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Despite the recent decline in Apple Inc.'s (NASDAQ:AAPL) stock price, many analysts remain confident in the stock's ability to break above its all-time high closing price of $702.10 in September. Worries about the recent management change and concerns about supply chain problems have caused the stock to drop more than 20%. However, the supply chain problems seem to have begun subsiding, keeping analysts optimistic.
AppleInsider reported today that Piper Jaffray analyst Gene Munster has conducted nightly inventory checks at 100 Apple stores. Severe supply constraints reduced the availability of the iPhone for all three major US carriers, but this week Munster found the availability of the iPhone 5 above 20% for the first time. This past Wednesday, 24% of Apple stores had iPhone 5s available for Verizon Communications Inc. (NYSE:VZ) users, 54% for AT&T Inc. (NYSE:T) users, and 84% for Sprint Nextel Corporation (NYSE:S) users. He believes it will be another two to three weeks before consistent availability occurs for AT&T and Verizon .
According to Investor's Business Daily, Munster gives Apple a price target of $900 and predicts Apple will sell 45 million of all iPhone models in the December quarter.
Walter Piecyk of BTIG research shares the same view on the iPhone 5 supplies. In an article by Barron's Tech Trader Daily, Piecyk said, "product supply no longer appears like it will be an issue this quarter and there should be some carryover demand from a supply-constrained iPhone 5 launch in September." He highlighted the shipment times for the iPhone 5 have dropped from three to four weeks to about one week for most of the North American carriers. However, Apple's online store has kept its wait time of three to four weeks, and the reason remains unclear.
Piecyk maintained his projection of 47.5 million iPhone 5 sales in the December quarter.
Yesterday, Apple Insider reported Sterne Agee analyst Shaw Wu conducted checks within Apple's supply chain, finding the supply chain has improved its iPhone 5 production capacity since the device's launch in September. Consequently, Wu believes Apple will sell 46.5 million of all models of the iPhone in the December quarter. Apple sold 26.9 million iPhones in the recent September quarter.
These reports have relieved some fears about Apple's supply chain after Hon Hai Precision Industry (TPE:2317) Chairman Terry Gou stated, "Market demand is very strong, but we just can't really fulfill Apple's requests." The company has struggled to meet Apple's quality demands. However, Wu noted in his report that the supply chain bottleneck shifted from the production of the components to the assembly of the smartphone itself, and Foxconn Technology (TPE:2354), a subsidiary of Hon Hai, produces the iPhone and iPad.
iPhone 5 in China
According to a Wall Street Journal report, China Telecom (NYSE:CHA) may launch the iPhone 5 early in China , pending approval from the government. If permitted, the company will begin selling the smartphone in late November or December. China Telecom Chairman Wang Xiaochu said in an interview, "We hope to offer it this year but, what I say doesn't matter."
Apple CEO Tim Cook also wants the iPhone 5 in China before the end of the year as China accounted for $5.7 billion, or 16%, of Apple's revenue in the recent September quarter. Apple's iPhone has dropped out of the top-five most popular smartphones , and the company wants the iPhone 5 to make the list again. (Also see China: Apple Drops Out of Smartphone Top 5; Starbucks Coffee Called a "Woman's Drink".)
Amit Daryanani reported that Apple will likely begin selling the iPhone 5 through China Unicom (ADR) (NYSE:CHU) and China Telecom first. China Mobile Ltd. (NYSE:CHL), the world's largest mobile operator, is expected to begin selling the iPhone in early 2013, but it currently has no official agreement with Apple. Daryanani predicts China Mobile could sell between 10 million and 16 million iPhones in the first year.
The Wall Street Journal article mentioned that analysts believe Apple may have held off on pushing the iPhone 5 in China because it wanted to meet the demand in the U.S. first. It is unknown how the demand from China will impact the pressure on Apple's suppliers.
This article by Christopher Witrak originally published on Minyanville.
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Disclaimer: The views represented on this blog are those of the individual authors only, and do not necessarily represent the views of Schaeffer's Investment Research.