iPhones Reign in 4Q11 - Analyst Blog
January 31 2012 - 9:45AM
Zacks
Apple Inc. (AAPL) has toppled Samsung to become
the leader in the smartphone market in the fourth quarter of 2011.
According to the data compiled by research firms Strategy Analytics
and IHS iSuppli, Apple returned to its former glory in the
smartphone market, buoyed by robust holiday sales of iPhone 4S.
In terms of units sold, Apple sold 37 million iPhones during the
October- December period, while Samsung shipped approximately 36.5
million smartphones. Nokia Corp (NOK) sold 19.6
million smartphones during the same period to grab the third
position. Sony Ericsson ranked fourth, with 6 million units sold,
while Motorola Mobility Holdings Inc. (MMI) sold 5
million units to settle for the fifth spot.
In the U.S. market, among the 9.4 million smartphones activated
by AT&T Inc. (T), the second-largest wireless
carrier in the country, 7.6 million were iPhones. Of the 7.7
million smartphones activated by Verizon Wireless, the largest
provider, 56% were iPhones.
Apple with its launch of iPhone 4S in October, which featured
voice recognition facility, caught the imagination of the holiday
crowd. Not only did this help Apple climb to the top, but it also
helped the company in reporting impressive first quarter earnings
results. In the recently concluded quarter, the year-on-year growth
of Apple’s iPhone sales was a staggering 128.0%.
Though Apple, with its 23.9% market share in calendar fourth
quarter 2011, has gained a slender lead over Samsung’s 23.5% share,
data from Strategy Analytics reveals that the iPhone maker is short
of Samsung’s 19.9% market share as against Apple’s 19.0%, when
compared on a full-year basis.
The figures clearly show that the smartphone market is being
dominated by Apple and Samsung, with others falling way behind.
Though Nokia is still the highest cell phone maker by volume, its
sluggish share of the smartphone market (12.6% in the fourth
quarter) is due to its dull touchcreen smartphone portfolio and
limited U.S. market penetration. Other smartphone makers also lag
the the top three in terms of innovation.
Apple remains the biggest growth story, based on its superior
product pipeline, Apps, recently launched iCloud and iPhone 4S, as
well as the upcoming update of iPad and Apple TV. Apple is also
well positioned to gain from a loyal customer base and
international expansion, in our view.
Particularly, Apple’s expansion in China, Brazil, Russia and in
other emerging economies in the Asia-Pacific region will lead to
incremental growth over the long term. Apple’s ability to spread
the popularity of its products in developing nations, where pricing
is often an important consideration, will go a long way in deciding
the company’s future growth.
However, legal complexities and patent litigation cases against
Samsung will remain the primary headwinds in the near term.
Moreover, competition from other smartphone makers will remain an
overhang on the stock.
We maintain our Neutral recommendation on Apple over the long
term (6-12 months). Currently, Apple has a Zacks #1 Rank, which
implies a Strong Buy rating in the near term.
APPLE INC (AAPL): Free Stock Analysis Report
MOTOROLA MOBLTY (MMI): Free Stock Analysis Report
NOKIA CP-ADR A (NOK): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
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