Morgan Stanley On Smartphone: Demand Better Than Expected
Analysts at Morgan Stanley on Wednesday released data from its proprietary “AlphaWise Smartphone Tracker” analysis.
iPhone demand: Data points to potential EPS upside
Morgan Stanley's Asian Tech analyst Jasmine Lu expects Apple's supply chain to build 38 million to 39 million iPhones in in the first quarter, which is one million less devices than her expectations in February.
In contrast to Lu's data, the AlphaWise Tracker is projecting Apple to produce 42 million iPhone devices. This figure was derived from new U.S. carrier promotions in the quarter that is driving incremental demand compared to late 2013 when carriers were stricter in their contract terms and not as generous in promotional activities. Additionally, iPhone devices will see a boost in demand from several large retailers running iPhone promotions such as Wal-Mart and Best Buy.
Demand for iPhones improved in every major region tracked except for China, according to Huberty.
“China had tougher comparisons in C1Q14 due to the earlier iPhone launch compared to past years,” Huberty wrote. “China Mobile likely offset the difficult comparisons slightly, but we expect the majority of the benefit in late 2014 as subscribers wait for the next generation, larger-screen iPhones.”
According to Huberty, the AlphaWise Smartphone Tracker analysis has been a very good indicator of Apple iPhone shipments and has proven to be more accurate than the Street's consensus estimates.
Samsung Galaxy: Galaxy S4 variants supporting demand
According to the AlphaWise Smartphone Tracker, demand for Samsung Galaxy devices is expected to total 41 million units, which represents a decrease of 11 percent from the previous quarter.
Despite a slowdown in Galaxy S4 and Note 3 shipments accounted for 18 million units this quarter, demand in the current quarter will be supported by several Galaxy S4 variants such as the Mini, Zoom, Mega, Google and Active models.
In total, Samsung is expected to ship about 91 million total smartphones in the quarter which tracks ahead of the consensus. However, overall mix will be weaker due to lower-priced phones and a shift towards China.
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