Carbon-free aluminum smelting process now a reality

Alcoa, Rio Tinto, Apple  announce ‘world’s first’ carbon-free aluminum smelting process 

carbon-free aluminum smelting process; Stockwinners
carbon-free aluminum smelting process; 

Alcoa (AA) and Rio Tinto (RIO) announced what the companies called “a revolutionary process to make aluminum that produces oxygen and eliminates all direct greenhouse gas emissions from the traditional smelting process.”

carbon-free aluminum smelting process, Stockwinners
carbon-free aluminum smelting process, Stockwinners

To advance larger scale development and commercialization of the new process, Alcoa and Rio Tinto are forming Elysis, a joint venture company to further develop the new process with a technology package planned for sale beginning in 2024.

carbon-free aluminum smelting process, Stockwinners
carbon-free aluminum smelting process, Stockwinners

Apple (AAPL) is also investing in the venture. Apple said that its involvement with the new process started in 2015, when Apple engineers came across the new technology at Alcoa in Pittsburgh when looking for a cleaner way to mass-produce aluminum. They were able to get Rio Tinto on board, and three years later, the three companies have formed a joint venture.

Elysis, which will be headquartered in Montreal with a research facility in Quebec’s Saguenay-Lac-Saint-Jean region, will develop and license the technology so it can be used to retrofit existing smelters or build new facilities. Canada and Quebec are each investing C$60M in Elysis.

The provincial government of Quebec will have a 3.5% equity stake in the joint venture with the remaining ownership split evenly between Alcoa and Rio Tinto. Apple is providing an investment of C$13M.

The company helped facilitate the collaboration between Alcoa and Rio Tinto on the carbon-free smelting process, and Apple has agreed to provide technical support to the JV partners.

Aluminum has been mass produced the same way since 1886, when it was pioneered by Alcoa’s founder, Charles Hall. The process involves applying a strong electrical current to alumina, which removes oxygen. Both Hall’s original experiments and today’s largest smelters use a carbon material that burns during the process, producing greenhouse gases.

Alcoa and Rio Tinto will invest C$55M cash over the next three years and contribute specific intellectual property and patents.

The patent-protected technology, developed by Alcoa, is currently producing metal at the Alcoa Technical Center, near Pittsburgh in the United States, where the process has been operating at different scales since 2009.

The joint venture intends to invest up to C$40M in the United States, which would include funding to support the supply chain for the proprietary anode and cathode materials.


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Barron’s is bullish on Apple and Exxon

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

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Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS

Apple reaffirms position as tech’s ‘undisputed’ leader – In a follow-up story, Barron’s says that with its earnings report last week, Apple (AAPL) flexed its financial muscle and reaffirmed its position as “tech’s undisputed leader.” Fiscal second-quarter iPhone sales came in roughly as expected, while the company’s total profit was slightly ahead of estimates, the report notes, adding that Apple’s real surprise came from its updated buyback plans. Investors rewarded the company with its best five-day stretch in the stock market since October 2011, Barron’s says.

Apple raking in profits amid technology impasse – Warren Buffet’s Berkshire Hathaway (BRKA) has bought another 75M shares of Apple (AAPL), Tiernan Ray writes in this week’s edition of Barron’s. While the current impasse for technology is going to continue to reduce new opportunities for Apple, for competitors such as Samsung (SSNLF) and suppliers like Qorvo (QRVO), there is enough wealth in the steady supply of what exists to keep investors like Buffett delighted with the cash flow, he contends. Milking it, at the moment, triumphs over innovation, Barron’s says.

Boeing eyeing ‘air supremacy’  – Boeing  (BA) announced last week that it would acquire KLX, whose products include airplane parts, as part of the aircraft manufacturer’s long-term plan to bolster its presence in parts, components, and services, Lawrence Strauss writes in this week’s edition of Barron’s. This is a trend investors should keep an eye on, he contends.

Sarepta winning over investors – Sarepta Therapeutics (SRPT) has been winning over investors with rising sales of its drug to treat Duchenne muscular dystrophy and a promising pipeline of drugs targeted at the fatal muscle-wasting disease, Andrew Bary writes in this week’s edition of Barron’s. Part of the optimism surrounding Sarepta is that it can bring to market two drugs similar to Exondys 51, which treats about 13% of DMD patients, he notes, adding that these drugs – casimersen and golodirsen – target mutations at other points on the dystrophin gene and could treat another 16% of DMD patients.

Exxon Mobil looks appealing – Demand for oil and natural gas is expected to be strong for decades and to capitalize on this growth, Exxon (XOM) has an ambitious plan to increase the company’s energy output by 25% and more than double earnings by 2025, Andrew Bary writes in this week’s edition of Barron’s. At a share price of $77, Exxon looks “appealing,” he adds.

BEARISH  MENTIONS

Wolverine may face mounting cleanup costs – The Scotchgard chemicals that gave stain resistance to Wolverine’s Hush Puppies shoes have leached into wells and aquifers from rusting barrels of sludge and other factory waste scattered around Michigan’s Kent County, where Wolverine (WWW)  used the chemicals for about 50 years, Bill Alpert writes in this week’s edition of Barron’s. The footwear firm has provided water filters to area homes and last year it set aside $35M to cover expected legal and remediation costs, but the question is whether $35M is enough, Barron’s notes.


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Apple announces new $100B buyback program, boosts dividend by 16%

Apple announces new $100B buyback program, boosts dividend by 16%

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Apple announces new $100B buyback program, boosts dividend by 16%

Apple (AAPL) said it will complete the execution of the previous $210B share repurchase authorization during fiscal Q3 and announced a new $100B buyback program.

Its board has declared a cash dividend of 73c per share of Apple’s common stock payable on May 17, to shareholders of record as of the close of business on May 14.

“Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow,” said Luca Maestri, Apple’s CFO.

“With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure.

Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend.”

Separately, Apple reported Q2 EPS $2.73, consensus $2.69 – Reported Q2 revenue $61.1B, consensus $60.98B.

Apple reported Q2 iPhone units 52.22M vs. 50.76M last year – Reported Q2 iPad units 9.11M vs. 8.92M last year. Reported Q2 Mac units 4.08M vs. 4.2M last year.

AAPL closed at $169.10.


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Universal Display, other Apple suppliers fall as company to develop own screens

Universal Display, other Apple suppliers fall as company to develop own screens 

Universal Display, other Apple suppliers fall as company to develop own screens . Stockwinners.com
Universal Display, other Apple suppliers fall as company to develop own screens .

Shares of organic light-emitting diode technology maker Universal Display (OLED) and other suppliers are down in morning trading amid speculation Apple (AAPL) is producing its own device displays for the first time.

APPLE DEVELOPING DISPLAYS

Apple has been quietly designing and producing limited quantities of its own MicroLED device screens for the first time “for testing purposes” using a manufacturing facility near its headquarters, Bloomberg reported Monday, citing people familiar with the matter.

The move by the company, which is significantly investing in the development of the next-generation MicroLED screens that aim to make devices slimmer and less of a drain on power, could potentially hurt a range of suppliers in the long-term, from screen makers like Samsung (SSNLF), Japan Display, Sharp (SHCAY) and LG Display (LPL) to companies like Synaptics (SYNA) and Universal Display, according to the report.

The MicroLED screens are much more difficult to produce than organic light-emitting diode screens and customers will likely have to wait a few years before the technology is released.

Apple is planning to make the new displays available first in future Apple Watch devices, but it is unlikely the screens will reach an iPhone for at least three to five years.

An Apple spokeswoman declined to comment when contacted by Bloomberg.

WHAT’S NOTABLE

LG Display is expected to start supplying some of the OLED displays for Apple’s iPhone X, shipping as many as 60M displays for the smartphone starting in June, CNBC reported in December.

At the time of the report, discussions between Apple and LG Display were ongoing and LG said, “Regarding the OLED supply deal for Apple’s iPhone X, nothing has been set in detail.

When anything is confirmed in detail, we will announce it.” Apple has previously used Samsung as its exclusive supplier of OLED panels for iPhones.

PRICE ACTION

In Monday’s trading, shares of Universal Display dropped 10.1% to $111.52. Meanwhile, shares of LG Display trading in New York were down 1.2% to $12.92, Sharp fell 2.2% to $8.05 and Synaptics dropped 1% to $47.35.


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Apple announces new U.S. investments

Apple announces new U.S. investments, sees $38B of repatriation taxes

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Apple has too much cash

Apple (AAPL) announced a new set of investments “to build on its commitment to support the American economy and its workforce,” concentrated in three areas: direct employment by Apple, spending and investment with Apple’s domestic suppliers and manufacturers, and fueling the app economy.

Apple said in a statement that it is already responsible for creating and supporting over 2M jobs across the United States.

It expects “to generate even more jobs as a result of the initiatives being announced today.”

Combining new investments and Apple’s current pace of spending with domestic suppliers and manufacturers, an estimated $55B for 2018, Apple’s direct contribution to the U.S. economy will be more than $350B over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products.

Planned capital expenditures in the U.S., investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75B of Apple’s direct contribution, the iPhone maker said.

Apple anticipates repatriation tax payments of approximately $38B as required by recent changes to the tax law.

The company expects to invest over $30B in capital expenditures in the U.S. over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one. Apple already employs 84,000 people in all 50 states.

The company plans to establish an Apple campus in a new location, which will initially house technical support for customers. The location of this new facility will be announced later in the year.

Today, Apple is breaking ground on a new facility in downtown Reno, which will support its existing Nevada facilities.

AAPL is up $2.79 to $179.05.


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Apple to address child addiction concerns

Apple plans new features following concerns over child phone addiction

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Apple plans new features following concerns over child phone addiction

Apple is planning to launch new features and tools for its products after Jana Partners and the California State Teachers’ Retirement System, which hold a combined $2B stake in the tech giant, called on the company to address child phone addiction, Business Insider reports, citing an Apple representative.

The company said, “Apple has always looked out for kids, and we work hard to create powerful products that inspire, entertain, and educate children while also helping parents protect them online. We lead the industry by offering intuitive parental controls built right into the operating system…

We have new features and enhancements planned for the future, to add functionality and make these tools even more robust…We take this responsibility very seriously and we are committed to meeting and exceeding our customers’ expectations, especially when it comes to protecting kids.”

AAPL closed at $174.35.


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Barron’s is bullish on Apple, Western Digital

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names: 

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review 

BULLISH  MENTIONS

Apple may hit $1T in market value next year- Apple (AAPL) could soon reach a milestone, namely to be the first U.S. company with a $1T market valuation, with iPhone X and a rising stream of service revenue helping it get there, Jack Hough writes in this week’s edition of Barron’s. Hough does not thing the peak is near as Apple seems to be escaping its product supercycle peaks and troughs to post more-consistent year-to-year growth.

Opportunity seen in semiconductors as Bitcoin plummets on Friday – Last Friday, the price of Bitcoin plummeted over 25% before bouncing back, and no major crypto asset was immune to the selloff, with even Bitcoin Investment Trust momentarily changing hands at more than a 5% discount of its NAV, Crystal Kim writes in this week’s edition. But in every “bloodbath” there is an opportunity to buy, she adds, noting that while bitcoin is a possibility, a better one may be the stocks of semiconductors companies that make the chips and equipment needed to mine bitcoin and other cryptocurrencies.

Some tech still a bargain– For investors looking to buy low, there are a number of good candidates to pick up, such as Qorvo (QRVO) that features in Apple’s (AAPL) iPhone and Finisar (FNSR) that also got the nod from Apple to produce parts for augmented reality and that may be a target for Oclaro (OCLR), Tiernan Ray writes in this week’s edition of Barron’s. Additionally, Ray sees Universal Display (OLED) as the biggest beneficiary of the iPhone rise, while Cisco Systems (CSCO) should get a lift from the new tax law.

PG&E looks like a buy– A sharp drop last week in shares of PG&E (PCG) could present a buying opportunity, Andrew Bary writes in this week’s edition of Barron’s. Shares of California utilities Sempra Energy (SRE) and Edison International (EIX) also fell this past week amid concerns about their liability for this month’s wildfire outbreak in Southern California, Barron’s adds.

Investors should give REITs a chance – Income investors should give real estate investment trusts a chance, Bill Alpert writes in this week’s edition of Barron’s. Among REITs with nice payouts are Macerich (MAC), Simon Property Group (SPG), Agree Realty (ADC), National Retail Props (NNN) and Realty Income (O), he contends

Western Digital (WDC) could be worth $120 – Flash-memory prices are expected to fade in 2018, which has worried investors in Western Digital, Andrew Bary writes in this week’s edition of Barron’s. However, at $83, Western Digital shares look undervalued, as the stock could be worth $120 at $10 a share in free cash flow, Bary notes.

BEARISH  MENTION

 Bitcoin bourses should be avoided by small traders – Derivatives exchanges Chicago Board Options Exchange (CBOE) and CME (CME) recently launched futures trading on the digital cryptocurrency bitcoin, but these securities do not trade actual bitcoin and are instead based on indexes of bitcoin prices that are calculated differently, Theresa Cary writes in this week’s edition of Barron’s. Putting aside the risk reflected in last week’s bitcoin plunge, these are not retail-friendly products in their current form, she notes, adding that market observers expect that to change over the next six months.

Cryptocurrency mania may not end well – Cryptocurrency mania is obvious in the stock market activity of companies like beverage seller Long Island Iced Tea (LTEA), with shares soaring after the company said it would change its name to Long Blockchain, Vito Racanelli writes in this week’s edition of Barron’s. The real risk is regulatory as governments around the world will gradually see the cryptocurrencies as a threat to their fiat currencies and policies, he notes, adding that it is a mania and eventually the bubble will pop amid tears.


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Barron’s is bullish on Alaska Air

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:  

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Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH  MENTIONS

Alaska air should bounce back in 2018 – While shares of Alaska Air (ALK) are down over 20% this year, they should get back up in 2018, Strauss writes in this week’s edition of Barron’s. With a lower valuation and a better dividend yield than many rivals, the company should rise after if fully integrates Virgin Air, which already is adding to earnings, he notes.

CBOE should not be treated as ‘set and forget’  – Bitcoin futures have pushed CBOE’s (CBOE) stock to a new record high, and some see the stock as a way to benefit from investors fascination with Bitcoin, Steven Sears writes in this week’s edition of Barron’s. However, Sears is recommending that investors no longer treat the shares as a “set and forget” position until it is clearer how the Bitcoin ecosystem will influence CBOE.

Spark Therapeutics selloff may be overdone – Spark Therapeutics (ONCE) shares plunged after the company released disappointing results for its hemophilia A treatment, but the selloff may be overdone given the company’s other promising treatments, Andrew Bary writes in this week’s edition of Barron’s.

More consolidation to come after Disney/Fox deal – Netflix (NFLX) success and its high valuation is forcing the rest of the TV work to scramble, Alex Eule writes in this week’s edition of Barron’s. In the wake of Disney’s (DIS) 21st Century Fox (FOXA; FOX) purchase, investors should expect more consolidation to come, he adds. Given that FOX RSN business looks very similar to MSG Networks (MSGN) and with Disney’s deal spurring a new wave of RSN interest, 208 could be the year that MSG gets sold, Barron’s says. Other potential attractive targets include AMC (AMCX) and Viacom (VIAB), Eule contends.

BEARISH  MENTIONS

Exxon (XOM) disclosure of climate-change regulation impact has risks – In a filing with the Securities and Exchange Commission, Exxon’s board acceded to a proxy request to disclose more about what tightening climate-change regulations may do to the long-term value of its hydrocarbon assets in the ground, Vito Racanelli writes in this week’s edition of Barron’s. Once Exxon discloses this information, companies that do not will be under pressure, he notes, adding that while more disclosure as a rule is good for shareholders, there are risks as it could hurt its competitive position and the ability to sell assets at a fair price.

New Apple iPhone features also bring software bugs – While each new Apple iPhone (AAPL) brings more “dazzling” features, it also brings a rising number of software bugs, Tiernan Ray writes in this week’s edition of Barron’s. Apple has little choice but to keep adding features to stay ahead of the pack, and one large cost is having to divert engineers to fix bugs, he adds.


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Apple becomes Finisar’s Santa Clause

Apple awards Finisar $390M from Advanced Manufacturing Fund

Apple awards Finisar $390M from Advanced Manufacturing Fund. Stockwinners.com
Apple awards Finisar $390M from Advanced Manufacturing Fund.

Apple (AAPL) announced that Finisar (FNSR) will receive $390M from its $1B Advanced Manufacturing Fund.

“The award will enable Finisar to exponentially increase its R&D spending and high-volume production of vertical-cavity surface-emitting lasers.

Apple says that Finisar is going to work on both research & development and high-volume production of optical communications components. The most complicated components are the vertical-cavity surface-emitting lasers (VCSELs) used in the iPhone X for Face ID, Animoji, Portrait mode and other face-mapping technologies.

But Finisar also works on proximity sensors including the ones in the AirPods.

And it’s quite easy to understand why Apple is investing in Finisar. There are simply not enough suppliers in this field today. In the fourth quarter of 2017 alone, the company will purchase 10 times more VCSEL wafers than the entire VCSEL production in the world during the fourth quarter of 2016. So Apple needs to foster production.

VCSELs power some of Apple’s most popular new features, including Face ID, Animoji and Portrait mode selfies made possible with the iPhone X TrueDepth camera, as well as the proximity-sensing capabilities of AirPods,” Apple said in a press release.

It added that Finisar will transform a 700,000-square-foot manufacturing plant in Sherman, Texas, into the “high-tech VCSEL capital of the US.”

Apple’s award will create more than 500 high-skill jobs at the Sherman facility.

FNSR closed at $19.30. It last traded at $23.00.


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Apple launches Heart Study app

Apple, Stanford University partner to launch Apple Heart Study app 

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Apple launches Heart Study App

Apple (AAPL) yesterday launched the Apple Heart Study app, a first-of-its-kind research study using Apple Watch’s heart rate sensor to collect data on irregular heart rhythms and notify users who may be experiencing atrial fibrillation.

To calculate heart rate and rhythm, Apple Watch’s sensor uses green LED lights flashing hundreds of times per second and light-sensitive photodiodes to detect the amount of blood flowing through the wrist.

The sensor’s unique optical design gathers signals from four distinct points on the wrist, and when combined with powerful software algorithms, Apple Watch isolates heart rhythms from other noise.

The Apple Heart Study app uses this technology to identify an irregular heart rhythm. Apple is partnering with Stanford Medicine to perform the research.

As part of the study, if an irregular heart rhythm is identified, participants will receive a notification on their Apple Watch and iPhone, a free consultation with a study doctor and an electrocardiogram patch for additional monitoring.

The Apple Heart Study app is available in the US App Store to customers who are 22 years or older and have an Apple Watch Series 1 or later.

AAPL closed at $171.85.


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Qualcomm says no thank you

Qualcomm board unanimously rejects Broadcom’s unsolicited proposal

Broadcom proposes to buy Qualcomm for $70 per share. See Stockwinners.com for details

Qualcomm (QCOM) announced that its Board of Directors unanimously rejected the unsolicited proposal announced by Broadcom (AVGO) on November 6, 2017.

“It is the Board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the Company’s leadership position in mobile technology and our future growth prospects,” said Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Incorporated.

“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry. We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G,” said Steve Mollenkopf, CEO of Qualcomm Incorporated.

“The Board and Management are singularly focused on driving value for Qualcomm’s shareholders. After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom’s proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty. We are highly confident that the strategy Steve and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer,” said Tom Horton, Presiding Director for Qualcomm Incorporated.

QCOM closed at $64.57. AVGO closed at $264.96.

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Square reports today

What to watch in Square earnings report

Square reports today. See Stockwinners.com for additional analysis

Square (SQ) is scheduled to report results of its third fiscal quarter after the market close on November 8, with a conference call scheduled for 5:00 pm EDT.

What to watch for

1. OUTLOOK

During the company’s last earnings call, Square said it sees third quarter adjusted earnings per share of 4c-5c and revenue of $562M-$568M. Square also raised its 2017 adjusted earnings per share outlook to 21c-23c from 16c-20c, and its 2017 net income outlook to (21c)-(19c) from (24c)-(20c).

Additionally, the company sees 2017 revenue between $2.14B-$2.16B.

2. BANKING BUSINESS

Back on September 7, The Wall Street Journal reported that Jack Dorsey’s Square was looking to get into the banking business and was planning to submit an application to form a wholly owned bank based in Utah. The unit, which will be called Square Financial Services, would offer loans and deposit accounts to small businesses and be capitalized with $56M in cash, the publication noted.

3. UPSIDE, RISING VALUATION

On October 11, Oppenheimer analyst Jed Kelly initiated Square with an Outperform and $35 price target saying he sees continued upside from execution on core initiates to expand into multiple revenue channels.

The analyst told investors he believes Square’s cohesive user experience is enabling the company to create a differentiated product that is in the early stages of utilizing its vast payment data to build an ecosystem for small businesses that can obtain products such as loans, marketing services, inventory management and ecommerce solutions.

Later in the month, Deutsche Bank analyst Bryan Keane raised his price target for Square to $37 saying he expects “robust” revenue growth when the company reports quarterly results.

Continued business momentum and rising sector valuations drive the new price target, the analyst noted, reiterating a Buy rating on Square.

Square reports today. See Stockwinners.com for details

His peer at Nomura Instinet also raised his price target on the name to $45 from $33. Analyst Dan Dolev argues that the third quarter report will “prove to be a defining moment” with the shares up 147% year-to-date. The analyst’s study showed that the consensus “chronically underestimates” Square’s profitability. He expects a “stellar” second half of the year with adjusted EBITDA potentially reaching $145M-$150M.

4. VALUATION TOO HIGH

Meanwhile, earlier this month, Stifel analyst Scott Devitt downgraded Square to Hold from Buy ahead of the company’s third quarter earnings. While he expects a strong quarter, the analyst noted the stock is up 168% year-to-date.

5. NEW PRODUCTS

On October 31, Square unveiled its newest hardware offering, Square Register, a versatile, fully integrated point-of-sale, built in-house to work seamlessly with any business.

Square Register is priced to offer larger sellers a fully integrated point-of-sale solution at $999, or with a convenient financing option of $49 per month for 24 months. Sellers can accept all forms of card-present payments with a new, simple transaction rate of 2.5% + 10c per transaction.

SQ last traded at $36.59. It has a 52-weeks trading range of $11.43 – $37.75.


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Apple to say goodbye to Qualcomm

Apple develops iPhones, iPads that would drop Qualcomm components 

 

Apple (AAPL) is developing iPhones and iPads for next year that would drop Qualcomm’s (QCOM) components amid a legal fight with the chipmaker, the Wall Street Journal reports, citing people familiar with the matter.

Apple, which is considering using only chips from Intel (INTC) and possibly MediaTek for the device, filed a federal lawsuit against Qualcomm claiming it used its market dominance to block rivals and charge costly patent royalties after the chipmaker withheld software necessary to test chips in iPhone and iPad prototypes.

Qualcomm, which has worked with Apple for a decade, stopped sharing the software after Apple filed a federal lawsuit in January accusing Qualcomm of using its market dominance unfairly to block competitors and to charge exorbitant patent royalties, this person said. Qualcomm has said Apple is mischaracterizing its practices.

Qualcomm said its “modem that could be used in the next generation iPhone has already been fully tested and released to Apple.” The chip company said it is “committed to supporting Apple’s new devices” as it does for others in the industry.

Apple in the past used only Qualcomm modem chips for iPhones, but started also procuring the chips from Intel for its iPhone 7 and 7 Plus models last year. It again used a mix of the two in the iPhone 8 and 8 Plus that started selling in September.

Apple’s plans to exclude Qualcomm chips from next year’s model could still change. People familiar with Apple’s manufacturing process said the company could change modem-chip suppliers as late as June, three months before the next iPhone is expected to ship. Still, some of the people said Apple hasn’t previously designed iPhones and iPads to exclude Qualcomm chips at a similar stage of the process.

The Apple plans indicate the battle with Qualcomm could spill beyond the courtroom feud over patents into another important Qualcomm business where it has the potential to send ripples through the smartphone supply chain. Qualcomm last year sold around $3.2 billion of modem chips a year to Apple, or 20% of its total chip sales, according to an estimate by Macquarie Capital. This year, Qualcomm’s chip sales to Apple are likely to come to $2.1 billion, or 13% of total chip revenue, reflecting more fully the iPhone 7’s mix of Qualcomm and Intel modems.

Selling chips is generally less profitable for Qualcomm than its patent business. Apple paid $2.8 billion last year in Qualcomm royalties, which accounted for nearly 30% of the chip maker’s per-share earnings, according to Macquarie Capital. In the last year, Apple has stopped reimbursing those fees to iPhone and iPad manufacturers, which in turn have stopped paying Qualcomm.


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Apple lower on poor Watch reviews

Apple falls after reports of Watch connection issues, poor reviews

Stocks to Buy, Stocks to Buy on Margin, Stocks to invest in, stocks to own

Shares of Apple (AAPL) are under pressure on reports of Apple Watch connectivity issues and somewhat disappointing reviews for the upcoming device. Meanwhile, Rosenblatt analyst Jun Zhang said checks suggest iPhone 8 preorder volume is below that seen for prior models.

SERIES 3 SMARTWATCH

According to a report by The Verge, citing a company spokesperson, Apple has admitted that its new LTE-enabled Series 3 smartwatch, which starts shipping this Friday, has been experiencing connectivity issues.

“We have discovered that when Apple Watch Series 3 joins unauthenticated Wi-Fi networks without connectivity, it may at times prevent the watch from using cellular. We are investigating a fix for a future software release,” the spokesperson reportedly said.

Meanwhile, Apple Watch Series 3 reviews are out, and consensus seems to be that it is convenient to have a watch with a connection when you do not have a phone, but that it has poor battery life when used in those situations, CNBC reported.

Most reviewers also suggested buying the GPS model instead of the one that can also place phone calls, the publication added.

[youtube https://www.youtube.com/watch?v=lse3oJfPPk4?rel=0&controls=0&w=560&h=315]

IPHONE 8 PREORDERS

In a research note to investors, Rosenblatt analyst Jun Zhang said checks indicate about 1.5M iPhone 8 preorders on JD.com (JD) in the first three days of availability, versus 3.5M for the iPhone 7 in its first three days. He also pointed out he thinks China Mobile’s (CHL) iPhone 8 preorder volumes are around 1M units, below those seen for the iPhone 7 and iPhone 6 in the first three days.

For the U.S., Zhang said initial feedback suggests iPhone 8 preorder volume below the iPhone 7 and iPhone 6. The analyst told investors he remains concerned the iPhone 8 production plan for second half 2017 may need to be cut and the iPhone X production ramp might not be able to meet demand for the December and March quarters.

‘SOLID’ IOS 11 REVIEWS

Meanwhile, Macquarie analyst Benjamin Schachter told investors that the first round of iPhone 8 and iOS 11 reviews support his positive view of Apple and its Service business, with the initial wave of ARKit apps expected to have a “solid reception.”

iOS 11 is one of the most substantial iOS updates in recent memory, the analyst noted, adding that the App Store has also been completely redesigned to be more visually appealing and to better promote the discovery of new apps, which should increase download rates that have been slowing for mature users.

However, #Schachter acknowledged that it will likely be harder for investors and others to track app revenue, given the removal of the top-grossing charts. The analyst pointed out that the most highly praised new feature is the iPhone 8 Plus’ Portrait Lighting.

While Apple is not positioning it as such, Schachter believes it is essentially the best augmented reality app on iOS. The first wave of popular AR apps will not be games, but instead be more natural extensions of existing smartphone apps, he argued.

The analyst reiterated an Outperform rating and $180 price target on the shares.

PRICE ACTION

In Wednesday’s trading, shares of Apple have dropped nearly 2.5% to $154.84. Note that most iPhone and Watch suppliers are under pressure on the news.


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iPhone X Coming Soon!

Watch Apple ahead of iPhone X launch

iPhone-X Coming Soon. See Stockwinners.com for details

Apple (AAPL) is expected to unveil the highly anticipated iPhone X tomorrow along with other new versions of its flagship mobile device. Commenting on the tech giant’s event, RBC Capital analyst Amit #Daryanani told investors that it may surpass expectations.

Meanwhile, his peer at JPMorgan argued that he expects the OLED based iPhone X to become available in October as Apple begins volume production in September.

APPLE EVENT

On Tuesday, September 12, Apple is expected to unveil its much anticipated 10th anniversary iPhone. According to a leak over the weekend, the new device will be called the iPhone X and will include wireless charging, facial recognition, edge-to-edge display and no home button.

Alongside the iPhone X, Apple is expected to release two other phones, namely the iPhone 8 and iPhone 8 Plus. Many also expect to see a third generation of the Apple Watch and a 4K Apple TV.

EVENT MAY TOP EXPECTATIONS

RBC Capital’s Daryanani told investors that Apple’s event tomorrow could surpass investors’ expectations, particularly as some of the new iPhone features are demonstrated live.

The analyst noted he believes the next generation flagship iPhone will feature a brand new form factor with an OLED display that spans edge-to-edge, upgraded A11 processors, wireless/inductive charging capability, a virtual home button embedded in the display, a 3-D facial recognition sensor for the front-facing camera, an augmented reality enabled rear-facing vertical dual lens camera, glass front and back with stainless steel edges, 3GB of RAM, 64GB and 256GB storage tiers, and improved water resistance.

Additionally, Daryanani expects Apple to introduce two new LCD iPhones, with pricing for the OLED device to start at $999 while the LCD models should be priced similarly to the current 7/7-plus. Alongside the new iPhones, Apple should also introduce a new Apple Watch with a cellular connection and a new TV product in addition to software updates for each device announced, he contended. The analyst reiterated an Outperform rating and $180 price target on the shares.

OLED IPHONE AVAILABLE IN OCTOBER

In a research note of his own, #JPMorgan analyst Rod #Hall told investors he currently expects the OLED based iPhone X to become available in October as Apple begins volume production in September. The specific week of October that the device begins shipping will have a few million units of impact on the December earnings forecasts, Hall noted, adding that the risk to earnings estimates is relatively small heading into the event.

The analyst pointed out that he estimates the 256GB version will cost $1,100, while the LCD models’ pricing should be similar to the iPhone 7 models. The analyst also believes that the most important thing Apple is likely to say about the Apple TV financially relates to the content available on the device, as he is expecting Amazon (AMZN) Prime Video to finally become available.

While the Apple Watch update that has been reported including LTE should be a small incremental positive, it is unlikely to move numbers, he added. Hall reiterated an Overweight rating on Apple’s shares.

SUPPLIERS TO WATCH

Here’s a look at five Apple iPhone chipmakers that should benefit from launch of iPhone X: Skyworks Solutions (SWKS), Texas Instruments (TXN), Analog Devices (ADI), Qorvo (QRVO) and Broadcom (AVGO).

PRICE ACTION

In Tuesday’s trading, shares of Apple have gained about 2% to trade near $161.50. Year-to-date, Apple shares have risen nearly 40%


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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