Sprint Shares Extend Slide; At Least 5 Firms Cut Ratings

Sprint shares, which fell 19.9% Friday following a disastrous meeting with analysts in which the company warned it would need more capital to completes its build-out plans for adding 4G services using the LTE standard, is down again Monday, as the Street heaps scorn on the meeting and the company’s prospects. At least five analysts cut their ratings on the company this morning.

In addition to the unexpected need for more capital, the Street was grumpy over the lack of clarity of the costs involved in the company’s roll-out of the Apple iPhone, and there remains serious confusion about what the company’s position is on Clearwire; Sprint remains the largest investors in the broadband wireless company, but seems to be backing away from its relationship as fast as it can. The combination of factors has left the Street much more wary on the prospects for the company.

• J.P. Morgan analyst Philip Cusick cut his rating on the stock to Neutral from Overweight. “Sprint has gone for us from a rebounding top-line story to one more about long-term network-vision driven technology changes and cost cutting, topped with a fear of cash burn amid a tight capital market,” he writes in a research note. “While subscriber numbers will likely improve from here driven by the iPhone, we believe that as long as Sprint is burning cash and both it and ecosystem partners need additional capital, it will be tough for the stock to work.” He notes that the $10 billion the company expects to spend through 2013 to build the LTE network is well above the $7 billion he had estimated.
• Deutsche Bank analyst Brett Feldman cut his rating to Hold from Buy, with a new target of $3, down from $6. Feldman says the meeting Friday “left us with too many unanswered questions about critical issues,” including the company’s 4G spectrum strategy and the fate of its relationship with Clearwire, its funding plans for its Network Vision 4G buildout, and the financial impact of the addition of the iPhone. “We believe the shares will remain range-bound until visibility improves.”
• Collins Stewart analyst Greg Miller cut his rating to Hold from Buy. “After upgrading the stock only two months ago, we are returning to a Neutral rating after the details of the Network Vision plan call for substantially higher cap-ex, lower wireless service margins and significantly higher cash consumption while at the same time effectively abandoning a 4G platform it had touted for years as an industry leader,” he writes. “We no longer look for margins to rebound sooner with higher spending.”
• Kaufman Bros. analyst Ben Abramovitz cut his rating to Hold from Buy, as well. “We continue to believe that Clearwire will remain a part of Sprint’s 4G strategy for capacity, but that management is playing a reckless game of chicken in their deviation from the existing strategy,” he writes. “We believe the major revisions have brought into question management’s ability to remain focused on driving shareholder value, and has increased the potential for lawsuits stemming from their relationship with Clearwire.”
• Raymond James analyst Ric Prentiss cut his rating to Outperform, from Strong Buy; he cut his target to $3, from $6. He notes that higher-than-expected capital spending, an accelerating of the decommissioning of the iDEN network, a reduction in the use of Clearwire’s network and the costs associated with selling the iPhone will stress the company’s balance sheet for the next couple of years. “We expect Sprint will draw down its existing revolver in the near-term and then access the debt markets in the next six months,” he writes.

Sprint this morning is down 17 cents, or 7.1%, to $2.24.

Article source: http://www.forbes.com/sites/ericsavitz/2011/10/10/sprint-shares-extend-slide-at-least-5-firms-cut-ratings/

iOS 5 + A5 Processor = iPhone 4S? What Apple’s iFumble Means to Investors

Regardless of the hubbub, Apple (AAPL) is clearly late with its iPhone 5 Launch. Many people expected that the Oct 4th keynote was supposed to herald the iPhone 5 and iPhone 4S, yet we only received the latter. Apple’s iPhone 4S is a solid phone but it is clearly not the ground breaking mobile phone that can fend off the myriad of sophisticated high-end Android devices that tout 3D cameras, 3D displays, much larger AMOLED screens etc. This is undoubtedly a drag for Apple as it will lead to the loss of some of its high end customers. However, it’s very encouraging to see Tim Cook’s intent on capturing the rest of that 95% of the mobile phone market with continuing software support and distribution of older generation iPhones. This will help to reach the massive population of low-end users at home and abroad.

Instead of creating multiple models to target different price points, Apple just has one model and sells the older generation iPhones at the lower price points. This will extend the product life of every single generation of iPhones and minimizes the RD, and production retooling costs for Apple. Brilliant.

Technologically, Samsung’s (SSNLF.PK) high-end Android phones are almost a generation ahead of Apple’s iPhone 4S. I won’t go into detail about Samsung products but based on hardware specifications alone, the new Samsung Note, and Samsung Galaxy S 2 HD LTE are both faster, have higher resolution, larger and lighter than the iPhone 4S. To Apple’s solace, hardware is not everything, and housing such cutting-edge hardware can actually thin out margins.

Effectively, what has happened is that Apple is missing a leading edge flagship model and is forced to compete at a lower price range. Fortunately, the company is looking forward to lowering the barrier of entry in order to access a much larger population of users internationally. Previously, Apple has never had a low-end iPhone in its lineup. Now with iPhone 4 at $99 and iPhone 3GS for free (with two year contracts), it is now offering the best deals around at multiple price points.

While the media is focused on the loss of technology lead, the smart money will focus on the fast and cost effective roll out of lower end iPhones to open up a huge mid to low end mobile phone market for Apple. Consequently, this event has caused me to be increasingly bullish on the next few quarters for AAPL but it dampens my 3-5 year outlook for Apple as their technology lead is heavily under siege.

Disclosure: I am long AAPL.

Article source: http://seekingalpha.com/article/298671-ios-5-a5-processor-iphone-4s-what-apple-s-ifumble-means-to-investors

Steve Jobs: The Power of Design

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How Steve Jobs and Apple created a brand that birthed from design, starting with the company’s first computers — powerful through a simplistic, graceful look which birthed the products originally as a must-have by all graphic designers. It was so much more than the product’s capabilities.

One need only to look at other instances of the power of design to understand how his relentless pursuit of simple, elegant product clarity gave Apple that “thing” to become a great consumer product company.

Take the Toyota Prius as an example. The world’s first mass hybrid car was a hit that remains today as the definition of a hybrid because Toyota went the extra mile when designing and launching the product in the 1990s to give the Prius something more than just an efficient gasoline-electric engine.

Had the company’s patented hybrid engine been launched into the body of its top-selling Corolla, it wouldn’t have turned out that way. But Toyota understood that it need a new, sleek body for the Prius — one that revealed to consumers that they didn’t have to sacrifice space, comfort or elegance to have a small, efficient car.

For Toyota, the design of the Prius gave it a game-changer — far above the functionality and capability of the hybrid engine Toyota designed.

We can look back before that to find other examples. Among the most striking belongs to John Deere, arguably the world’s greatest agriculture products company. John Deere has that “thing,” and it too breeds from design. Consider that the company had been around for decades until the 1950s, when it enlisted the help of industrial designer Henry Dreyfuss.

The company understood that a tractor should be functional, able to handle demands of the field better than competitive products. But John Deere also understand that design should be an important elements of its products, enlisting the help of Dreyfuss, a noted industrial engineer from New York.

When Deere moved from two-cylinder tractors in 1960, its new generation of power was captured in sleek new design. The new product had more power, yes, but it also had a elegant design. Dreyfuss designed John Deere’s new four-cylinder tractor with a body which concealed the engine with one, sleek green metal hood.

It contributed “to the visual impression that the vehicle was in the process of pulling, reinforcing the added power.” The tractor’s new body had no visible seams or screws. It had a modified seat, and a smooth, powerful feel. When the tractor was first unveiled at a Neiman Marcus department store in 1960, John Deere was a formidable player among agriculture product companies in the world — but it wasn’t the player.

The new tractor with the Dreyfuss touch of design changed that. Decades later, John Deere remains the industry leader, just as Toyota remains the leader in hybrid engine vehicles in many respects, and just as Apple is clearly established as the leader in consumer tech products with its global-leading iPhone smartphone, iPad tablet, iPod and Mac computers.

That’s also why we can expect that Apple will release a new iPhone 5 with a total new design sooner than many observers now expect. It’s not a matter of if, but when. Already there’s been rumors that the iPhone 5, whenever it is unveiled, will feature a new metal form that better fits the hand, and perhaps a larger screen even.

Because Steve Jobs and Apple are about design from the beginning, it will happen. It’s all about staying ahead of the curve, in more ways than product functionality. Jobs were obsessed with that quest, and so is Apple. It’s a signature reason for the success of the company, and its products.

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Article source: http://www.ibtimes.com/articles/228259/20111010/steve-jobs-apple-power-of-design-iphone-5-toyota-prius-john-deere-henry-dreyfuss.htm?cid=2

Stratosphere to ship a day before iPhone 4S

Computerworld -

The Galaxy S Stratosphere smartphone goes on sale Thursday as the first device with a physical Qwerty keyboard to run on Verizon’s Wireless 4G LTE network.

The Samsung Galaxy S-class device runs Android 2.3 and will sell for $149.99 after rebate and a two-year agreement with Verizon, both companies announced. A minimum $40 monthly voice plan plus a $30 monthly 2GB data plan are also required.

Verizon sells several touchscreen-only LTE smartphones. Smartphones with physical keyboards are generally aimed at business users — an area where Research in Motion BlackBerry devices have prevailed.

It is significant that Verizon didn’t turn to a BlackBerry LTE first instead of one by Samsung, which has become the largest maker of smartphones and cell phones sold in the U.S.

The Stratosphere has both a five-row physical keyboard and a 4-in. Super Amoled touchscreen as well as business features such as Cisco AnyConnect 2.1 SSL VPN security.

With access to an Verizon’s LTE network, which offers data downloads up to 12 Mbps, Verizon said the VPN can be accessed with “no waiting.”

Speed in the Stratosphere will also be enhanced with a 1GHz Cortex A8 Hummingbird processor, although dual core processors are now being launched in many phones including the coming Apple iPhone 4S, available Friday, and the recently-announced Samsung Galaxy S II devices.

A front-facing 1.3 megapixel camera in the Stratosphere supports video chat, while a 5 megapixel rear-facing camera is provided.

Also, Stratosphere has business support for Exchange ActiveSync for workers to connect to Exchange Server for access to pushed email, calendar and contacts. Also supported: Sybase Afaria Mobile Device Management; encryption of the device and storage card; and complex passwords.

Samsung and Google were expected to unveil the Nexus Prime, or a smartphone with a similar name, running Android Ice Cream Sandwich, the next-generation OS, on Tuesday at the CTIA conference. Many widely predicted that would be a Verizon exclusive.

However the companies said they are postponing the event indefinitely out of respect for those mourning the loss of Steve Jobs. “We believe this is not the right time to announce a new product as the world expresses tribute to Steve Job’s passing,” Google said last week.

Samsung last week took on the new iPhone 4S by issuing a chart comparing its recently-launched Galaxy S II to the new Apple device just hours after its introduction and just hours before Jobs’ death was announced .

The only carrier without the Galaxy S II has been Verizon, and the Nexus Prime has been seen as the device expected to fill that gap. A notable difference with the Galaxy S II smartphones (in two versions) and the iPhone 4S is that they all have dual core processors. While the Stratosphere’s is fast, its processor has only a single core.

Meanwhile, the public is clearly responding to the iPhone 4S, with pre-order supplies exhausted at Verizon, ATT and Apple. The first devices that have been successfully ordered already ship on Oct. 14, one day after Verizon starts selling the Stratosphere.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt’s RSS feed . His e-mail address is mhamblen@computerworld.com.

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Article source: http://www.computerworld.com/s/article/9220671/Stratosphere_to_ship_a_day_before_iPhone_4S