Recent reports have added 4G LTE connectivity and a quad-core processor to a rumored spec list that already includes Siri voice recognition, better cameras, a higher-capacity battery and a much-improved display with double the pixel density of the iPad 2.

All of which sounds entirely reasonable, and certainly like the makings of a formidable successor to the iPad 2. Enough of one that analysts are already tweaking their sales estimates upward.

“We believe this significant refresh will likely help drive higher iPad sales and help further differentiate from arguably the only real competitor in the market, Amazon’s Kindle Fire, and not to mention the myriad of Android offerings out there,” says Sterne Agee analyst Shaw Wu. “We are currently modeling 48 million iPad shipments for calendar 2012.”

That’s an awfully big number, but it could prove too small before the year is out. Says Wu, “[48 million] could turn out conservative.”

No matter how elegant the mythical Apple Television may be in its design, no matter how intuitive its interface, it won’t be worth much to anyone without great content. For an Apple Television to truly succeed it must crack the content code, as well. And that’s a very difficult proposition, indeed.

Which isn’t to say it can’t be done. Just that there are a lot of content partnerships and licensing terms to be ironed out before the device can ever be brought to market (if that is really Apple’s intent). Among the most important: Deals for live-broadcast TV and truly customized programming.

As Sterne Agee analyst Shaw Wu observes, the first of these could be solved relatively easily, by integrating the subscription services cable and satellite TV providers already offer their customers.

But that doesn’t jibe well with Apple’s existing iTunes and iCloud services. And it’s not all that disruptive. If Apple truly wants to upend the TV industry, it needs Internet-based programming subscriptions with customizable channel lineups. And, according to Wu, that’s what the company is really gunning for.

“We continue to hear what Apple would love to do is offer users the ability to choose their own customized programming, i.e., whichever channels/shows they want for a monthly subscription fee,” Wu says. “This is obviously much more complicated from a licensing standpoint. … In our view, it would change the game for television.”

It would also differentiate Apple’s television, giving it a big advantage over the competition. An easy-to-use, all-in-one TV solution similar to the iMac, plus the ability to create your own custom channel packages? To many TV viewers, that would be a godsend.

In the first group is Ticonderoga’s Brian White, who expects Apple to sell 29.9 million iPhones in the December quarter, a quarter-over-quarter increase of 84 percent. With him, BTIG Research’s Walter Piecyk, who says AT&T’s good news suggests Apple will sell 30 million iPhones in the quarter, just as he predicted in August.

In the second group: Stern Agee’s Shaw Wu and UBS’s Maynard Um. Wu raised his forecast for iPhone sales this quarter to 28 million, up from 26 million. Um went him two million better, raising his estimate to 30 million from 28 million, though he concedes even that might end up being a little light, thanks to high demand in the Asia Pacific region.

“We believe that there is a general strength across the board for iPhone demand,” Um said in a note to clients. “We continue to believe that our estimates are conservative as [they] are still below where expected build plans are.”

In other words, Apple will likely blow out iPhone sales for the quarter, just as CEO Tim Cook said it would during the company’s last earnings call.

Said Cook, “We’re very confident that we will set an all-time record in the December quarter for iPhone sales. We — in our wildest dreams, we couldn’t have gotten off to a start as great as we have on the 4S.”

The move to slash $200 and then $300 from the device’s retail price was evidently made to battle the Fire’s loss-leading $199 price. “Our understanding is that RIM was blindsided by Amazon pricing its Kindle Fire aggressively at $199,” says Sterne Agee analyst Shaw Wu. “We estimate that the company is losing $50-$75 per PlayBook sold.”

And it may lose more in the future.

Remember, when RIM announced last week that worse-than-expected sales of its PlayBook tablet will cause it to fall short of financial targets for its third quarter, it said it must expand its “aggressive level of promotional activity” to drive PlayBook adoption. It also said it “now believes that an increase in promotional activity is required to drive sell-through to end customers.”

Sterne Agee analyst Shaw Wu on Monday took a hatchet to his rating on the company, downgrading its stock to “neutral” from “buy,” and trimming his estimates for 2012 and 2013 earnings. And, notably, he conceded he should have done so earlier.

“Looking in retrospect, we should have downgraded in mid-October when the stock was $24 and our supply chain checks indicated that while its new flagship BlackBerry Bold 9900 was doing decently, the rest of its product line was lagging,” Wu explained. “We had trimmed estimates below consensus due to this. Since then, estimates have come down a bit but we believe will likely need to be reduced further.”

The main reason Wu isn’t advising his clients to sell their RIM holdings? “There is some intrinsic value in RIM as an acquisition target with its 70 million subscribers, push network, BlackBerry OS, and patent portfolio.”

Wu is latest in a conga line of analysts cutting their targets and/or ratings on the BlackBerry maker’s stock. RBC Capital Markets, Barclays Capital, Sanford C. Bernstein, Deutsche Bank, Citigroup, J.P. Morgan Chase — all have slapped downgrades on the beleaguered RIM in the past six months. And RIM’s stock has reaped the whirlwind for it. Shares in the company have plummeted more than 70 percent this year, slipping below book value earlier this month and consistently charting new 52-week lows.

In the run-up to RIM’s quarterly results in mid-December, the situation looks increasingly grim. Here’s hoping for some good news about the company’s new BBX platform come Dec. 15, when RIM reports third-quarter earnings.

While Siri still has a way to go if it is to popularize voice as the next major user interface, its natural-language processing and automation abilities are already good enough to be a real competitive advantage for Apple in the mobile market.

It’s pushing competitor costs up, as rivals scramble to come up with equivalent voice command offerings — not a cheap or easy feat, considering the level of Siri’s applied artificial intelligence and speech comprehension.

And better than that, it’s creating a consumer bias towards the 4S, Apple’s newest iPhone and presumably the one with the highest margins.

Sterne Agee analyst Shaw Wu says his latest checks with industry and supply chain sources show broad sales strength across Apple’s entire iPhone portfolio, but most of all for the 4S. Evidently lots of folks who could be spending $99 on the iPhone 4 are opting to fork over another $100 for the 4S — and a lot of them are doing it for Siri.

“Despite global macroeconomic headwinds, Apple continues to defy conventional wisdom with a higher-end product mix,” Wu says. “Talking to industry sources, what’s driving the 4S is better than expected reception of its new Siri software.”

The reason for that? Siri’s voice recognition actually works — and pretty consistently, unlike competing solutions, which are often unreliable. And as of today, it’s still in beta. So it will certainly get better and more powerful over time. And it will continue to drive sales.

To wit, Wu’s forecast for the December quarter, which we’re only about a third of the way through: 26 million iPhones — a new record.

That’s the gist of another rebuttal to Hong Kong-based J.P. Morgan analyst Gokul Hariharan’s claim that the company is cutting orders to vendors in its iPad supply chain, this one from Sterne Agee’s Shaw Wu.

In a Tuesday morning research note, Wu added his voice to others seeking to correct the evidently mistaken impression that iPad demand is flagging, saying build plans for the device remain “well above expectations.”

Though reports of production cuts may have some merit, they’re no cause for concern, said Wu.

“From our understanding, these production cuts are due to much improved capacity and Apple actively managing its inventory in front of what is likely an iPad refresh in the March quarter,” Wu explained. “The iPad 2 started shipping in March 2011 making the product likely due for an update near its 1-year anniversary. We would also like to remind investors that production changes are common throughout a quarter and through the lifecycle of a product.”

In other words, the Monday morning scare that sent shares of Apple briefly downward was unmerited. Said Wu, “Our distributor checks indicate demand remains strong.” His estimates for iPad shipments in the second half of the year: 12 million in the September quarter and 15 million in the December quarter.

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.

Evidently the market is not buying into that logic. Because according to Stern Agee analyst Shaw Wu, iPhone 4 sales remain surprisingly strong, despite the device’s advanced age and a widely anticipated October refresh.

“The biggest surprise we are picking up is unexpected strength in Apple’s iPhone business,” Wu said in a note to clients. “The reason why this is remarkable is demand for iPhone 4 remains fairly robust despite it being well known that there will be an upcoming iPhone 5 refresh. We had modeled a sizeable quarter-to-quarter decline to reflect a pause and inventory drawdown ahead of a refresh and we now think this is conservative.”

Accordingly, Wu has revised his iPhone estimate for Apple’s last fiscal quarter of the year, raising it to 18.5 million from 15.7 million. That’s less than the 20.34 million iPhones the company sold in its third quarter, but it’s impressive just the same.

And Wu is not alone in noting strong continuing demand for the iPhone 4.

Last week, Canaccord Genuity analyst T. Michael Walkley noted that the device remains one of the top-selling smartphones in the U.S.

“Our checks indicated strong sales of the iPhone 4, as it remained the top selling smartphone at AT&T and Verizon despite increasing consumer expectations for the iPhone 5 launch,” he wrote. “During the holiday season, we anticipate strong sales of the iPhone 5, as we anticipate a strong global launch with increased distribution to new carriers including Sprint in the U.S. market.”

Astonishing demand for a smartphone that’s been on the market for a year now, but that’s perhaps to be expected. After all, the iPhone 3GS is two years old, and it’s still selling well at AT&T.

“While the company is stating it is doing so to satisfy stronger than expected demand, our checks with supply chain sources indicate another reason may be to fulfill commitments to component suppliers and manufacturing partners,” Sterne Agee analyst Shaw Wu says. “This makes sense as it is not in HP’s interest to alienate the supply chain base and the company may not lose as much money as it is bringing in some revenue as opposed to taking a full write-down on commitments with no revenue.”

Better to meet those supply-chain obligations than annoy the supply chain, which will presumably continue to figure prominently in HP’s PC business whether the company spins it off or sells it outright. And if you generate a bit of buzz in the process, all the better. As Wu notes, the larger the installed base of TouchPad and webOS devices, the more valuable webOS is in a potential sale.

According to Sterne Agee analyst Shaw Wu, the pair of new BlackBerry 7 devices the company recently launched leave it poised to regain the footing that it lost in the wake of the iPhone and Android onslaught. With better hardware and an improved operating system, RIM is finally giving its customers a decent reason to upgrade their handsets.

“We see RIM benefiting from arguably the strongest product cycle it has seen in some time driven by its new BlackBerry 7 OS,” Wu says. “From the early reviews, they are mixed to positive, which is a marked improvement than its predecessor BlackBerry 6 OS, which received noticeably more negative reviews.”

Add to this the continuing difficulties at rivals like Nokia, and RIM may well see its fortunes take a marked turn for the better.

“We believe RIM can capitalize on the disruption in Nokia as it transitions its smartphones to Windows Phone 7 from Symbian,” Wu says. “In addition, we are picking up from our industry checks that its launch in North America will not likely happen until 2012. The reason is that Nokia and Microsoft plan to launch internationally first where Nokia is stronger before entering the highly competitive North America market. We believe this gives RIM a window of opportunity.”

Cook’s operational acumen has driven Apple’s expansion since he first joined it. As Chairman Steve Jobs once told Businessweek, “I couldn’t find anyone internally or elsewhere that knew as much as I did — so I did that job for nine months before I found someone I saw eye to eye with, and that was Tim Cook. After Tim came on board, we basically reinvented the logistics of the PC business.”

Given the importance and increasing complexity of Apple’s long-term strategic supply chain investments, can Apple manage without a COO for long?

In other words, does Tim Cook need his own Tim Cook?

“There will be a point in time where there will be a need for a successor to Tim Cook,” Sterne Agee analyst Shaw Wu says. “Obviously, that point isn’t now but could be in a few years.”

The most likely candidate for the job: Jeff Williams, who was promoted to senior VP of operations last summer. An Apple veteran, Williams has worked closely with Cook for over a decade and overseen some of the company’s major supply chain deals. It was Williams, for example, who orchestrated Apple’s massive flash memory purchase in 2005, one that effectively cornered the market for NAND flash and left rivals scrambling for supply. He’s also credited with leading worldwide operations for the iPhone since the device first launched.

So if someone is to succeed Cook as COO, Williams would appear to be the guy.

“My take is Apple does need a COO, and effectively has one with Jeff Williams,” says Piper Jaffray analyst Gene Munster. “He has been VP of operations since 2004, and was promoted to Senior VP a year ago. Whether or not Jeff gets the COO title is hard to say.”

Indeed. The COO is traditionally viewed as CEO in waiting. Is Williams CEO material? That’s impossible to say at this point and it’s premature to speculate. But it’s worth noting if only because it might mean that Apple will keep the COO slot open until Williams is properly groomed for it, or the company finds a candidate it feels is more worthy.

“COOs serve two roles — to broaden a potential CEO successor and/or to divide up the administrative responsibilities in an organization,” says Harvard Business School professor David Yoffie. “It is too early for the former, and Tim Cook will have to decide if the latter is necessary. Many big companies do not have COOs, and I suspect that Apple will not appoint a new COO in the near term.”

Apple spokesperson Katie Cotton stopped short of denying further organization changes down the road, but she did insist the transition will be smooth.

“Apple is not going to change,” Cotton told AllThingsD. “Apple is a company and culture unlike any other in the world and we are going to stay true to that. We are going to continue to make the best products in the world that delight our customers and make our employees incredibly proud of what they do.”

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While for tax reasons it’s probably more likely that HP will spin the unit out as an independent company — there are no taxes when assets are distributed to shareholders — Sterne Agee analyst Shaw Wu, in a note to clients issued this morning, breaks down the possible suitors should HP opt instead for a sale.

Topping the list is Samsung, which you might have guessed already. Samsung would make sense, Wu argues, given its “large size and global ambitions.” Samsung has been trying to build a PC business since 1997, when it acquired AST Research, but hasn’t gotten anywhere. But it is the world’s biggest manufacturer of DRAM memory chips, used in PCs; and the largest supplier of NAND flash memory, which forms the basis of solid-state drives that are increasingly built into notebook PCs. It’s also a big maker of LCD displays and notebook batteries. All that vertical integration, combined with HP’s consumer PC footprint — it’s the biggest supplier to Best Buy — would make Samsung the worldwide player it has always aspired to be.

Don’t ignore the other players, though. Acer, Lenovo, Sony and even Dell could all conceivably show up with a bid, Wu writes. But it will all come down to HP’s asking price, and what parts of the business are included. Wu pegs HP’s PC business as being worth $8 billion, or about $3.66 per HP share. To calculate that valuation, he assumes a premium of five times profit of $1.6 billion on $40 billion in revenue; a five percent operating margin and a 22 percent tax rate.

One potential issue to watch in a possible Samsung bid: Whether the South Korean giant asks HP to include its webOS software. Samsung is also a huge supplier of smartphones around the world, and would probably like to rely less on Google’s Android than it does now — and would want to own its own operating system. Having decided to kill the webOS hardware business, HP has indicated that it has plans to keep the software alive in some form, though enough cash from Samsung might change HP’s mind.

Wu also argues that the market has gotten too negative on the PC business in general. While it’s true that Apple’s iPad has left a historically significant mark on the PC universe, PCs aren’t dead yet — just ask Intel. Give them iPad-like touchscreens and flash drives for instant-on capability, and the market might rebound, he says. “We believe longer-term tablets and PCs are the same market. Ironically, we view Apple’s MacBook Air as the first generation of these future hybrid PCs.”

Update at 9:38 AM PDT / 12:38 PM EDT: Samsung just issued a brief statement saying it’s not interested in HP’s PC business. Such rumors are “not true,” the company says. Well it’s really not a rumor exactly, but speculation really. Somehow I don’t believe it’s the last word on the subject.

(Image, obviously, is from the sheet music of the number “Who Will Buy?” from the musical “Oliver!” Hear it below.)

Suddenly it seems incredibly popular: HP’s own Web site appears to have sold out of them. Engadget noted that the TouchPad is the hottest gadget on Amazon today, but not for the newly slashed price. At the moment, the 16GB unit is going for $454 on Amazon, and the 32GB version for $502.

Whatever this last minute mania might do to cushion the damage, the fact is that HP is taking a financial bath on the TouchPad, and not a small one, either. According to analyst Shaw Wu of Sterne Agee in San Francisco, HP’s initial order from its Taiwanese contract manufacturer, Compal, was for between 500,000 and one million units.

As we now know, sales of what we called the “OuchPad” were terrible, particularly at retailer Best Buy and pretty much everywhere else, prompting a sudden decision by HP management to kill the product and, in fact, all hardware running the webOS operating system.

So how much will HP end up losing on the TouchPad? We’ll probably never know for sure, but let’s do a little back-of-the-envelope math in order to arrive at an educated guess.

We know roughly what it cost to build each TouchPad, courtesy of a teardown analysis conducted last month by the research firm iSuppli. A 16GB TouchPad cost $306.65 to build, while the 32GB version cost $328.65.

Now let’s assume that the million-unit order is correct and that it was evenly split between 16GB and 32GB units. (It probably wasn’t, but it makes the calculation easier.) That would make HP’s combined hardware cost $317.7 million. Let’s give HP the benefit of the doubt and assume that before last week’s events it sold 50,000 units at an average price of $400. So we’ll subtract $20 million. That leaves us with $297.7 million.

Now let’s do the same calculation, this time assuming the order from Compal was for an evenly divided 500,000 units. In this case, the total hardware cost would be about $159 million, which, after knocking off that same $20 million sold, leaves us with $139 million. Thus, our range is somewhere in the neighborhood of $140 million to $300 million spent on hardware alone, depending on how many units were ordered.

Whatever the actual figure, you can bet that the cost of written-off hardware is a sizable contributor to the $1 billion cash charge HP said it will be taking in the fourth quarter, related to the shutdown of the webOS hardware business.

What else goes into that $1 billion? Costs associated with people who worked on it, who will soon be out of a job, for one thing; plus getting rid of any related assets, and so on.

And though it doesn’t factor into that $1 billion charge, it would be interesting to find out how much HP’s advertising agency spent on filming and buying TV slots for the TouchPad TV commercials starring Lea Michele from “Glee” and the Filipino boxer-turned-politician-turned-singer Manny Pacquiao. Those folks don’t exactly turn up for free. Nor do primetime ad slots. Also, as Reuters reported, those ads were still running on CNBC as of Friday.

Update: A few more thoughts on what other line items are likely within that $1 billion cash charge, courtesy of Wayne Lam at IHS iSuppli. There would have been other TouchPad models in various states of the design and manufacturing pipeline, though probably more designed and prototyped than manufactured. Then there was the associated research and development work going on with the various models of webOS phones that HP sold, not least of the which was the Veer — which oddly enough was in the schwag bag given away at D9 — as well as the Pre 3. Lam also says that HP was thought to have an exclusive contract with Qualcomm for the supply of the chips for the phones. Shutting down the hardware business might invoke some expensive contract cancellation terms, he says.

HP shares have been bashed about in recent days, in no small part because of the dismal revenue outlook issued by rival Dell on Tuesday, and also on the heels of a downgrade by BMO Capital analyst Keith Bachman. Word that the TouchPad tablet isn’t selling well at Best Buy didn’t help. Dell shares gave up more than 10 percent of their value, and HP shares appeared to fall in sympathy by nearly four percent, closing at $31.39, or more than 36 percent off their 52-week peak.

So, what to expect? More lowered estimates, if Bachman is to be believed. In a note to clients Wednesday, Bachman cut his rating on HP to “market perform” from “outperform,” even though HP is trading at an inexpensive valuation. “Poor execution, low revenue growth and negative operating income growth” have caused him to slash his price target on HP to $36 from $43.

Bachman said he expects HP to fall short on PC sales, which may cause it to miss its previously issued revenue guidance. “We think HP will modestly miss July top-line estimates, and more meaningfully miss current top-line estimates for HP’s October quarter,” he wrote.

The consensus view of analysts calls for HP to report per-share earnings of $1.09 on revenue of $31.2 billion.

Chris Whitmore, an analyst at Deutsche Bank, wasn’t quite so dour as Bachman, though he wasn’t exactly whistling Dixie about HP’s prospects, either. Saying he expects HP to report results that are in line with the consensus expectations, Whitmore wrote in an Aug. 14 note to clients that he sees a “modest risk to revenue expectations.” The continuing investment to beef up HP’s investment in the services business will put some pressure on future earnings potential, Whitmore worries.

Citing checks of HP’s supply chain and distribution channel, Shaw Wu of Sterne Agee said in a note to clients yesterday that he thinks HP will “meet or exceed” the consensus estimates, and that, as in recent quarters, enterprise hardware sales will be stronger than consumer PC and device sales. “We believe this favorable product mix, in addition to lower component costs, should benefit gross margin,” he wrote. At least there’s one vote of confidence.

Back to services for a moment. HP’s long-term strategy has been to transform itself into a bigger player in IT services, so that it can rely less on sales of personal computers and printers, both of which are subject to violent sales-cycle swings. It’s a strategy that worked out well for IBM, and the $14 billion acquisition of EDS in 2008 was a key part of it.

During HP’s last earnings call in May, Apotheker grumbled that under previous CEO Mark Hurd, now a president at Oracle, HP “over-executed operationally and under-invested strategically.” Essentially, Apotheker blamed Hurd — known as an aggressive cost-cutter — for cutting too deeply without making sufficient investments to fuel growth in higher-profit lines of businesslike services. As a result, Apotheker explained, some expensive investments would be needed over the next several quarters to get that services business where it needs to be, and these investments would eat into results for the next several quarters. (You can hear him explain it himself in a CNBC video from May, below.)

It will be interesting to see if that “Hurd’s fault” narrative is still on the table. If it is, it’s not likely to fall on sympathetic ears. In his downgrade note, Bachman at BMO criticized HP harshly for pressing this message. “We suspect that management will make the point that previous management cut HP too much. However, previous management did not provide guidance, and then miss for three quarters, particularly right after having an analyst event. We would leave blaming the previous administration to politicians — it does not work with investors.” Ouch.

While early speculation suggested the device would be more a refinement of the iPhone 4 than an overhaul, recent supply chain chatter indicates it might turn out to be quite a bit more. In addition to the expected under-the-hood improvements — the faster A5 processor on which the iPad 2 runs and a higher resolution 8 megapixel rear camera — supply chain sources tell Sterne Agee analyst Shaw Wu the iPhone 5 will feature a thinner design with a wider display.

“We are picking up that this ‘interim’ iPhone refresh in the Fall timeframe could be a bigger upgrade than we expected,” Wu says. “In addition to a dual-core processor that we have talked about before, our supply chain sources indicate that it will sport a slightly larger display than the current 3.5-inch retina display that is already industry leading. We are picking up that it will retain a similar form factor and size but with thinner bezel. … We believe this keeps the iPhone fresh and competitive and helps maintain its leadership position.”

One thing Wu says the iPhone 5 won’t feature: An LTE chipset.

“[The handset] will not likely incorporate 4G LTE due to battery life issues and spotty network coverage,” says Wu, adding, “[I]ronically, if anyone is in a position to fix these weaknesses, it would be Apple.”

Of those leaving the company, 2,100 are taking a voluntary retirement buyout package that’s been made available to people whose age and years of service add up to a sum of 50 60. For example, an employee 40 50 years old with 10 years at Cisco would be eligible. An additional 4,400 will lose their jobs outright, but will no doubt receive severance packages. The remaining 5,000 or so are employees of a Cisco plant in Mexico that is being sold to Foxconn, the Taiwanese contract manufacturer. They will become Foxconn employees.

These reductions are the third significant step in what’s expected to be a four-step process, spearheaded by CEO John Chambers, to get Cisco on a leaner, more competitive and more profitable path. Analysts are, so far, fairly positive on the cuts.

Brian Marshall of Gleacher & Co. in San Francisco, who last week predicted that Cisco would cut 5,000, gave a tentative thumbs-up to the move. Cisco’s goal throughout the process has been to take out $1 billion in annual operating costs. Marshall says that it looks like Cisco could do better than that: He thinks the cuts could yield $1.7 billion in savings and add 25 cents in per-share earnings to the bottom line in 2012.

Breaking it down, he says the 6,500 jobs cut could result in $1.3 billion in savings from retirements and firings, assuming a cost of about $200,000 per head. The sale of the facility in Mexico will yield about $400 million in reduced cost of goods sold (COGS).

The next step, which Marshall expects in September, will be for Cisco to recalibrate its long-term financial expectations. Long accustomed to telling Wall Street to expect in the 12 to 17 percent range, the more realistic range for Cisco, Marshall says, is now closer to 10 percent, plus or minus a few points. Gross margin expectations will have to come down, too, to about 25 percent, down from a range of 28 to 31 percent.

Shaw Wu of Sterne Agee in San Francisco called the reductions “painful but necessary.” He notes that Silicon Valley hiring has been pretty strong of late and that those Cisco folks losing their jobs should have little trouble finding work at companies like Facebook, Apple or Google, though I’d suggest that Hewlett-Packard’s up-and-coming networking unit or Juniper will be eager to pick up some Cisco talent.

On the sale of the factory to Foxconn, Wu sees Cisco as winding up for a spin-off of the set-top box business. “We view the Foxconn transaction as effectively a restructuring of its lower margin set-top box business and think ironically, could make a potential future spin-off easier with the manufacturing detached.”

Update: A few of you have written to say my initial characterization of the retirement package terms was incorrect. The required sum of age plus years of service is 60, not 50. Sorry about that.

Having closed on Friday at $14.97, the price of Cisco shares is nearing its lowest point in about five years (Cisco hit $14.18 in March of 2009). CEO John Chambers has blamed toughening competition in its main networking business, lower profit margins resulting from a product transition and a drop in government spending for many of its troubles. A significant restructuring is coming some time before the end of the summer that will combine offering retirement packages to eligible employees and laying off others. It’s also possible that other parts of Cisco’s business may be sold, spun off or shut down.

Chambers’ plan is to trim Cisco’s operating costs by $1 billion a year. Meanwhile, the video business that Chambers constantly talks about is starting to get interesting and competitive, and other products, like its blade servers, are starting to show some traction. And by the way, the Internet isn’t exactly getting smaller, you know.

Whatever it is, it better happen soon, Wu says, because investors are getting impatient. “In sum, we believe Cisco is fixable and not structurally flawed, but admit we need to see more dramatic steps be taken,” he writes.

While some investors have been calling for Chambers to step down, Wu isn’t with them. “From an investor standpoint, most believe that Cisco will be very difficult to turn around and that a management change is needed. While we do not believe that John Chambers needs to go, as we believe he has proven to be one of the greatest managers and visionaries of the modern era, we do believe he needs to make bigger moves than what has been done so far.” One suggestion? Boost the dividend to 3 percent from its current 1.6 percent.

Also? Cisco may have to take some “bitter medicine” on the price of its switches and other networking gear. Many Cisco customers and its channel resellers told Wu that Cisco’s prices are too high when compared to competitors, and that it may be pricing itself out of the market. “Many believe that Cisco still deserves a premium, but 50 to 100 percent seems a bit excessive,” he writes. “Because of this, we believe Cisco will likely need to take the bitter medicine of lower gross margin for longer-term good.” He cut his assumptions on Cisco’s gross margin accordingly from about 62 percent to a little higher than 55 percent.

That said, most of the the bad news at Cisco is priced in, making its depressed price a fair buying opportunity, he says. “We believe the Cisco story is getting better, and we’d rather be a buyer at these depressed levels than wait for obvious evidence of improvement. By then it may be too late.”

Wu still rates Cisco shares a buy, with a price target of $25, which is a drop from his previous target of $29. He also lowered his fiscal year 2012 estimates on Cisco’s revenue and per-share earnings to $45.9 billion and $1.50 per share, from $46.5 billion and $1.80 a share. The new target price represents a multiple of 12.5 times Cisco’s projected calendar year earnings of $1.62.

Wu also thinks Cisco will start setting more realistic expectations going forward, and back away from its projecting a long-term annual growth rate of 12 to 17 percent, which, he says, “no one believed anyway.”

Given all that, Cisco’s close to turning the corner, he says, though it won’t happen right away. “We realize that Cisco may take a few quarters in fixing itself, but we believe management will make the right moves in restoring investor creditability.”

(Image borrowed from the 1938 Warner Bros. classic animated short, Porky In Wackyland.)

“Our checks with industry sources indicate that Verizon will put heavy promotion behind the iPhone, likely ahead of its other platforms including Android,” Kaufman Bros. analyst Shaw Wu says.

I’d say that’s a safe bet, given the amount of effort that Verizon put into the deal and the obviously high expectations for it. Indeed, as Wu himself notes, the carrier is already touting the iPhone 4 as a flagship product on its Web site. And it’s given it a snappy little tagline that’s well suited for an (inevitable) ad campaign: “The phone that changed everything. Coming to America’s most reliable network.”

PREVIOUSLY:

• Verizon iPhone Will “Suck The Wind Out of Android’s Growth”
• Analysts Go Out on Limb, Predict Verizon iPhone Will Be Big for Apple
• AT&T: Verizon iPhone? Whatever.
• Verizon iPhone: What, AT&T Worry?
• Why Verizon’s iPhone Won’t Be So Bad for RIM
• How Might the Verizon iPhone Differ From the iPhone 4 (Besides Being Able to Make Calls)?
• Tired: Speculating About Verizon iPhone. Wired: Speculating About Verizon iPhone Sales.
• Verizon iPhone to Debut With Unlimited Data Plan
• Apple CEO Likely to Appear at Verizon iPhone Event
• Verizon Event Set for Tuesday–iPhone Time

In a sequel to his original research note suggesting the PlayBook’s battery life is “relatively poor” compared to rivals’, Kaufman Bros. analyst Shaw Wu reiterates that claim, saying he would be “very surprised if PlayBook matches anywhere near the battery life of the iPad at 10 hours unless it uses a larger battery.”

The reasons for this are threefold:

1. The PlayBook supports Flash, and Flash is a resource hog. Says Wu, “As seen in recent tests for the new MacBook Air, use of Flash can cut battery life in half….From our understanding, the poor battery life of early PlayBook units may be due to its incorporation of Adobe Flash.”
2. QNX, the operating system on which PlayBook is to run, wasn’t designed for it. It was intended for devices drawing power from a wall socket or car battery, not mobile platforms whose power sources are necessarily limited by their own mobility.
3. RIM’s implementation of power management is not as well-integrated as that of its rivals–particularly Apple, whose homegrown A4 system-on-chip enables the company to deliver superior battery life.

Obviously further work is needed to optimize the device’s battery life; RIM admitted as much in its rebuttal to Wu’s first note and, to be fair, this is a pre-release device–a work in progress. RIM still has a few months left to optimize the PlayBook’s battery and get it to that “comparable” level it claims.

But even fully optimized, Wu doesn’t see it matching the iPad.

“Our sources indicate that the best that PlayBook can probably deliver is six hours as offered by the Samsung Galaxy Tab, which is nearly half of that offered by iPad,” he concludes. “And that is with significant re-engineering.”

That’s RIM’s rebuttal to Kaufman Bros. analyst Shaw Wu’s suggestion that the PlayBook’s battery life is “relatively poor” compared to rivals–a claim the company says is based on the observation of a pre-beta version of the device.

“Any testing of battery life to date by anyone outside of RIM would have been performed using pre-beta units that were built without power management implemented,” RIM said in a statement. “RIM is on track with its schedule to optimize the BlackBerry PlayBook’s battery life and looks forward to providing customers with a professional grade tablet that offers superior performance with comparable battery life.”

Ah, but comparable to what? And speaking of “comparable,” what happened to “way ahead”? Wasn’t that what RIM co-CEO Jim Balsillie said of the PlayBook’s performance during the company’s last earnings call? “I think there’s going to be a rapid desire for high performance. And I think we’re way ahead on that. And I think CIO friendliness, we’re way ahead on that.”

And what does RIM have to say about Wu’s suggestion that it may be forced to delay the PlayBook’s launch to optimize its battery life? Nothing beyond the oblique assertion that it’s on track with an undisclosed internal schedule. Question is, is that schedule still based on an early 2011 launch or one in the May quarter as Wu suggested. Because if it’s the latter, that means the PlayBook could conceivably arrive at market after the next-generation iPad.

Sources tell him the tablet currently lasts just a few hours per charge, compared with rivals like Samsung’s Galaxy Tab, which lasts about six, and the iPad, which lasts upward of 10. If true, that’s an untenable situation for RIM, which really needs to hit the mark with the PlayBook, and it may cause a delay of the launch–if only for a bit (to be fair, Wu is talking about an unreleased device that’s still in development and months away from market).

“From our understanding, this [is] likely why RIMM pushed out its launch to the May 2011 quarter,” Wu writes. “Keep in mind that QNX (the OS on which PlayBook runs) wasn’t originally designed for mobile environments but rather for devices like network equipment and automobiles where battery life isn’t as much a constraint.”

In other words, as promising as plugging QNX into a tablet form factor with a dual-core processor and a gig of RAM sounds, it’s proving to be a bit of a challenge. So what’s the solution? Most likely a bigger battery. But obviously that will add to the heft of the device and perhaps require a design concession or two.

Given that, Wu takes a conservative view of PlayBook’s prospects; he figures RIM will sell 700,000 units in 2011, far less than the one million to eight million that other analysts have been calling for. “As we have said before, we are not convinced that tablets outside of the iPad will see high volume success,” he concludes.

UPDATE: RIM finally got back to me with a comment: “Any testing or observation of battery life to date by anyone outside of RIM would have been performed using pre-beta units that were built without power management implemented. RIM is on track with its schedule to optimize the BlackBerry PlayBook’s battery life and looks forward to providing customers with a professional grade tablet that offers superior performance with comparable battery life.”

The one million units is in line with his forecast, and a bit ho-hum given it equals just $400 million annually in revenue on an $88 billion top line. The units might be “significantly higher” if Apple TV had access to the 300,000 apps in the Apple App Store, writes Wu.

“One questions many investors have asked us is how does Apple add multi-touch capability to a TV?” writes Wu. “Our answer is the ability to connect the Magic Trackpad, similar to adding multi-touch to its desktop macs including iMac, Mac Mini, and Mac Pro.”

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“We are hearing that Verizon…may be willing to pay for exclusivity to itself and AT&T. For these reasons, Verizon could be more willing to give in to Apple’s terms,” Wu said in a note to clients this morning, adding that the iPhone’s continued success has undoubtedly given Apple the upper hand in its negotiations with the carrier. “Apple is back in the driver’s seat with a record 14.1 million iPhone shipments in the September quarter helping AT&T gain share against Verizon over the last two quarters as Android starts to lose some of its luster (at least at Verizon). In addition, our sources indicate that Verizon does not believe the pending launch of BlackBerry 6 on its network is likely to have a material impact.”

An interesting bit of speculation. If Apple were to win concessions from Verizon and AT&T to keep the iPhone exclusive to those carriers, it might be able to drastically expand the device’s distribution in the States and keep its margins in line at the same time. As Wu writes, “This is important as many, including ourselves, have been concerned that Verzion iPhone economics could be less favorable given the strength of Android and higher cost of components, particularly those associated with CDMA.”

That said, with Google’s Android OS gaining market share so quickly it might be a better move strategically to sacrifice a bit of margin to bring the iPhone to more carriers and temper its rival’s growth.

“We frankly are not sure if this model will see the light of day,” said Wu. “But this would be a big departure from the design it has had since 2005 when it replaced the iPod mini. From our take, a radical refresh may make sense to jumpstart what was once its top-selling iPod.”

If Apple were to remove the click wheel from the nano, what would it replace it with? Perhaps those mini-touchscreens we heard about in July….