The following are excerpts from Canaccord Genuity's
Morning Coffee, a compendium of news on market-moving equities.
Apple (NASDAQ:AAPL): Hey! Check this out.
Canaccord Genuity Technology Analyst Michael Walkley's November channel checks indicated seasonally stronger smartphone sales with very strong sales of the iPhone 5 at AT&T
(NYSE:VZ), and Sprint
(NYSE:S) and also in international markets with dramatically improved supply. Further, his checks indicated solid sales of legacy iPhone 4/4S models at reduced prices and very strong sales of the fourth generation iPad and iPad mini during the Black Friday weekend. Given these checks combined with Apple’s plans to ramp the iPhone 5 in over 100 countries including China by Q4/12, Walkley believes that Apple will gain strong smartphone share during Q4/12.
While his checks indicated strong iPhone sales, they also indicated very strong Samsung
(PINK:SSNLF) Galaxy S III sales at all four tier-1 US carriers along with strong Note II sales. Global checks indicated strong 3G and EDGE smartphone sales in Asia and LTAM offset by slightly weaker sales in parts of Europe. In the US market, stronger LTE smartphone sales were led by very strong sales of the iPhone 5 and Samsung Galaxy S III and modestly increased sales for other OEMs with several new LTE smartphones launched for the holiday season. While the iPhone 5 and Samsung Galaxy S III were the dominant selling smartphones, other top selling smartphones included the Samsung Galaxy Note II at T-Mobile/Sprint, the Nokia Lumia 920 at AT&T, the HTC Windows 8X at T-Mobile, and the Motorola Droid RAZR MAXX HD at Verizon.
lululemon athletica (NASDAQ:LULU): Hooray for yoga pants!
Canaccord Genuity Consumer Products Analyst Camilo Lyon initiated coverage of lululemon athletica with a bullish rating as he believes the company is evolving from an athletic brand with its roots in yoga to a lifestyle brand that is marrying form and function. To that end, he notes the company has had issues in keeping pace with demand. Lyon’s supply chain checks suggest capacity in 2013 will expand; as a result, traffic and conversion should improve, resulting in a reacceleration of comp growth. He believes key manufacturers are expanding production lines dedicated to LULU garments in 2013.
In years past, Lyon believes LULU has left demand unmet due to faster than anticipated sell through. While a signal of a strong brand, this has resulted in LULU under-earning its true potential. He estimates increasing production capacity could result in an incremental $0.09-$0.18 in EPS in 2013. Additionally, Lyon believes e-commerce growth is set to ramp up. Now that LULU can ship to 51 new countries, he believes it is on the verge of accelerating its international brand presence. Ultimately, he expects international ecommerce to serve as a leading indicator for new store openings. Lyon believes LULU has solid unit growth prospects both domestically and internationally. With just 200 total stores today, he believes LULU can double its US square footage, while growth abroad is in its infancy.
Microsoft (NASDAQ:MSFT): Coming to the Surface?
The market for traditional PCs has no growth left because people are increasingly using mobile devices to connect to the Web, an analyst at Nomura Holdings said yesterday. As consumers shun personal computers in favor of smartphones and tablets, the PC market will contract by 1.2% to 348.7 million units this year, according to HIS ISuppli, the first annual decline since 2001.
Moreover, the recent debut of Windows 8, the latest version of Microsoft’s flagship operating system, hasn’t delivered a sales boost, according to NPD Group. Microsoft said last week that it has sold 40 million software licenses since Windows 8 went on sale on October 26. However, some of that tally includes versions shipped to corporate customers with multiyear contracts, making it a poor indicator of consumer demand. NPD said US retail sales of PCs running Windows have been weak, with revenue declining 21% since the latest software release, compared with the same period a year earlier.
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