Apple is winning the battle between iPhone and Samsung Galaxy S3/S4 according to the latest analyst reports. Samsung, however is still very profitable.
Apple Will Survive with Big Profits from iPhone 6
Jeffries analyst Peter Misek recommended investors buy Apple stock after visiting Apple's Asian suppliers. The suppliers reported a “substantial shift in attitudes toward Apple,” who have become “far more lenient on price.” He predicted that Apple profit margins will survive until the launch of the iPhone 6, next year.
He reports that the iPhone 6 will have a 4.8" screen and catalyze the upgrade cycle.
iPhone 5c Sales Not So Colorful
His checks showed that Phone 5c builds are being cut from 30M to 15-20M due to weak sell-through. The poor iPhone 5s/5c cycle would offer a bigger upgrade opportunity for the iPhone 6, when 85M iPhones eligible for an upgrade in September 2014 Profits could also be boosted by another 5-10 million from people who skipped the iPhone 5s/5c cycle. Other profit makers for Apple could be the iWatch and iTV launched in 2014 or later, noted Misek.
Samsung Sings Profit But Not High-End Smartphone Sales
Samsung Galaxy S4 sales are waning while Samsung component sales are doing well.
Misek reported that "Galaxy S4 sales missed internal targets leading Samsung to not raise foundry prices for Apple." Samsung makes many of the components for the iPhone 5c/5S.
We don't have to worry about Samsung's profits, though. The Wall Street Journal reported that Samsung issued guidance for record operating profits in the third quarter from$9.2 billion to $9.6 billion. Analysts estimate between 85 million and 89 million smartphones shipped in the third quarter.
However, analyst Greg Roh has doubts over the sustainability of smartphone-driven profits.
Several analysts have warned that Samsung's smartphone sales are showing signs of plateauing.