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Apple stock jumps to record high amid iPhone 5 rumors

As speculation abounds that Apple will announce an iPhone 5, a smaller iPad and an iTV television set, the company's stock climbs 1.9% on Friday to an all-time high.

August 17, 2012|By Andrea Chang, Los Angeles Times
  • Apple shares closed at $648.11 on Friday, a record high for the company. Above, people pass the Apple Store in New York's Grand Central Terminal.
Apple shares closed at $648.11 on Friday, a record high for the company.… (Spencer Platt, Getty Images )

The frenzy surrounding the release of a new iPhone hit Wall Street on Friday, pushingApple Inc.'s stock to an all-time high — even though there has been no official product announcement or launch date from the company.

Shares closed at $648.11, up nearly 1.9%. They're up more than 22% since May, when iPhone 5 rumors began to swell.

The stock surge comes ahead of a widely expected new iPhone rumored to be unveiled Sept. 12 in San Francisco, with the smartphone expected to hit store shelves a couple of weeks later.

Based on recent checks with Apple's Asian suppliers and images purportedly showing the revamped device, technology analysts say they expect a handset with a larger screen, high-speed 4G LTE connectivity, a better camera, faster processors and a smaller dock connector.

Wall Street has also been buzzing with speculation that Apple may introduce a smaller, 7.85-inch iPad to compete with rival tablets such as Amazon.com Inc.'s Kindle Fire. And there's a rumor that Apple might also introduce an iTV television set, although most analysts say they think a TV announcement won't happen until later this year or next year.

"We continue to believe that a smaller form factor iPad is indeed imminent," Barclays analyst Ben A. Reitzes said this week in a note to investors. "We believe that a smaller iPad will combine the ease of use expected of Apple products with high-performance hardware in a size that is more conducive as a companion device, remote, e-book or game player."

Peter Misek, a managing director at Jefferies, raised his price target for Apple shares to $900 from $800 on Friday and said he expected the iPhone 5 to be "the biggest handset launch in history."

"In Apple's case, product launches have an inordinate impact," he said. "They have such a meticulous, product-focused extreme attention to detail that we haven't seen before in other companies."

The previous high for Apple, the world's most valuable company, was $644, reached in April. The Cupertino, Calif., company's market cap is now $607.54 billion.

The mounting buzz over the last few weeks underscores the mania that has accompanied Apple's product launches since the release of the first iPhone in 2007.

New rumors pop up seemingly every day as bloggers, consumers, investors and analysts breathlessly devour anything and everything Apple.

Apple could not be reached for comment Friday, but it has in the past refused to comment on rumors and speculation.

Friday's stock rally was a nice rebound for Apple, which saw its stock tumble last month after releasing a disappointing third-quarter earnings report — a rare miss for a company known for reporting blowout numbers. It was only the second time in more than 30 quarters that Apple missed analysts' earnings-per-share estimates.

One problem last quarter: Many consumers appeared to be waiting for the next upgrade of the popular smartphone, and that caused sales to drag for the technology giant.

Rumors that a new iPhone with a larger screen may come out in the fall have been rampant for months, with some influential consumer blogs recommending that customers hold off buying until that next generation, expected to be a huge upgrade for the popular phone.

Apple officials acknowledged during last month's earnings call that sales had been hampered by hype.

"Our weekly iPhone sales continue to be impacted by rumors and speculation regarding new products," Peter Oppenheimer, Apple's chief financial officer, told analysts. As per Apple's usual approach, he and other company executives remained tight-lipped about new products.

But even consumers who are holding out to be among the first to get their hands on a new iPhone may be in for some disappointment. Inventory in the first few weeks will likely be in limited quantities, said Reitzes, the Barclays analyst.

"We continue to believe that Apple lacks the ability to release the iPhone 5 in full volumes in September," he said, "but that the improved outlook for in-cell production could lead to a strong ramping up in the December quarter and beyond."

For the quarter ending in September, he said he expected iPhone unit sales to fall to 23.4 million, down 10% from the previous quarter. But for the quarter ending in December, he predicted that iPhone sales would rocket 73% to 40.5 million, an estimate that "could prove conservative."

andrea.chang@latimes.com

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