Stocks That Will Benefit And Lose From The iPhone 5 Launch

by: Alexander Thorburn-Winsor

On September 12th, 2012, Apple (NASDAQ:AAPL) will launch its much hyped and long awaited iPhone 5. As the next generation of the iPhone, it is expected to top sales records and become one of the best-selling products of all time.

According to JPMorgan (NYSE:JPM), the iPhone 5's launch could single handily boost the U.S. GDP by 0.5%, a massive number. The last iPhone, the 4S, became the best-selling iPhone of all time, despite having no significant design changes. Apple's senior VP of international marketing, Phill Schiller, says that every previous iPhone model has sold roughly the number of units of all the previous ones combined, meaning the iPhone 5 could sell 250 million units if the pattern holds true. The new iPhone is expected to be lighter, faster, and have a bigger screen like its Google (NASDAQ:GOOG) Android competitors.

While Apple will obviously benefit from the iPhone 5's massive launch, so will many other companies; from the companies that make the parts powering the new iPhone, to the carriers that allow you to browse, call, and text.

The iPhone is more profitable for cellular carriers than most other smart phones thanks to its ability to command a higher price for a monthly plan and the cellular carriers like AT&T (NYSE:T), Verizon (NYSE:VZ), and other carriers that have lagged behind like Sprint Nextel (NYSE:S) will see a huge jump in sales thanks to the iPhone. Deutsche Bank (NYSE:DB) has upgraded its iPhone sales estimates for all of the carriers, but a huge sales jump for Sprint could put it back on track after years of poor performance. Sprint has also recently launched its LTE network in many cities, gaining it many new customers from its iPhone plans thanks to its unlimited LTE data.

While the carriers over time make the most money off of the iPhone, the manufacturers behind the technology in the phone make hundreds of dollars from every iPhone sold. Blayne Curtis, an analyst at Barclays Capital said that Skyworks Solutions (NASDAQ:SWKS), the maker of the LTE and Wi-Fi technologies in the iPhone 5 will gain the most from the launch of the new iPhone and raised his EPS estimate significantly. Edward Snyder, an analyst from Charter Equity said that the new technologies in the iPhone 5 could boost Skyworks revenue per iPhone sold from $1.60 in the last iPhone to nearly $3.60. With some analysts predicting that millions of iPhone 5's sold in the 4th quarter of 2012 Skyworks could potentially gain over $20 million in revenues in the 4th quarter. Along with Skyworks is Qualcomm (NASDAQ:QCOM), the maker of the radio equipment in the new phone that will be in high demand.

Obviously many companies will benefit from the launch of the new iPhone, but many will also take a hit. Google's Android market share will likely fall thanks to the new iPhone's bigger screen and LTE technology, features that were previously exclusive to Android devices. Many people bought the Samsung (SSLNF.PK) Galaxy S3, thanks to its larger and thinner screen and super speedy 4G LTE capabilities, still a relatively new technology. Now that the iPhone 5 has all of these features and a price that will likely be in line with Samsung's S3 many people will be won over by the iPhone 5 and its design, battery life, and support.

Personal computer manufacturers already facing slowing sales and declining profit margins will also likely take a hit as more and more companies give their employees smart phones with similar, or superior capabilities or let them bring their own devices that can download apps, access the internet anywhere, and prepare presentations all at a lower price.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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