3G iPhone 4x the Fun for Apple's Top Line

7/14 - "Based on trends during the quarter, we have revised our estimates to reflect the new iPhone business model and our analysis of recent component price trends, with EPS estimates about the same and FCF estimates significantly higher...The iPhone 3G launch was clearly not as smooth as last year's launch owing mostly to the simultaneous launch of 2.0 software and a more cumbersome activation process. However, demand was clearly strong across the U.S., with lines persisting at the Apple store in Nashville at least through Saturday night...For 2008E/2009E our EPS estimates go to $5.19/$6.26 from $5.15/$6.27. Our FCF/Share estimates for 2008E/2009E are now $7.56 and $9.43/share."

"While MacBook growth is likely to remain very strong and may even accelerate in Q4 with a potential product refresh, overall gross margins are likely to be down significantly Y/Y due to recent product refreshes and launches, and last year's sudden drop in component prices...We estimate that desktop unit growth in Q3 and Q4 will decelerate to +35% Y/Y and +20% Y/Y, respectively, as the stimulus from the August 2007 iMac refresh begins to wane."

"iPod Growth Slows, but May Surprise Some Investors - We expect iPod volumes and revenues will rise +5% Y/Y and +8% Y/Y, respectively, due to the contribution of the Touch, a full quarter of lower priced Shuffles, and benefits from the U.S. economic stimulus...A global launch of the iPhone 3G should help volumes reach 10.7 million by FY2008E and 25.0 million by FY2009E based on our new assumptions. We note that our model assumes the introduction of new form factors over time, and a large increase in SG&A (up +32% Y/Y in Q4:08E and +30% Y/Y in Q1:09E) to support increased marketing initiatives worldwide."

"iPhone strength over the next several years should enable the company to grow 20%+ even with a slowing iPod line. The most significant risks we see near term for Apple remain the economy (at some point even Apple isn't immune) and the unknown marketing spend for the iPhone over the next few quarters. We have attempted to build reasonable expectations into our financial model and have derived a revenue growth estimate well in excess of a the consensus view, but an EPS expectation that is essentially in-line with the consensus. We maintain our Market Perform/Market Risk rating on shares of Apple into the Q3 earnings call, and will adjust our estimates and reassess our rating after Q3 results."

7/14 - "After cracking open Apple's (AAPL) iPhone and looking at its insides, FBR has determined..."

'Marvell does have the WiFi chip ($2–$3 of content) in the iPhone, as we thought. With about 10 million incremental iPhones and iPod Touches in 3Q versus 2Q, incremental revenue contribution is 2%–3% sequential growth, as we expected. We like shares of MRVL here, given that they have retraced to the $15 level, and since the firm is a margin turnaround story now as operating expense leverage kicks in over the next year.'

'Linear Technology (LLTC) does supply the battery/USB charger ($1.00–$1.50 of content), as it did in the prior generation. With 10 million incremental iPhones and iPod Touches in 3Q versus 2Q, incremental revenue contribution is about 3% sequential growth, as we previously thought. Linear (Market Perform, $38 target) is a defensive stock to own in difficult macroeconomic times.'

7/11 - "AmTech thinks RIMM can compete against Apple's (AAPL) iPhone because of "superior connectivity." Specifically, RIM's Blackberries have a better user experience and are more addictive:

'Always-on push connectivity is important for the user experience of IM. To date, a session-based experience has not shown the same sticky qualities and heavy usage as BlackBerry. We believe this is also true of social networks and will become so for many other applications. Facebook and many applications look great on iPhone and are much more functional than other competing platforms; but for many applications, RIMM’s push connectivity solution enables a better overall experience for mobile users.'

"AmTech also stresses that technology adoption is viral, and the player that can convince users that their product offers the superior user experience the fastest, often comes out ahead. For RIMM, their connectivity advantage and superior IM experience may convince the youth demographic, which is key to RIMM's growth, to pick up Blackberries instead of iPhones. AmTech reiterates its Buy rating and keeps its price target at $205."

7/1 - "Apple's new 3G iPhone will have embedded GPS, which will make the gadget all the more useful. Regardless, though, will consumers be using their iPhones as replacements for full GPS devices in all those vehicles? Unless there is a decent vehicle mount kit available, it's hard to believe so."

"If you've ever used a GPS navigation program installed on a normal cellphone or smartphone, does it works seamlessly like a standalone product? Can you take and make calls while the GPS continues working in the background, giving you all those voice directions? What makes standalone GPS devices so valuable is that they work even when we're multitasking with phone calls. That's the kicker: the first time you miss a direction by voice because you're busy chatting on the phone, a GPS solution on top of a cellphone -- at least for driving purposes -- would become useless to the average consumer."

"...I continue to see a bright future for standalone GPS device manufacturers (although profits will continue to dwindle). Apple, as always, is not the only game in town. It will still be big for non-driving GPS uses, though."