While the mobile phone world is going to be all ga-ga the next few days over this weekend’s debut of the Palm (PALM) Pre, which as noted has been getting pretty impressive reviews, next week the focus will quickly shift to Apple (NASDAQ:AAPL), which next week holds its Worldwide Developers Conference at Moscone West in San Francisco. Expectations for the show are relatively modest. There will certainly be a lot of discussion about Snow Leopard, the new version of the Mac OS, which is due later this year, as well as plenty of chatter about the coming launch of the new version of the iPhone OS.
Both of those are highly important for Apple, but neither is likely to provide a lot of major surprises; the company has been showing off bits of Snow Leopard for at least a year, and held a press event to unveil iPhone OS 3.0 back in March. What the Street expects to see soon, whether at WWDC or shortly after, are some new iPhones. The thinking is that there will be new models with more memory and new features - better camera, video, compass, faster processor, battery battery life - and the current $199 and $299 price points; some analysts remain convinced that there will also be a cheaper version, perhaps with less memory and reduced functionality, at $149, or even $99. Some analysts suspect Apple could hold off on launching the new phones for a few weeks and hold a separate event - perhaps with the triumphant return of Steve Jobs from his current health-related leave. (He had promised to return at the end of June.)
The coming WWDC has triggered a flurry of research notes from the Street this morning; here’s a rundown:
- Yair Reiner, Oppenheimer: He repeated his Outperform rating, and upped his target to $160, from $140. Reiner thinks the focus at WWDC wil be on software, and contends there are good reasons to delay the new iPhones a bit longer, in particular to focus attention on Snow Leopard and iPhone OS 3.0. He advises buying the stock on any weakness related to disappointment with the event. Reiner today upped his FY 2009 EPS estimate to $5.69 from $5.41 to reflect stronger Mac sales; for FY 2010 he goes to $6.67, from $6.17.
- Vincent Rech, Soceite Generale: He picked up coverage of Apple Thursday with a Buy rating and $160 target. He sees several catalysts ahead for the stock, including the iPhone refresh and the launch of the new iPhone 0S. The analyst sees a potential 20% boost in iPhone unit sales if the company signs a deal for distribution in China.
- Gene Munster, Piper Jaffray: Munster cautions Thursday that the WWDC is likely to be in line with expectations, which he thinks could be “a slight negative” for AAPL shares. He says a new family of iPhones is coming in mid-July, whether they are unveiled at WWDC or at some future event. Munster says reports of cheaper iPhone service plans appear unfounded; he also thinks a cheap phone is more likely to be priced at $149 than $99. Munster maintains a Buy rating and $180 target.
- Shaw Wu, Kaufman Bros.: He has similar expectations to Munster, asserting that new iPhones are coming, including a “much more powerful version with improved battery life,” as well as “junior” version with less functionality. He is more optimistic than Munster about AT&T offering more flexible service plan pricing. Wu also notes that Apple may decide not to show the new phones at WWDC; he advises buying the stock on any weakness related to disappointment about the event. Wu maintains a Buy rating and $160 target.
- Phil Cusick, Macquarie Research: He says a next-gen phone with 32 GM of storage is not likely to spur much incremental demand; but he thinks a price drop to $100 for low-end iPhone plus lower-cost data plans could increase the addressable market dramatically, with units up 100% or more, iPhone revenue jumping more than 70% and iPhone-related profits increasing more than 50%. If they go that route, he says, the addressable market could increase by more than 3x, he says. Cusick thinks the new high-end version of the phone will likely include a front camera for video chat and a rear camera with autofocus. He says speculation about an OLED screen is likely wrong. Cusick maintains a Neutral rating and $135 target.
- Kathryn Huberty, Morgan Stanley: She thinks the company in fact will unveil the new iPhones at the WWDC, and sees several potential sources for increased demand. A $100 price cut could boost annual units by 5 million a year and lift EPS by 50 cents, she writes in a research note. Entrance into China, she adds, could add another 1-2 million units. Convincing AT&T to cut the monthly service plan fee could drive another 4 million incremental units, she contends. And adding another carrier - something she thinks won’t happen before 2011 - could boost units by another 5 million to 7 million a year, she writes. Huberty maintains her Overweight rating and $180 target.
I’ll be in SF Monday morning for the keynote from Phil Schiller, and plan to blog the event live.
AAPL Thursday is up $2.54, or 1.8%, to $143.49.