Shaw Wu of Sterne Agee has now adjusted his estimates for the iPhone and iPad after reviewing Apple’s recent supplier checks.  The concern is that supplier checks indicate near-term iPhone expectations are likely too high.  Fortunately for the Apple lovers and fanboys, Mr. Wu said this weakness will be offset by strength in the iPad.

Wu noted, “Based on our supply chain work, we believe significant iPhone upside over the next two quarters is less likely based on reduced supplier build plans. Conversely, the likelihood of iPad upside appears higher due to additional screen supply. Recall, last year ahead of the iPhone 4S refresh, Street estimates of 20 million units (some as high as 23 million) were significantly off from actual shipments of 17 million.”

The report indicates that building plans for current iPhones have been reduced significantly, down as much as 20% to 25% in the March quarter with potential shipments of 26 million to 28 million (below consensus closer to 30 to 31 million).

Another issue is the 8.6 million iPhones in channel inventory.  Wu believes that the reason for the reduction is not demand related.  It is due to the upcoming 6th generation iPhone refresh that is expected in the September-October timeframe.  Wu went on to note, “We would also like to note that consensus last year grossly underestimated the impact of a pause and inventory drawdown ahead of the iPhone 4S refresh where estimates were significantly off.”

The strength overall is coming from the iPad and what held back shipments were supply constraints on its new HD retina display. The firm has heard that this has been greatly improved with an additional supplier and Apple can better meet strong demand and deliver upside relative to consensus expectations.

For the June quarter, Stern Agee is cutting its iPhone forecast to 27 million units from 28 million units, but it is raising iPad targets to 15 million units from 14 million.  Apple’s gross margin assumption is now raised to 43.5% from 42.5% and the firm now sees $36.1 billion in revenue and $10.16 in earnings per share.  For the company’s Fiscal-2012, the firm is now at $159 billion in sales and $46.75 in earnings per share.  Those are slightly higher.  For Fiscal-2013, Stern Agee sees $189 billion in revenues and $53.50 in earnings per share.

In the end, the report seems to be a wash as Stern Agee is leaving its BUY rating in place and it is even leaving its price target at $780 based on 11.7-times its 2013 earnings plus net cash.

Apple shares are up about $1.00 at $559.30 shortly after the open and the 52-week trading range is $310.50 to $644.00.

JON C. OGG

Here is the formal announcement from LightSquared.

LightSquared has reportedly filed for bankruptcy protection.  This will put the creditors in charge and the Bloomberg report shows that the company lists more than $1 billion in assets and liabilities each.  Creditors had previously asked backer Philp Falcone of Harbinger Capital Partners to move aside after he had invested some $3 billion or so into the company.

Bloomberg also noted that Carl Icahn cleaned up buying and selling the LightSquared debt, but Dish Network Corp. (NASDAQ: DISH) Chairman Charlie Ergen has reportedly acquired some $350 million of the debt.

The company’s website notes, “LightSquared will unleash the boundless opportunity of wireless broadband connectivity for all. We believe that it is time to transform the broadband industry to one that truly fosters innovation, creativity, and freedom of choice—with limitless and unimaginable possibilities.”  It sure sounds like LightSquared needs to change all of those verbs to past tense.

Another huge wireless venture bites the dust.  Whether or not this company has any future other than its large spectrum is a guess.

JON C. OGG

T-Mobile may be the current merger flavor of the day, but this is the wrong effort or at least the wrong focus.  Sprint Nextel Corporation (NYSE: S) was the most recent potential acquirer but CEO Dan Hesse was blocked by his board of directors over fears that investors were already punished excessively and that the acquisition would put further pressure on its shares.  Sprint now owns Virgin in this overlapping field of prepaid and no-contract wireless and Sprint is still losing money.

The other would-be merger in the past was with Leap Wireless International Inc. (NASDAQ: LEAP).  With this company being the direct comparable outfit, it would make sense for these two companies to try to get past their differences and consider a stock-for-stock merger again.  While it will generate less for shareholders today versus the past, it would still allow for upside if the combined efforts generate higher earnings.

AT&T Inc. (NYSE: T) recently botched the T-Mobile buyout and T-Mobile does now have a few billion more in cash to spend.  Could that make T-Mobile a true buyer?  Anything is possible.  What T-Mobile does not have going for it is a stock in the U.S. that would allow it to do a stock transaction.

Leap Wireless is worth only $456 million and MetroPCS has a market value of $2.7 billion.  Both shares surged on Wednesday and both shares are down severely from their 52-week lows.  Perhaps these companies should swallow some pride and join their millions of customers together rather than hoping that one of the larger U.S. carriers will hope to grow with a reach-down effort into no-contract and prepaid wireless.  If the companies merge in a stock for stock transaction the action will still allow the holders who are long and wrong to recoup their losses if these two companies can get their earnings higher again.

Deutsche Telekom has reportedly issued the “no comment” but we would not have expected anything different in the current climate.

JON C. OGG

The company filed an 8-K after the close of trading Friday.  Hesse noted that the company has received feedback from some shareholders relating to the discretionary adjustment the Compensation Committee made under the incentive plan payouts for the impact of the iPhone on its financial results.

Hesse noted in the filing, “I do not want, nor does our Compensation Committee want, to penalize Sprint employees for the company’s investment with Apple, so I will forego this adjustment to my compensation. I have also voluntarily decided to take some additional actions regarding my personal compensation, and the Compensation Committee has agreed. I’m hopeful that these actions will allow the company to remain focused on delivering the best overall customer experience in the wireless industry, which is what will serve the company best in the long run.”

There is a lot more to this story if you look past the raw terms of the cuts.  Here are some of the actions being taken on Hesse’s compensation:

• Salary cut on a pro-rata basis over his remaining paychecks in 2012 to repay the $239,760 associated with the discretionary adjustment he received in February under the 2011 Short-Term Incentive Plan.
• Salary cut on a pro-rata basis over his remaining paychecks in 2012 to repay the $106,463 associated with the discretionary adjustment he received in February related to the performance units under the 2009 Long-Term Incentive Plan.
• Forfeits any right to a payment of $250,500 associated with the discretionary adjustment earned with respect to the 2011 performance period for the performance units under the 2010 Long-Term Incentive Plan. Subject to the satisfaction of applicable vesting conditions, this payment would otherwise be payable to Hesse in 2013 under the terms of the plan.
• Forfeit any right to payment of $294,107 associated with the discretionary adjustment earned with respect to the 2011 performance period for the performance units under the 2011 Long-Term Incentive Plan. Subject to the satisfaction of applicable vesting conditions, this payment would otherwise be payable to Hesse in 2014 under the terms of the plan.
• Reduce, from 200% of Hesse’s annual base salary ($2.4 million) to 170% ($2.04 million), his target opportunity under the 2012 Short-Term Incentive Compensation Plan.
• Forfeit two million performance units (valued at $2 million) granted to Hesse on February 22, 2012 under the 2012 Long-Term Incentive Compensation Plan.

Again, this feels like one of those situations where there is just a lot more to the story than meets the eye.

Hesse went on to say, “These voluntary actions regarding my personal compensation, which total $3,250,830, will eliminate any benefit for me to the discretionary adjustment the Compensation Committee made earlier this year, and will set my 2012 incentive compensation target opportunities at my 2010 levels.”

Hesse said this voluntary reduction of his future compensation does not constitute “Good Reason” under his amended and restated employment agreement dated December 31, 2008.  Hesse also agreed that if his employment terminates prior to completion of the salary reductions described in the first two bullet points above to a reduction of any amounts otherwise payable to him or his estate in an amount necessary for Sprint Nextel to “fully recover the indicated amounts, and to the extent insufficient to do so, to repay the remainder as soon as reasonably practicable.”

Doesn’t that sound a bit like a clawback of pay similar to what you have heard about for Wall Streeters during the financial crisis?

What is interesting here is that this starts out using the ‘investment’ with Apple over the iPhone.  It is not typical for a CEO to take a pay cut and to address dealings with an outside company as one of the first issues.  That is particularly the case in a hot product like the iPhone.

Another take here, and perhaps the most important take, is that Hesse is losing serious support from inside the company.  The way that the news reports went in February it looks like the board rejected Hesse’s efforts to acquire Dan Hesse, to purchase MetroPCS Communications, Inc. (NYSE: PCS) for the no-contract and ‘pay as you go’ cellphone service offering.  It is worth noting that MetroPCS shares hit another 52-week low on Friday and this one has been battered since earnings just over a week ago.

The question we are asking ourselves here is really about the timing of this filing.  By sneaking the news out on Friday after the close of trading, it sure seems like the company is hoping that other news will be more front and center besides a ‘voluntary’ pay cut.  The news may not be a stock-moving event on its own merit but this certainly feels like the second move from Sprint that would lead us to question just how long Dan Hesse has left as CEO of Sprint Nextel.

Sprint is burdened with debt of more than $20 billion at the end of 2011 and its share price of $2.36 compares to a $2.10 to $6.45 range of the last 52-weeks.  The $7.1 billion market capitalization of the common stock is only a small portion of the Sprint Nextel enterprise value.

Blocking a CEO-led acquisition and then sneaking in a filing late on a Friday showing a ‘voluntary’ pay cut for the CEO… Honestly, how much longer does Dan Hesse have as CEO?

JON C. OGG

So, here is why this is only a partial win.  The Wi-Fi access will be in the subway stations and will gradually roll out over the next five years.  Saying that this allows for 1.6 billion annual subway riders is misleading unless it is only planning to offer a subway pass on per-use model rather than a subscription service.

The agreement will eventually allow subway riders to connect to the Internet using their smartphones, e-readers, tablets and other wireless devices while waiting for a train.  The release shows that Boingo Wi-Fi services will be available at stations throughout Manhattan, Brooklyn, the Bronx and Queens.

The real reason that this is an ‘almost’ win is that the effort is not wiring the entire subway line.  Riders are often on a subway ride for a very long time, but the waits inside the subway system may only be a few minutes depending upon which subway line and depending upon the time of day.

If Boingo wants a home run announcement, it should aim to provide Wi-Fi throughout the entire subway line and sell monthly subscription services or single use connection fees like it does in airports.  Then it could do the same in Chicago and in other large global cities with subway systems deep underground where there is no real Wi-Fi connection during the ride.

Boingo shares are only up 1.4% at $10.85 but this much larger and much broader effort should be the real goal.  Those who frequently use the subway lines may pay a monthly subscription to Boingo if it means that they can get access to email, Facebook, news, and other online efforts on their way to and from work or when they are out on weekends and using the subway system a lot.  To occasionally use this while you are waiting on a subway where a user might already still have some limited internet access on their smartphone is not really a very ambitious effort.

KT offers Wi-Fi on some of the Korean subway lines but the U.S. has been way behind on various forms of wireless connectivity for years now.  If Boingo does not offer this service, perhaps AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), or even Sprint Nextel Corporation (NYSE: S) could.  It is not out of the realm of possibilities and it might really drive customer loyalty in those regional markets where subways are used by the masses.

If Boingo really wants to make an effort that will drive paid subscriptions and pay-per-use, it should be focusing on the entire subway ride.

JON C. OGG

This morning came news that Garmin’s revenue was $556.6 million versus a consensus from Thomson Reuters of only $520.2 million.  The company owes its gains to the outdoor and fitness products.  Some of the demand is being driven by watches with GPS sensors, golf devices with preloaded courses, and other fitness and lifestyle device applications.

The outdoor and fitness sales were up 20% to $148 million, while the automotive/mobile unit sales rose by 6% to $280 million due to higher unit sales even though the company has cautioned about weaker PND sales.  Garmin expects PND revenue to fall and unit deliveries to decline, but this surprising gain shows that the company may not be as down and out as those short sellers were hoping.

Garmin’s news is enough for a gain of 4% to $49.75 against a 52-week range of $29.23 to $49.93 (high hit today).  Garmin’s short interest was most recently put at 11.03 million shares, but that is only half of the short interest from as recently as last September.

So far we are not seeing the same reaction out of Trimble Navigation Limited (NASDAQ: TRMB) as its shares are down 1.2% at $53.27 against a 52-week range of $31.88 to $55,95.

JON C. OGG

MetroPCS added fewer subscribers and phone subsidies increased its operating costs. Net income fell by more than half to $21 million and that translated to a mere $0.06 in earnings per share, but revenue did rise 7% to about $1.27 billion for the quarter.  We had a Thomson Reuters consensus target of $0.17 EPS and $1.29 billion in sales.  That is a poor showing on earnings even if revenue was only a miss worth a footnote. The subscriber additions of just over 131,000 gave MetroPCS 9.4 million subscribers at the end of the quarter, but that was only about half of the add-on subscribers expected.  MetroPCS offers no iPhone.  Can you imagine a no-contract or prepaid iPhone?  Maybe overseas, but not so much here in America.

Leap Wireless posted a wider loss than expected at -$1.28 EPS and its revenue was only up 6% to $825.6 million. Thomson Reuters had estimates of -$0.98 EPS and about $831.7 million in sales. Leap added about 258,000 subscribers in the quarter rather than about 280,000 to 290,000 expected.  Leap is facing higher churn and a slower gain in the average revenue per user.

Leap Wireless shares are down a whopping 23% at $5.90 against a 52-week range of $5.50 to $17.66; MetroPCS shares are down almost 12% at $7.00 at a new 52-week low as the prior 52-week range was $7.51 to $18.79.

JON C. OGG

Today’s Clearwire downgrade came from Jefferies & Company with a downgrade to “Hold” from “Buy”.  The real blow is that the price target objective was lowered from $4.00 to $2.00.  It is hard to take much joy that after a 4% drop to $1.48 that this still implies almost 35% upside on the post-downgrade share price.  Clearwire has traded in a range of $1.24 to $5.47 over the last year and its market capitalization rate is down to about $669 million.

The move by the analyst comes just two days shy of the wireless data provider’s expected earnings report and only one day ahead of the expected earnings report from Sprint Nextel Corporation (NYSE: S).

RadioShack Corporation (NYSE: RSH) just hit a two-decade low today after posting an unexpected loss rather than a small positive earnings report.  RadioShack’s report was marred in part because it sold fewer of the high-priced Sprint mobile plans and that reflects more pressure all over again for Sprint and ultimately for Clearwire even if Sprint shares are up 2% ahead of earnings as it is likely that the short sellers are covering their shorts ahead of earnings.

Unfortunately, Clearwire has its woes and the fallout from upstream is just too much.

JON C. OGG

Next quarter guidance is $0.91 to $0.97 EPS on $4.6 to $5.0 billion in revenues, while the consensus estimates are $0.89 EPS and $4.49 billion in sales.  For fiscal year 2012, Qualcomm is offering guidance of $3.55 to $3.75 EPS on sales of $18.7 to $19.7 billion; estimates are $3.59 EPS and $18.48 billion in sales. The company sees 146 to 154 million MSM units shipped in the current quarter.

The company ended its latest quarter with a cash arsenal of $22 billion or so if you include the cash equivalents and short-term investments.

Shares closed up 1.25% at $59.56 and the 52-week range is $45.98 to $59.84 and shares are trading up around $62.00 after a near-4% gain in the after-hours. 

Keep in mind that the market cap hit $100 billion today and that will drive the market well over the $100 billion mark if its holds up after the conference call.  Beating earnings estimates and raising guidance is welcomed.

JON C. OGG

We have now seen positive earnings out of ARM Holdings plc (NASDAQ: ARMH) Jim Cramer turned out to be very spot on when it came to his relative value tout in Broadcom Corporation (NASDAQ: BRCM) with its post-earnings reaction being up 7%.

Options traders are braced for a move of up to about $2.00 in either direction based upon the monthly expirations of puts and calls.

With the stock near a year high, the chart does not offer any great reads right now other than that the most recent support was around $57.25 and if the news is really unpleasant then the 50-day moving average is $55.37 and the 200-day moving average is $54.02.

Analysts still lean toward a ‘Buy’ consensus for their official ratings bias.  Thomson Reuters has a consensus target (mean target) of almost $66.00.

We would probably lean twoard waiting another quarter before expecting Qualcomm to boost its dividend, which has been the same for three consecutive quarters and currently offers investors a 1.5% yield.

JON C. OGG