The analyst asserts that weak financial forecasts from both Skyworks and Jabil, as well as checks with the supply chain, suggest that iPhone supply issues continue to limit near-term shipments. The issue: low manufacturing yields for for the in-cell displays Apple is using in the new phone. "This shortfall mostly appears to be a timing issue though we assume some lost sales in an effort to be conservative," he writes in a research note.
Milunovich continues to estimate September quarter iPhone units at 26 million, with 8-10 million iPhone 5s. But for the December quarter, he now sees sales of 38 million units, down from a previous forecast of 44 million, "with upside unlikely beyond 40 million." His revenue estimate for the quarter drops to $49.3 billion from $53.1 billion; his EPS forecast to $13.65, from $15.03.
The analyst notes that he has not added the 6 million iPhones cut from his forecast to future quarters, taking the conservative view that shipment delays could result in some lost sales. He continues to forecast unit sales of 44 million in the March quarter, 43 million in the June quarter and 38 million in the September 2013 quarter, for a total of 163 million for the fiscal year.
He also trims his full year EPS view to $52.51 from $53.76, and now sits below consensus at $53.32.
All that said, he keeps in Buy rating on the shares. "We do not read the maps glitch and potential near-term shipment disappointment as a material change in the long-term story," he writes. " In our view, stock gains may not come as easily, but there are few tech franchises with Apple’s ROIC [return on invested capital] and growth at 11x EV/FCF [enterprise value/free cast flow]."
AAPL this morning is up 50 cents, to $665.68.
