Apple Inc. (NASDAQ:AAPL) has fewer true-blue friends on Wall Street than Needham & Co. Analyst Charlie Wolfe. Every syllable that the Apple analyst writes on the maker of the iPhone, iPad and the Mac is gobbled up by the media. Apple investors take his lines as if they are the gospel truth when a healthy degree of skepticism is in order.
Take his statement released yesterday that Android’s market share peaked in March. Wolfe, one of Wall Street’s best-known tech analysts, came to this conclusion after reviewing IDC data that the Apple iPhone share in the U.S. smartphone market rose a whopping 12.3 percentage points to 29.5% while Google Inc. (NASDAQ:GOOG) powered Android phones saw their first sequential loss ever, dropping from 52.4% to 49.5%.
Wolfe puts his money behind his words. According to Needham’s website, when it comes to Apple, “The research analyst and/or research associate (or household member) has a financial interest in the securities of the covered company (i.e., a long position consisting of common stock).” In short, he owns Apple. Also, “The research analyst and research associate have received compensation based upon various factors, including quality of research, investor client feedback, and the Firm’s overall revenues, which includes investment banking revenues.”
To be clear, Wolfe’s actions are fine since they were disclosed. Sadly, most media outlets ignore these types of disclosures even though they are relevant. A reference to these issues helps put a controversial call into context. When Wolfe argues that Verizon (NYSE:VZ), which activated 2.2 millionApple iPhones during the first quarter, saw weak sales because the iPhone 4 was eight months old at the launch, an “eternity” in the smartphone market. Some Apple fans are holding back buying a new phone until the iPhone 5 is released, Wolfe claims.
“It’s our expectation, then, that the anticipated surge in iPhone sales on the Verizon network is likely to occur this fall after Apple launches iPhone 5,” he writes in a note to clients. As Barron’s notes, “Wolf thinks that means, ‘However, Android’s share in the U.S. could experience a material decline in December following the launch of iPhone 5 in September.’ ”
But Wolfe’s view of the smartphone market is not universally shared.
A May Fortune article argued, citing Nielsen data, that the smartphone market was “something like a three-way stalemate in the battle for dominance” between Google, Apple and Research in Motion (NASDAQ:RIMM), with Android holding the lead at 36%, 10 percentage points higher than Apple. RIM’s BlackBerry held 22% share and was showing signs that its decline was slowing, the magazine says. A survey released in April by comScore showed that Android’s share rose 7 points between November 2010 and February 2011.
So, is the Apple iPhone’s share rising or falling? It’s tough to say. AAPL stock is not immune to the forces of the broader economy. Consumer was worse than expected in June. For Apple, that means that many people will be happy to hold onto their iPhone 3s or iPhone 4s, or whatever model they currently own which is good enough to meet their current needs. Even if the iPhone 5 can work on 4G ,which many bloggers are expecting, Apple will have the issue of price to consider. AT&R retails 16 GB iPhone 4s retail for $200 with a two-year contract, which is more expensive than many comparable Android models.