And the iPhone 4S sold more than double that. And the iPhone 5 sold more than five million. That trend doesn’t exactly support Richard’s prediction.
And clearly Apple has done pretty well for itself peddling premium hardware — even in a down economy. The record revenue of over $54 billion and sales of over 75 million iOS devices it reported last quarter are evidence of that.

That said, Richard’s comments add an interesting twist to the chorus of calls for a low-end iPhone that we’ve been hearing. Richard is arguing, as many have, that Apple needs a budget handset for emerging markets like China and India, but he’s arguing that it needs one for established markets as well.

And there might be something to that.

While peddling legacy iPhones to price-sensitive customers has allowed Apple to tap into the budget handset market, it would likely be a lot more successful with a device designed specifically for it. As I wrote earlier this year,

“What’s more appealing, paying bargain-basement prices for a two-year-old iPhone? Or purchasing an inexpensive version of the latest model? Think of the low-end iPhone like the iPad mini, and the logic of that argument becomes quite clear. The iPad mini has become very popular, very quickly.”

A low-end iPhone could very well follow a similar trajectory. Which is why Apple has been considering one since at least 2009 and may even ship it before the year is out.

“The days of easy iPhone sales are over,” Jefferies analyst Peter Misek told AllThingsD. “Competitors have closed the gap in technology while Chinese and Indian white label vendors powered by Android have demolished pricing in some markets. Apple needs to have a breakthrough to grow earnings again; otherwise, profits likely peaked on a run-rate basis in Q4 of last year.”

Jefferies & Co. analyst Peter Misek on Tuesday raised his rating on RIM shares to “Hold” from “Underperform,” doubling his price target to $10 for this very reason. “We have been surprised by the strongly positive initial feedback on BB10 from carriers,” Misek wrote in a recent note to clients. “We are a bit puzzled as we expected a more muted response given BB10 is two years late and RIM’s market share has plunged from 20 percent to 5 percent.”

Indeed. Misek, who’s generally pretty skeptical of RIM’s prospects for a turnaround, now thinks BB10 has a 20 percent to 30 percent probability of success. In other words, the company is still a huge gamble, but it’s a better one than previously thought. Misek figures carriers see BB10 as one of their last chances to avoid being locked long term into Apple and Google’s smartphone OS duopoly.

It’s worth noting that there are still plenty of contrary views out there. Pacific Crest analyst James Faucette, for example, today issued a note arguing the chances are very slim that BB10 will reverse RIM’s precipitous slide. His big concern: That Google, Amazon and Microsoft will begin subsidizing not only mobile hardware, but mobile services as well. If they do, that could be devastating for RIM.

“If declines in [RIM's] service business were to accelerate, the key remaining bull case on the stock would be dramatically undermined,” Faucette wrote. “Let us be clear: we do not have a firm opinion on the quality of upcoming BB10 devices and OS (although we harbor our doubts). On the other hand, we are absolutely convinced that, regardless of its quality, the structure of the industry means that there is virtually no chance that BB10 will meaningfully change RIM’s trajectory.”

RIM shares closed at $9.71, up 1.2 percent, today, and the stock continued to climb in after-hours trading.

In other words, don’t expect RIM’s new make-or-break OS until March 2013.

“Management has been silent as to the timing of the launch within CQ1,” Jefferies analyst Peter Misek said Tuesday. “But we believe plans for a January launch have now been pushed back until March, which means BB10 will miss RIM’s February quarter.”

Here at AllThingsD, we’ve been hearing similar chatter, with sources familiar with RIM’s plans indicating that a January launch is, in the words of one, “probably too optimistic.” This person also reiterated that the company is intent on releasing polished products. It’s working quickly, but it isn’t going to rush its new handset portfolio to market. Given its deteriorating market position, RIM needs an exceptional hit. And that’s what it’s shooting for.

For its part, RIM says all is well. “There’s lots of rumors and speculation out there. I think that demonstrates lots of interest in BlackBerry 10,” a RIM spokeswoman told AllThingsD. “As Thorsten mentioned during BlackBerry Jam Americas, we continue to be on track for our calendar Q1 target.”

So RIM will continue to face challenging conditions in the current quarter, with the holidays being particularly tough. But even the skeptical Misek sees a chance of things beginning to turn around next year, after BB10 ships — particularly if RIM licenses the OS to others. “We still believe a third ecosystem will emerge, but the probability of BB10 filling the role is wholly dependent on whether RIM can convince Samsung, Huawei, and ZTE to license,” Misek said. “We think Samsung and some other Asian OEMs might be interested, but we think they see better terms and entry points months from now.”

Piper Jaffray analyst Gene Munster, an Apple bull if there ever was one, whacked 2.2 million units from his September iPhone forecast Thursday for precisely this reason. Munster’s team surveyed 100 U.S. Apple Stores over the past week and concluded that the supply of iPhone 5 is “extremely limited.” Given that, Munster lowered his iPhone forecast for September from 27.2 million units to 25 million units.

But Munster’s not yet willing to take a scalpel to the holiday quarter. By December, he figures, Apple should be able to meet demand for the iPhone 5, and when it does, investors will finally see those outrageously big sales for which they’ve been hoping. “While the supply issues for the iPhone 5 since launch are concerning in terms of the company’s ability to fully meet demand in December, we are staying with our 49 million unit estimate for the holiday quarter,” he said.

So, assuming supply and demand for the iPhone 5 hit equilibrium in the next month or so, Apple is going to be in a great position heading into the holidays. As Jefferies analyst Peter Misek observes, right now there simply aren’t enough iPhone 5s to go around. “Remember, there are 170 million post paid subscribers coming off contract,” Misek told AllThingsD. “That’s overwhelming all supply ramps. The demand here is unprecedented.”

HP shares are trading lower by more than 2 percent in premarket action in partial response to the downgrade note by Peter Misek of Jeffries and Co. Misek lowered his target price for HP shares to $14 from $17, and maintained his already low estimate on its per-share earnings for fiscal year 2013 of $3.58, which is far below the consensus estimate of $4.22.

He has lots of reasons: For one thing, Misek is worried about HP’s intentions in the tablet and smartphone arena. After failing to capitalize on the acquisition of Palm and shutting down the webOS hardware business after sales of the TouchPad tablet failed to gain traction — and a subsequent $3.3 billion write-off for goodwill and inventory — Whitman has promised to try again with another smartphone. Misek sees that “makes sense strategically,” but it carries with it a lot of risk: “On top of adding costs and working capital burdens to an already stressed balance sheet, there could be additional write-offs.”

Meanwhile, HP already has significant trouble with its bread-and-butter PC business. Overall demand in the PC market is slowing, while Microsoft’s Windows 8 doesn’t yet appear to be much of a catalyst, at least if you look at the slow demand for PC microprocessors from Intel.

On top of that, the transition to a renewed emphasis on higher-value IT hardware and services is sputtering. Documents revealed in the lawsuit with Oracle over the Itanium chip — HP won the first round, but Oracle has promised to appeal — laid bare the fact that HP has long been relying heavily on revenue-derived service-and-support contracts with customers who buy Itanium-based servers. Referring to the Business Critical Server unit that sells the servers, Misek writes that his conversations with its customers don’t bode well for HP: “Our conversations with BCS customers indicate a lack of confidence in the longevity of the product platform. While migration off of BCS is not lightly undertaken, we expect continued weakness in BCS hardware and related Services revenues.”

Then there’s the printer business: Inventories of printer ink have built up because they’re selling more slowly than before. The correction, Misek argues, will take several quarters to resolve. He thinks tablets are cutting into demand for printed pages.

Finally, there’s software: The one still-unfinished bit of messy business left over from the 11-month service of former CEO Léo Apotheker is the $11.7 billion acquisition of the British software firm Autonomy, announced 13 months ago. Misek says he expects HP to write off some of the value of Autonomy. This would follow the massive $8 billion write-off announced Aug. 22, related to the EDS acquisition from 2008. After that first big write-off, HP hinted strongly that more goodwill write-offs are in the offing, probably in Software, Misek says. “After Autonomy’s poor performance the last couple quarters, we think HP will write off half of the $6 billion goodwill from the Autonomy acquisition, which will put further pressure on its debt to equity ratio.”

Which brings us to HP’s debt situation. Misek notes that HP has $1 billion in debt payments due in the fourth quarter of this year, and another $5.5 billion due in fiscal 2013. While not unusually high for HP historically, it doesn’t exactly help the already-strained balance sheet. Investors in debt markets have certainly noticed as credit default swaps on HP bonds experienced a textbook case of “blowing out” over the summer, though in all fairness it wasn’t the only PC maker they worried about.

Misek isn’t the first to place a “sell” rating on HP shares. Chris Whitmore of Deutsche Bank Securities was notable for placing a “sell” on HP in August of 2011, and has remained bearish on the shares since then. The bearish case is strong, indeed, and many investors are working it: Short interest in HP shares — an indication of sentiment that the share will fall further — has increased substantially in the last year.

As markets opened for trading in New York, HP shares fell by 15 cents, or a little less than 1 percent, to $16.96 on the New York Stock Exchange, after closing yesterday at $17.11. If HP shares fall to the $14 price target that Misek has set, it would constitute their lowest price since April of 2003.

Apple will begin taking preorders for the iPhone 5 this coming Friday, Sept. 14. A week later, on Sept. 21, it will begin selling the device in nine key markets, among them the U.S., Canada, the U.K., Japan and Hong Kong. The following week, it will bring the iPhone 5 to 22 more countries. And if all goes according to plan, the device will be available in 100 markets by year’s end. In comparison, iPhone 4S debuted in seven countries. Apple began shipping it to 22 more countries two weeks later. And by the end of 2011, it was available in 70 countries. When the iPhone 4 launched, it debuted in only five countries, and by the end of its first month at market it was still only in 18.

So Apple has given the iPhone 5 an aggressive rollout plan. And coming as it does after rumblings of supply chain contraints that some worried would limit iPhone 5 availability at launch, it’s something of a surprise.

“The schedule’s impressive,” ISI International analyst Brian Marshall told AllThingsD. “Apple must feel confident about its supply of in-cell display panels.”

Jefferies analyst Peter Misek took a similar view. “This timeline is way, way more aggressive than expected,” Misek told AllThingsD. “It should finally put to bed the unfounded view that this iPhone launch will be hugely capacity-constrained.”

More to the point, it should go a long way toward reassuring the market that Apple can meet consumer demand for the iPhone 5 and hit heady analyst estimates for the December quarter that range upwards of 45 million units. Estimates like those of Piper Jaffray analyst Gene Munster, who’s looking for the iPhone 5 to chart some serious growth for Apple in the months ahead.

Said Munster in a Wednesday afternoon note, “While we previously expected December units to shift to September for a September launch, we are maintaining our 49 million December estimate as we believe Apple can still deliver on the 32% year-over-year growth that number assumes.”

“In our view, the challenge for the Android camp now is that Apple will likely pursue the other Android vendors,” Jeffries analyst Peter Misek said in a note to clients. “We believe industry players will continue to develop their portfolio of patents as this case highlights significance of having strong IP in both design and utility.”

Morgan Stanley analyst Katie Huberty views Apple’s victory over Samsung as a significant competitive advantage, one that could make Apple’s smartphone rivals a lot less nimble than they are currently. “The bigger win for Apple is the competitive ramifications if other smartphone vendors experience lengthened product cycles and are forced to alter their software and hardware to ensure unique designs relative to Apple products,” she said.

In other words, the FUD — the fear, uncertainty and doubt — created by the validation of Apple’s patents in this case makes for a troubling distraction for OEMs that must now expend additional time and effort vetting their device designs to ensure they don’t invite litigation.

This will be an obvious advantage for Apple — but likely only for a short while. Google and its Android hardware partners will develop workarounds for Apple’s IP. It’s only a matter of time.

“We believe that it is likely that other lawsuits between Apple and other handset makers move toward a settlement, given the precedent of the Samsung case,” Piper Jaffray analyst Gene Munster said in a Sunday evening research note. “In these cases, we note that software changes are the most likely competitive outcome (aside from monetary exchanges). We do not believe further settlements are likely to hamstring Android in any serious way. We continue to be confident in our 4 year outlook on mobile device share, which assumes that iOS and Android further dominate the smartphone market with likely close to 85% share combined by 2015.”

That’s the word from Jefferies analyst Peter Misek, who believes that RIM’s strategic review will culminate in a decision to license its BB10 operating system, and that Samsung is the company most likely to be interested in licensing it.

“Given recent management comments in the press, it now appears that RIM is realizing what Wall Street has been saying for some time: they are a subscale manufacturer and desperately need a partner,” Misek wrote in a note to clients. “We believe RIM is attempting to revive discussions with Samsung regarding a BB10 licensing deal.”

That’s a bit of a leap, but not an entirely unreasonable one. Just last week, RIM CEO Thorsten Heins acknowledged that licensing BB10 was an option under serious consideration at the company.

“We don’t have the economy of scale to compete against the guys who crank out 60 handsets a year,” Heins said. “To deliver BB10, we may need to look at licensing it to someone who can do this at a way better cost proposition than [we] can do it.”

But is that “someone” to which Heins refers most likely to be Samsung? Misek certainly thinks so — and this isn’t the first time he’s floated the theory. It’s his view that Samsung, through an acquisition of RIM, would gain access to the company’s vast subscriber base and a means of tempering its dependence on Google’s Android OS.

“We believe Samsung is considering ramping up its internal OS [operating system] development efforts, licensing BB10, or buying RIM,” he wrote. “We think any acquisition is unlikely until after BB10 launches.”

Reached for comment, Samsung dismissed speculation that it’s interested in RIM for any reason. “Samsung Electronics has not considered the acquisition of Research in Motion or licensing BB10,” a company spokesperson told AllThingsD.

With its shares trading at a near-nine-year low amid increasing skepticism over its prospects for a turnaround, expectations for RIM’s first fiscal quarter are decidedly low. As Jefferies analyst Peter Misek told AllThingsD, “It’s going to be terrible with a scoop of worse for August.”

Which is probably a fair bet. The company’s shares have tanked 11 percent so far this month, and its market capitalization has slipped below $5 billion. Five years ago, it was about 16 times that.

Consensus among Wall Street analysts is for RIM to report a net loss of three cents per share on revenue of $3.1 billion for the quarter, a precipitous decline from the earnings of $1.33 per share on revenue of $4.9 billion the company posted for the same period last year. But that’s the mean estimate. Some analysts are forecasting far greater losses, with the low being -36 cents. (To be fair, the top high estimate is 51 cents, but that’s clearly from an equally high analyst.)

And forecasts for RIM’s second quarter are equally gruesome. At a loss of four cents, the mean is a penny lower, dragged down by concerns about how Samsung’s Galaxy S III and Apple’s next-generation iPhone will further kick the legs out from under RIM.

But let’s not get too far ahead of ourselves here.

The disaster of the day is RIM’s first-quarter earnings report, not its second. And beyond just some ugly numbers, there could be additional bad news as well. A decline in BlackBerry shipments. A leveling out of new subscriber additions — or a decline there, too. And then there’s the issue of the timing around the launch of RIM’s already-delayed BlackBerry 10 operating system. If RIM waits too long to debut the OS and its related hardware, it could miss this year’s critical back-to-school season, which would be disastrous for what is essentially a last-ditch effort from new CEO Thorsten Heins to save the company.

Wedge analyst Brian Blair recently took that scenario to its logical conclusion and, as you’d expect, it ends badly.

What we know from watching Nokia and Palm over the years is that fundamentals that are bad can always get worse, particularly if there is no meaningful catalyst for stabilization on the horizon, or if that catalyst isn’t able to stem the fundamental bleeding. RIM finds itself in such a situation with an aging product line and nothing that appears able to change its fate in the pipeline. We see a steep drop off in revenues and units near term, punctuated by a drop in subscriber adds, and an OS refresh that is largely ignored by carriers and consumers alike, driving RIM into a forced sale in 2013.

A harsh assessment. But then it’s gotten difficult to pick out any bright spots in the train wreck that RIM has become. With the company in such decline, there’s a chance that even BlackBerry 10 won’t be enough to turn it around.

Said Blair, “This is going to be the third inning of RIM’s death spiral.”

The document reveals that in RIM’s February 2012 fiscal year, gross margins on hardware fell to 20 percent from 36 percent on a GAAP basis, and to 25 percent on a non-GAAP basis. And, according to Jefferies analyst Peter Misek, if you factor operating costs and inventory charges into those numbers, hardware-operating margins slip into negative territory: -8 percent on a GAAP basis; -3 percent on a non-GAAP basis, or -4 percent on an adjusted non-GAAP basis.

Nasty numbers, all of them. So which is the most accurate?

Misek believes it’s the adjusted non-GAAP number, which excludes restructuring, litigation and goodwill-impairment charges, but includes the $752 million in inventory write-offs RIM took for the quarter. Some might argue that including those write-offs skews the numbers here a bit, but Misek points out that RIM has written off inventory in the last two quarters, and is likely to do so again in the next.

So, whether it was 8 percent, 3 percent or 4 percent, RIM’s hardware division probably spent more than it made. Indeed, that may well have been one of the drivers of the “comprehensive review of strategic opportunities” CEO Thorsten Heins announced after the company reported abysmal fourth-quarter earnings. But that review isn’t likely to do much for the hardware business for some time. If hardware is in the red, then it’s probably going to remain there for a while longer — at least until the debut of RIM’s BlackBerry 10 devices. And that’s not scheduled to happen until late in the year.

After the company’s grotesque fourth-quarter earnings yesterday, many on Wall Street are asking themselves that very question. And the broad consensus seems to be that RIM’s downward trajectory isn’t going to change anytime soon, despite CEO Thorsten Heins’s plan to reverse it. As Jefferies analyst Peter Misek said this morning, “We expect trends to get worse from here and think the August quarter will be dire.”

His was the first of many dour predictions from Wall Street analysts following RIM — over the past year, they have become the Greek chorus in the company’s rapidly unfolding mobile market tragedy.

Pierre Ferragu at Bernstein, for example, says there is little reason to put faith in RIM’s ability to change with the current strategy. “We think the company will continue to lose traction until it showcases its next generation of products based on QNX, and the latter is very unlikely to generate renewed consumer traction,” he says. “Developing a software platform and the attached ecosystem is an iterative game few got right in the first place and in which QNX is many years late compared to iOS, Android and even Windows.”

That’s a view held by Needham analyst Charlie Wolf, as well. “RIM appears to be pinning its hopes on its new QNX operating system, which will power its BlackBerry 10 line of smartphones due out sometime in the second half of the year,” he remarks. “But we think it’s an open question whether BlackBerry 10 can save the day. QNX, which runs on the Playbook, did not save the Playbook’s day.”

Meanwhile, Barclays analyst Jeff Kvaal is raising an eyebrow over the company’s effort to prioritize enterprise and entry-level products over consumer ones. “We believe RIM’s decision to prioritize enterprise over what it called the media consumption segment of the consumer market (which we interpret as the high end consumer) is a mistake,” he says. “RIM believes that its partnerships will allow it to be successful in high end consumer. Our view is that RIM’s declining unit volumes will make partnerships more difficult to strike.”

And then there’s Misek at Jefferies, who says RIM’s performance is a complete disaster, of which its leadership “should be ashamed.”

“They’re going to scramble around now for the next three to six months and every poor shareholder that had faith in them is going to be potentially impoverished,” he vents. “I’m so angry as a Canadian; every Canadian investor should be angry. It’s going to be an absolute gong show for the next few quarters.”

This according to Jefferies analyst Peter Misek, who says he discovered early production evidence of the mythical iTV during a recent trip to Asia.

“We believe specialty components have begun to ship to Apple’s Asia panel suppliers with polarized films, filters, and IGZO components starting to move in small quantities,” Misek says. “We expect commercial production in May/June with 2M to 5M builds likely.”

Misek offered no details on the iTV beyond that, though he did raise his price target on Apple shares in anticipation of it, as well as an upcoming refresh of the MacBook Air and Pro and generally strong demand for the iPhone 4S and new iPad. His new call: $699, up from a previous projection of $599.

This time around, Samsung is said to be the leading suitor, or rather the company with which RIM would most like to strike an agreement — though once again its leadership is believed to be asking for too much money.

There is an alternate theory making the rounds, though, and this one seems far more plausible than the breathless “RIM is desperately trying to sell itself” blathering: RIM is talking to Samsung about a licensing deal for its forthcoming BlackBerry 10 OS.

This seems a far more likely scenario. After all, it would take a bold company indeed to pay the premium RIM would almost certainly demand for itself. And what would it be purchasing? The chance to turn around RIM’s deteriorating business? An opportunity to do damage control on the ill-starred PlayBook? The chance to arrive late to market with another ill-conceived BlackBerry? And then to go head-to-head with Apple and Google, which have already wiped the floor with it?

No. A licensing deal is much more plausible, as Jefferies analyst Peter Misek observed in a research note to clients today.

“We see a licensing deal announced within the next 3 months with actual BlackBerry 10 handsets out in Q4,” Misek said, adding that he feels the company will likely charge a licensing fee of $10 per device. “We believe this is the main way RIM will be able to maintain its services revenues and build ecosystem momentum. We believe Samsung and HTC would do this to gain access to the RIM subscriber base [and] diversify away from sole dependence on Android.”

RIM declined comment on the rumors, citing company policy on market speculation.

UPDATE: This just in from Samsung via Reuters: “We haven’t considered acquiring the firm and are not interested in (buying RIM).”

Over at Jeffries, analyst Peter Misek suggests that Sharp is retooling a production line at its factory in Sakai specifically to manufacture modified amorphous TFT LCD panels that will be used in the so-called iTV. If all goes well, the line should be ready for commercial production by February of 2012, which means we could see Apple’s take on the TV by midyear.

But what form it will take remains a mystery — one that the entire TV industry is evidently eager to solve. “Based on our discussions, interestingly other TV manufacturers have begun a scrambling search to identify what iTV will be and do,” says Misek. “They hope to avoid the fate of other industries and manufacturers who were caught flat footed by Apple.”

Good luck with that, guys. Without Apple’s software acumen — or a rival to its new iCloud service, which will incorporate video sooner or later — that’s a tall order.

Says Misek: “Mainstream TV manufacturers are likely to be at least 6 to 12 months behind in a best-case scenario.”

It’s a mixed bag. While they all seem to agree that HP’s board is right to push out CEO Léo Apotheker, especially in light of the stock performance, a confused strategy and a jarring change in emphasis, none seem ready to endorse the ascendance of Meg Whitman, the former eBay CEO and current HP director, to that company’s top job. Yet like it or not, the HP board meeting that will make it all official is underway, and as AllThingsD has reported, Meg Whitman will be named HP’s CEO at the close of markets today.

Toni Sacconaghi of SanfordBernstein, the author of a widely circulated note last week describing how “exasperated” HP investors are, weighed in again. “We are not surprised by HP’s stock’s reaction yesterday, given that our conversations with shareholders and investors over the past month revealed a level of exasperation that we have not seen directed at HP or any other company in our universe in our 13 years following the sector,” he wrote in a note today.

He also slammed HP’s board. “Our conversations with major shareholders also indicate that they have been disgruntled with the board, given it has made and approved a series of decisions” — including the ouster of the prior CEO Mark Hurd, the Autonomy deal, the premature announcement of the PC-spinout — “that many shareholders believe were poor decisions and misaligned with their interests,” he wrote.

Nor is he a fan of the Whitman hiring. HP needs to search far and wide and also internally for another CEO, Sacconaghi says. “We would view any decision not to conduct a comprehensive search of internal and external candidates for a permanent CEO role as unsatisfactory and unnecessarily hasty,” he wrote. “We also believe that shareholder reaction to Whitman as a permanent CEO would be mixed.” He also thinks CFO Cathie Lesjak, notable for filling in as interim CEO during the Hurd-to-Apotheker transition, may be leaving.

Shaw Wu of Sterne Agee is pretty much in agreement with Sacconaghi. “Given the disappointing financial performance over the last few quarters and some questionable decision making including the high purchase price of Autonomy, handling of the spinoff of its PC operation, and abrupt shutdown of its webOS hardware business, we are frankly not surprised that a change is being considered,” he wrote in a note to clients today. “So far, investors and even some customers we have talked to don’t seem confident in where HPQ is heading so a change is likely needed.”

But he’s not sold on Whitman. “While we believe she has proven to be a very capable manager helping grow eBay from a start-up into one of the largest internet companies, we think an ideal candidate for HPQ should have extensive experience in the enterprise market. In addition, we believe expertise in supply chain management would be helpful as well.” He goes on to name a handful of insiders and outsiders he’d consider possible successors: Dave Donatelli, who runs HP’s enterprise business; Todd Bradley, who runs the personal systems group and would be a likely CEO of that unit if it’s spun out; Steve Mills, who runs software and hardware at IBM; and Gary Moore, the COO of Cisco Systems.

Wu also says it might be a good idea for HP to keep its PC unit after all is said and done. “We estimate the business generates $2 billion in operating income per year and is the second most profitable behind Apple,” he wrote. Also the PC business isn’t so bad when you think of it as being one and the same with the tablet market. He maintained a neutral rating on HP for now.

Lou Miscioscia of Collins Stewart isn’t encouraged by the shake-up, either. Many of HP’s problems aren’t necessarily Apotheker’s fault, he says in a note to clients issued today. And he’s not sold on Whitman, arguing that she’s never run so large a company as HP and has never run one focused on the enterprise before. He maintained a neutral rating.

And while a post-Apotheker HP may undo some of his decisions, like spinning off the PC business, one thing it probably can’t do is walk away from its $10 billion purchase of Autonomy Software, says Jeffries and Co. analyst Peter Misek. Corporate takeovers are governed by strict laws in the U.K., making it nearly impossible for HP to pull out of the deal now. He rates HP shares a buy.

“If you were to ask me in two years’ time, will Apple have less than 50 percent of the global tablet market, I think that’s a certainty.”

– Neil Mawston, Strategy Analytics, January 2011

The iPad’s dominance of the market for tablet computers may not prove as short-lived as some analysts have predicted. Though beset by a proliferation of new rivals, particularly those based on Google’s Android operating system, the company’s share of this fast-growing market isn’t eroding nearly as quickly as expected.

Why? According to Jeffries analyst Peter Misek, Android tablets simply aren’t competitive. “We have thus far been very disappointed with nearly every Android-based tablet,” said Misek–so disappointed that he’s slashed his 2011 tablet forecast to 70 million units from 100 million. In his opinion, Android tablets won’t come close to rivaling the iPad until their OS is more refined and their prices come down.

“[Android] Honeycomb is an OS that seems rushed and still requires significant polishing,” Misek says. “Our own multiple-week interaction with Honeycomb tablets showed daily crashes, bugs, and program hangs. Yet our iPad has yet to experience any of these trends or idiosyncrasies.”

And beyond this, Android tablets are simply too expensive.

“We believe there is significant price elasticity in the market, and these additional tablets have all in our view failed in one key category: providing a compelling discount to the iPad,” he explains, adding that Android tablet OEMs must cut prices if they’re ever to establish a beachhead against Apple’s tablet.

Eventually, says Misek, Android tablets will be quite competitive with iOS tablets, but not until these issues are addressed. Until then, the iPad will continue to dominate.

Jefferies & Co. analyst Peter Misek too says the device will be largely similar to the iPhone 4, but with significant improvements under the hood.

“We believe the likelihood of the iPhone 5 launch in September including LTE [Long-Term Evolution] is now remote,” Misek said in a note to clients. “According to our industry checks, the device should be called iPhone 4S and will include minor cosmetic changes, better cameras, A5 dual-core processor, and HSPA+ support.”

These specs are essentially the same ones Concord Securities analyst Ming-Chi Kuo reported back in April, so Misek’s not particularly telling us anything new, with the exception of one very interesting detail. He expects Apple to launch the the iPhone 5/4S on a handful of new carriers, Sprint, T-Mobile, and China Telecom among them.

“Industry checks indicate AAPL has or is about to announce new carrier deals in time for the holidays with T-Mobile and Sprint,” Misek wrote. “Additionally, we believe another China carrier could launch the iPhone in the next 12 months. On Apple’s last earnings call, management responded to a question about launching the CDMA iPhone at other carriers as “we are constantly looking and adding where it makes sense, and you can keep confidence that we’ll continue to do that.”

Jeffries analyst Peter Misek figures RIM sold about 45,000 PlayBooks Tuesday, with pre-orders accounting for about 25,000 of the total. RBC* analyst Mike Abramsky’s first day sales estimate is in the same range, but a bit higher: 50,000, including pre-sales.

“The launch appears to have been stronger than the launch of Motorola’s Xoom Tablet, or the Samsung Galaxy Tab, although it’s too early to judge sustainability,” he said in a note to clients, adding that, as of Wednesday, checks of 180 stores across 10 cities in the United States and Canada show rising PlayBook stockouts.

But some analysts I’ve spoken with feel those estimates are overly bullish, given the device’s limited availability. 50,000 sold seems an awfully big number when even the Broadway Staples store in downtown New York City had just 10 PlayBooks on hand at launch and a clerk at the Bay Area Best Buy I called described inventory as “a handful.”

“Those 50K estimates are likely a bit high, although there was reasonable demand at stores that actually had product,” said one analyst who declined to be named. “It definitely seemed more of a beta launch to me. A lot of the distribution partners didn’t have the product in stock yet, and there has been essentially no advertising.”

*Barbara Stymiest, Chief Operating Officer at RBC Financial Group, sits on RIM’s board of directors. RBC also makes a market in RIMM securities.

PREVIOUSLY:

• PlayBook Launch Strategy Revealed: Delayed Gratification!
• In Toronto, PlayBook Line Stretches…Wait, Do Two People Count as a Line?
• BlackBerry PlayBook: Fail With Consumers, Fail With Enterprise
• Research in Demotion: Critical PlayBook Reviews Weigh on RIM

On the software side, there’s the possibility of the natural language voice interface and navigation service I mentioned here earlier this month. Last April, Apple acquired Siri, developer of a virtual personal assistant supported by speech recognition, natural language processing and semantic Web search. (see video below). And in 2009 it purchased PlaceBase, a mapping outfit that specialized in enhancing maps with private and public data sets. Weave elements of those two acquisitions together and give them a 505,000-square-foot data center as a back-end and you’ve got a pretty compelling offering.

But what about the hardware side? An improved camera seems certain, as does a bigger screen and a faster chip. Support for near field communication (NFC), which would enable mobile payments through iTunes, is also a rumored feature, as is an increase to 64GB of internal memory. And, increasingly, it seems like an LTE chipset will be included as well. As I noted here Monday, a later-than-usual iPhone unveiling dovetails nicely with the expected launch of AT&T’s LTE network (Verizon’s is already up and running). It also would appear to coincide with the debut of an updated Qualcomm LTE chip.

“We believe Apple wants its next phone to be LTE capable and have a chipset compatible with both AT&T and VZ (with the LTE capability on AT&T turned on once their network is ready),” says Jeffries analyst Peter Misek. “Also, we believe the iPhone 5 could contain new chips from Qualcomm incorporating GPS and WiFi on the same chip (and in the future the socket could support Bluetooth and NFC).”

Misek, incidentally, is betting on a second-half 2011 launch for pretty much all the reasons cited above. “Our checks indicate Apple is aiming for a significant step forward with a strong focus on integrating cloud services into the operating system,” he concludes. “We believe this additional functionality is taking longer to incorporate than expected, leading to the next iOS launch being later this summer or fall.”

]]> http://allthingsd.com/20110401/iphone-5-lte-nfc-natural-language-voice-interface/feed/ 6 http://allthingsd.com/20100319/palm-running-out-of-time-again/ http://allthingsd.com/20100319/palm-running-out-of-time-again/#comments Fri, 19 Mar 2010 14:14:15 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=36830

Remarking on Palm’s gruesome third quarter during an earnings call yesterday, CEO Jon Rubinstein called the company’s performance “extremely disappointing to me personally.” This sentiment seems to be widely held among investors, who are dragging the company’s shares through the mud today–at $4.66, Palm is down 17.52 percent as I write this–and among analysts questioning whether Palm can ever pull off the turnaround for which it’s striving.

Analysts issued a handful of research notes on the company this morning and they are all viciously negative. The headlines proclaim that Palm’s brand value has collapsed, its financial performance is a disaster, and its execution missteps in a business as competitive as the mobile market have left its prospects dubious.

Over at Canaccord Adams, Peter Misek essentially threw in the towel on the company: “We believe that Palm’s troubles will only accelerate as carriers and suppliers increasingly question the company’s solvency and withdraw their support,” he wrote.

“With what appears to us to be roughly 12 months of cash on hand, an accelerating burn rate, a complete lack of earnings visibility, and substantial debt and preferred equity,” Misek added, “we no longer see any value in the company’s common equity. As such, we are reiterating our SELL recommendation and reducing our target to US$0.00 (previously US$4.00).”

Then there was this from Kaufman Bros. analyst Shaw Wu: “While we believe PALM has some value with its webOS and tight integration of hardware and software, we are unsure of the company’s prospects as an ongoing concern.”

And this from Morgan Keegan analyst Tavis McCourt: “It is certainly looking less likely that Palm can execute this turnaround on its own, but the company has at least one more chance with new hardware later this year to try and create some real consumer demand for webOS.”

And finally, this from Needham and Company’s Charlie Wolf: “Palm appears to be in a no-win situation. The company could invest even more in marketing the Pre and Pixi. But it’s unclear whether Palm could ever spend enough to reach a position where Pre and Pixi sales were sufficient to cover its marketing bill and return the company to profitability.”

Wolf concludes that “In the mean time, time is running out. Supported by an increasing number of smartphone manufacturers, the Android juggernaut is continuing to gain steam. And the day when Microsoft (N/R) launches Window Phone 7 and rejoins the spending party is drawing closer.”

If it’s true that bad news begets bad news, Palm is in for a very rough time of it in the months ahead. The company has already lost half its market value since the year began. Time for a takeover? Perhaps, though Rubinstein seems intent on staying the course.

“There’s all kinds of speculation out there that we are going to get bought, that we are not going to get bought,” Rubinstein said on the earnings call Thursday. “We’re not going to comment on any of those. Obviously, we are a public company. And if there’s a reasonable proposal, of course the Board has to consider it. But, that being said, our focus since the day I arrived here, and that’s almost three years ago now, is to build a great company with a great mobile platform and great products. And that has been our focus.”

FURTHER READING:

• Palm Pileup: Weak Smartphone Sales and a Gruesome Q4 Forecast
• Could Be Worse, Could Be Raining: Palm’s AT&T Launch Delayed?
• Could WebOS Licensing Be Palm’s Salvation?
• Palm’s Salvation? Less Push, More Pull.
• And if Palm’s Project JumpStart Doesn’t Work Out, There’s Always “Project Defibrillator”
• Double Face-Palm: Analysts React to Palm’s Lowered Guidance
• Time to Start Looking for a Buyer, Palm?
• 2010: Year of the Palm? Maybe Not…
• Analyst: Palm May Be Acquired in the Next Two Years

]]> http://allthingsd.com/20100319/palm-running-out-of-time-again/feed/ 0 http://allthingsd.com/20100317/palm-att-delay/ http://allthingsd.com/20100317/palm-att-delay/#comments Wed, 17 Mar 2010 14:39:12 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=36585 Palm’s fourth quarter may turn out to be no better than its third–an ugly period marked by a grotesque 30 percent revenue shortfall, poor sales and tepid interest in the company’s new line of smartphones.

In his latest note on the company, Canaccord Adams analyst Peter Misek says Palm’s (PALM) already substantial troubles are mounting. Palm’s latest problem: Delays in the long-rumored launch of its smartphones on AT&T (T). Originally expected this spring, sources now say the debut of new Pixi and Pre models has been pushed back until summer.

“Beyond generally lacklustre handset sales in the current quarter, which are already reflected in our previous estimates, we have recently learned that AT&T has delayed the planned launch of the Pre and Pixi on its network from April to June/July,” Misek writes.

“Moreover, we believe that this is more than just an ordinary delay,” the analyst adds, “as AT&T has cited a long list of technical issues with the Pre and Pixi. Furthermore, the carrier has decreased its initial order size and has decided to sharply reduce its marketing budget for the launch.”

So: A delayed launch on another major carrier, a smaller first order and a soft marketing budget. On top of these issues, Misek cites a mysterious “list of technical issues.” I’m not quite sure what he is hinting at; my sources tell me there are no problems with the devices on AT&T’s network–but perhaps Misek knows something they don’t.

Leaving the mystery list aside, this is bad news all around for Palm, which clearly needs the additional distribution it will get through AT&T sooner rather than later. Misek is slashing his February quarter unit shipment forecast to 670,000 from 720,000 and his 2011 forecast to 3.58 million units from four million.

Honestly, this getting difficult to watch.

Palm is scheduled to report third-quarter earnings after Thursday’s closing bell.

FURTHER READING:

• Could WebOS Licensing Be Palm’s Salvation?
• Palm’s Salvation? Less Push, More Pull.
• And if Palm’s Project JumpStart Doesn’t Work Out, There’s Always “Project Defibrillator”
• Double Face-Palm: Analysts React to Palm’s Lowered Guidance
• Time to Start Looking for a Buyer, Palm?
• 2010: Year of the Palm? Maybe Not…
• Analyst: Palm May Be Acquired in the Next Two Years

]]> http://allthingsd.com/20100317/palm-att-delay/feed/ 0 http://allthingsd.com/20100305/about-that-march-ipad-release-date/ http://allthingsd.com/20100305/about-that-march-ipad-release-date/#comments Fri, 05 Mar 2010 18:11:29 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=36211 When Apple CEO Steve Jobs announced the iPad on Jan. 27, he said it would be “available” in 60 days, implying an on-sale date of March 25. By announcing a pre-sale date of March 12, as it did this morning, the company has technically fulfilled that promise–yet it is not delivering the device to customers until April 3, about a week later.

If the ship date was to be April 3, why didn’t Jobs say so at the January event?

Obviously, it’s impossible to say. Though it’s certainly interesting that Jobs couldn’t offer a hard ship date for a major product that was just two months out.

Does this mean Apple (AAPL) may have run into a bit of an iPad manufacturing hiccup after all? I suppose it’s possible. Cannaccord Adams analyst Peter Misek, who first reported alleged production issues with the iPad, certainly thinks so.

“In our previous note we discussed that the upcoming iPad launch may be somewhat limited as a manufacturing bottleneck has impacted production,” Misek wrote in a research note to clients this morning. “We also suggested that there is a possibility that the launch will be delayed by a month due to a limited number of units available.”

Updating his assessment, the analyst notes, “According to today’s announcement, iPad is delayed by a week in the U.S. and by a month for some international markets. We believe the delay was caused by an unspecified production problem at the iPad’s manufacturer as we indicated earlier this week.”

Or perhaps this is simply about Apple’s level of visibility into its supply chain. After all, you’d think if there really had been production issues with the device, we would have been looking at delays of far longer than just a few days.

Either way, it’s really not of consequence to the company in any material sense. At $218.50, Apple shares are up nearly four percent on news of the April ship date. Obviously, Wall Street doesn’t care whether the iPad is late or not. And in the end, does it really even matter?

UPDATE: John Gruber has some interesting thoughts on all this over at Daring Fireball.

]]> http://allthingsd.com/20100305/about-that-march-ipad-release-date/feed/ 0 http://allthingsd.com/20100304/ipad-production-is-on-track-no-its-not-yes-it-is/ http://allthingsd.com/20100304/ipad-production-is-on-track-no-its-not-yes-it-is/#comments Thu, 04 Mar 2010 16:59:00 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=36104 Seems there’s a bit of disagreement over those rumored iPad production issues we’ve been hearing about.

Last week, Canaccord Adams analyst Peter Misek warned that a bottleneck at Apple’s manufacturing partner might limit initial availability of the device or delay its launch. Then yesterday, Digitimes–not the most reliable of sources–published a report suggesting there would be no such inventory issues or delays.

Now, ThinkEquity analyst Vijay Rakesh has issued a note echoing Misek’s claim.

“Our checks in Taiwan indicate some minor delays on the iPad,” Rakesh writes. “The manufacturing of the iPads was supposed to pick up in February, but volumes even in March are still low. Current volumes are much lower than the market expected but most checks are indicating minor delays.”

Rakesh says his checks suggest that iPad production volumes are currently at about 200K to 250K for the month, but should ramp up to 800K to one million per month by April or May. “We believe this is just a minor hiccup in a longer-term entirely new revenue stream and product roadmap for [Apple],” he says.

Who best to believe, if we are to believe anyone at all? Honestly, I have no idea. As I mentioned, Digitimes doesn’t exactly have a great track record when it comes to Apple (AAPL) rumors. Neither does Misek, really. That said, the fact that channel checks conducted by two research houses both found production issues in Apple’s iPad manufacturing, suggests there may be something here.

]]> http://allthingsd.com/20100304/ipad-production-is-on-track-no-its-not-yes-it-is/feed/ 0 http://allthingsd.com/20100301/ipad-inventories-may-be-tight-at-launch/ http://allthingsd.com/20100301/ipad-inventories-may-be-tight-at-launch/#comments Mon, 01 Mar 2010 13:21:23 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=35763 When Apple’s new iPad slate begins to arrive at market later this month, limited availability may leave some early adopters empty-handed–assuming it goes on sale this month at all.

In a research note this morning, Canaccord Adams analyst Peter Misek says he has heard rumblings that production issues at Apple’s (AAPL) manufacturing partners may keep the company’s iPad in short supply when it first goes on sale.

“We have…heard that the upcoming iPad launch may be somewhat limited as a manufacturing bottleneck has impacted production of Apple’s newest device,” Misek writes.

“An unspecified production problem at the iPad’s manufacturer, Hon Hai Precision,” the analyst explains, “will likely limit the launch region to the US and the number of units available to roughly 300K in the month of March, far lower than the company’s initial estimate of 1,000K units.”

Looking ahead, he adds, “The delay in production ramp will likely impact Apple’s April unit estimate of 800K as well. It is also possible that, given the limited number of units available in March, the launch will be delayed for a month.”

If Misek is right–and that’s a big if; Misek’s prediction earlier this year that Apple would debut a brand new iPhone on Verizon (VZ) at its January special event proved woefully off–it’s a slight setback for Apple, which obviously wants to take good advantage of enthusiasm for the device to really blow out first-year sales. That said, since this would be only a temporary production delay, it probably wouldn’t have that much effect on sales.

Says Misek: “We believe that the only material impact from the iPad delay could come in the form of frustrated consumers and some modest loss of lustre for the company’s product launch.” He figures Apple will sell 550,000 units in its third quarter, which ends in June, 1.2 million in fiscal year 2010 and 3.5 million in 2011.

]]> http://allthingsd.com/20100301/ipad-inventories-may-be-tight-at-launch/feed/ 0 http://allthingsd.com/20100225/palm-sales-well-short-of-targets-at-verizon-canaccord-says/ http://allthingsd.com/20100225/palm-sales-well-short-of-targets-at-verizon-canaccord-says/#comments Thu, 25 Feb 2010 13:00:15 +0000 Eric Savitz http://voices.allthingsd.com/?p=21723 Sales of Palm (PALM) smart phones at Verizon Wireless (VZ) are coming in well short of targets, according to Canaccord Adams analyst Peter Misek.

Misek told his firm sales force [Wednesday] afternoon–and then told me–that he thinks sales of the Pre Plus and Pixi Plus so far are less than 50 percent of Palm’s target levels. He believes Verizon will have to reassess its approach. Misek notes that there are multiple options: the carrier could ratchet up marketing (likely together with Palm); it could re-train store sales reps to push the phones; it could change its marketing approach; or it could simply throw in the towel and stop selling Palm phones entirely.

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