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Canaccord Genuity on Apple, S&P 500, and Google


Apple is snared by Sharp snafu; the S&P sees equity mutual fund outflows; and Google's Motorola division launches its phone.

The following are excerpts from Canaccord Genuity analysts' commentaries.

Apple (AAPL): Your Daily Apple News...
According to a source close to the matter, Sharp has not yet started mass production of screens for Apple's next iPhone, leading many to question whether Apple will be able to secure components to meet demand for the upcoming iPhone 5. Sharp had apparently planned to start shipping screens at the end of August, but production has been delayed due to manufacturing difficulties. Sharp is one of three screen suppliers for the iPhone. (Also see Could Sharp's Troubles Affect the Next iPhone?)

Japan Display and LG have already started shipping their screens to Apple, according to the source. This isn't the first time Sharp has delayed shipments to Apple. Screens for the most recent iPad were delayed earlier this year, but the delay did not create any supply shortages. The newest iPhone is rumored to have in-cell LCD panels, which make phones thinner by integrating touch sensors into the LCD, eliminating the need for a separate touch screen layer. In-cell LCD screens are reportedly more difficult to mass produce than traditional screens, possibly explaining Sharp's delay.

S&P 500 (^GSPC): All for Bonds, and Bonds for All.
Credit Suisse notes that US equity mutual fund outflows have defied the S&P gains. Equity mutual funds have suffered from outflows all year, as bond funds continue to attract assets. What is a bit surprising is the magnitude of the flows compared to market performance. 2008 set the record for outflows ($150 billion), as the S&P fell almost 40%. But the market then rallied almost 25% in 2009, and equity mutual funds still lost $28 billion. 2010 was another positive for the market, but negative for mutual funds.

The S&P 500 is up 11% YTD, but investors have still pulled over $80 billion out of equity mutual funds. If the trend continues, Credit Suisse projects $125 billion of outflows for the year. It's true that some of these mutual fund outflows are offset by ETF inflows (around $30 billion YTD), but more of it is still simply going into bond funds.

Google (GOOG): Wall to Wall.
Motorola's next phone, set to be unveiled at a Verizon (VZ) event this week, is said to have an edge-to-edge screen according to sources close to the matter. A conference is scheduled for Wednesday and the phone, powered by Android, is expected to be available for purchase later this year. This is Motorola's most high-profile debut since being acquired by Google and would be one of the first full-screen phones launched in the US. Motorola is counting on these features to help battle the iPhone and other smartphones according to sources close to the matter.

Additionally, the phone will run on Verizon's LTE technology, which offers faster network speeds. Currently, Verizon has the largest LTE network in the US Wednesday will also mark the debut of Nokia's (NOK) Oyj, which run's on Microsoft's (MSFT) Windows 8. Amazon (AMZN) is also holding a press event this week where some speculate a phone could be introduced as well as a revamped Kindle tablet lineup. The timing works well for smartphone manufacturers since Apple is not expected to debut the iPhone 5 until mid-September and Samsung may face a ban on some of its products in the US due to a recent ruling against it in its patent battle with Apple.

Editor's note: For more information on Canaccord Genuity, click here.
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No positions in stocks mentioned.
Canaccord Financial and its affiliated companies may have a Corporate Finance or other relationship with the companies mentioned and may trade in any of the Designated  Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage herein.
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