Canaccord: Apple Claims 80% of Q4 Mobile Handset Profits

| Apple Stock Watch

Apple claimed a staggering 80 percent of all mobile handset profits during the December quarter, according to Canaccord analyst Michael Walkley. The analyst said that Apple achieved this remarkable feat, even though it had only 8.1 percent of the market. Samsung claimed another 15 percent of those profits, leaving the next top six companies to scrap it out for the remaining 5 percent.

Canaccord Chart

The chart above shows that Apple took a huge leap during the 4th quarter in its share of hardware profits. In the third quarter ending in September, Apple owned only, and we use that word with tongue superglued to cheek, 56 percent of all industry profits.

Apple sold some 20 million iPhones in the September quarter, but that number increased to 37 million for the December quarter. That quarter included the launch of the iPhone 4S, the busy Christmas shopping season, and an extra week in Apple’s fiscal accounting calendar.

AAPL

Michael Walkley also raised his price target for shares in Apple Inc. in Thursday’s research note, bumping it from $650 per share to $665. The move comes with an increase in the analyst’s iPhone estimates for the March quarter from 30.1 million units to 32.6 million. For the full year, Mr. Walkley raised his iPhone estimates from 140 million units to 148 million.

Mr. Walkley told clients that he believes Apple is continuing to take market share in the U.S. smartphone market, particularly at the expense of Research In Motion’s BlackBerry platform and Nokia’s mostly defunct Symbian OS.

“Our January checks indicated the iPhone continues to extend its market share gains from [the December quarter],” Mr. Walkley wrote. “In fact, we believe iPhones are outselling all other smartphones combined at the Sprint, AT&T, and Verizon channels since the iPhone 4S launch.”

T-Mobile, the 4th largest carrier in the U.S., is the only major U.S. carrier without a deal to carry the iPhone. If, as the analyst believes, the iPhone is outselling every other smartphone combined, Apple will once be the top vendor during the quarter and could conceivably claim the top spot in smartphone platforms. If so, it would be a first for the company, but such an event seems unlikely.

iPhone 5

Looking ahead, the analyst said, “We believe an iPhone 5 with LTE technologies and a new iPhone form factor could result in even stronger iPhone sales than our increased estimates for [the second half of calendar 2012].”

So scary is the iPhone, the analyst said that industry sources suggest that would-be competitors have delayed launching some of their own products in order to avoid directly competing with the iPhone 4S while it is still new. He didn’t offer any specifics on that factoid, however.

In addition to increasing his price target, Mr. Walkley reiterated his “Buy” rating on the stock.

AAPL traded higher throughout Thursday’s trading day. In the late afternoon session, the stock was trading at $494.296, up $17.616 (+3.70 percent), on heavy volume.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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10 Comments Leave Your Own

aardman

8% market share yields them 80% of profits.  There goes your old 20:80 rule.

Oh wait, if Apple doubles their market share, they get 160% of industry profits!!

BurmaYank

“8% market share yields them 80% of profits.”

How merciful Apple has been to all its smartphone competitors - instead of driving all the Androids, RIMs, NokiaWins, etc. out of business by reducing the iPhone’s margins to that of its competitors’ and thus drastically underselling them all, Apple increases the iPhone’s margins until its price roughly matches that of its competitors’ prices, so that the Android, RIM, NokiaWin, etc. smartphones can hang on in the market (and so that Apple doesn’t have to worry about becoming a smartphone monopoly.)

Paul Goodwin

When they talk about the 8% of the “market”, I don’t know what that means. Sold units since the smart phone market started? Percent of phones sold in the last 12 months? And what phones are they counting as “smart”?

They’re selling more than 8% of the market if the other statement about outselling all others combined lately is accurate.

80% of the profits is all that really matters and I thank everyone involved that made AAPL stock go up $16.49 today. It went up almost as much as I paid for my first shares of Apple stock last decade - a little over $18 a share. Sure wish I still had those…

Bryan Chaffin

Paul, that’s 8.1% of the mobile handset market, which includes all mobile phones. The other market share numbers that also apply to iPhone is the subset of the handset market known as smartphones, where Apple’s share is far higher.

Paul Goodwin

Thanks Bryan. I kinda thought that might be the case. Kinda crazy when those analysts lump the $10 mobile phones in with the smart phones. I’vevheard a lot of different numbers lately about their market share.

Paul Goodwin

Thanks Bryan. I kind of thought that might be the case. Seems crazy when the analysts lump the smart phones in with the $10 mobile phones with equal weighting and quote a market share. Kind of like saying Harley Davidson only has 1% of the wheeled vehicle market share.  Didn’t think the last comment took- got an error message. Sorry about the repeat

Bryan Chaffin

Yeah, the problem is that there are lots of different ways for different people to look at different aspects of the industry. Hardware share, OS share, number of apps, number of app downloads, percentage of app downloads that are free vs. paid, smartphones, feature phones, ad views, ad taps, ad sales, prepaid, post-paid, new subscribers, churn…

I’m sure I left some things out, too. smile

And all of those numbers get crunched, dissected, analyzed, and spun! It’s hard to keep track of, for sure.

wab95

So Bryan,

What’s the metric for ‘disappointing’ anyway?

Perhaps those pundits who referred to the iPhone 4S as ‘disappointing’ were, in fact, pre-cogs who were simply lamenting the future effect of the iPhone on the competition, and we misunderstood the reference.

This past quarter, the iPhone 4S’s impact on the smartphone market has been nearly an ELE (extinction level event) for most other hardware vendors - in terms of profits. Marketshare be damned. They’ve got to hurting and bracing for the impact of the incoming iPhone 5.

Walkley may be correct regarding other vendors and the iPhone 4S, however they may be instead holding production and waiting to ape the form factor/feature set of the iPhone 5 - but with additional specs. This approach has served them well with previous iPhone releases.

Paul Goodwin

By the way, my wife won’t let me get a Harley. Says I’ll shoot my eye out. But she got me my iPhone 4 and iPad 2 so I guess I’m OK

Paul Goodwin

Any my Harley comparison probably wasn’t so good ‘cause they cost as much as 1/2 the cars sold

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