EFTA02406595.pdf

From: Richard Kahn <a Sent: Wednesday, July 12, 2017 1:07 PM To: Jeffrey Epstein Subject: Fwd: AAPL US: Apple Inc.: Estimate Change - Lowering iPhone estimates on anticipated delayed shipment of iPhone 8 - BUY (PO remains $180) Richard Kahn HBRK Associa=es Inc. 575 Lexington Avenue, 4th Fl=or New York. NY 10022 Pho Fax Cell Begin forwarded message: From: "Ens, Amanda' Date: July 12, 2017 at 8=56:37 AM EDT To: "Rich Kahn" Subject: AAPL US: App=e Inc.: Estimate Change - Lowering iPhone estimates on anticipated delayed s=ipment of iPhone 8 - BUY (PO remains $180) Reply-To: "Ens, Am=nda" Global Research =/td> <= class="MsoNormal" align="right" style="text-align:right"> <=tbody> =span style="mso-bookmark:_MailOriginal"> aspan> Reiterate Rating: BUY</=:p> Equity I 12 July 2017 1 EFTA_R1_01448921 EFTA02406595 =span style="mso-fareast-font-family:"Times New Roman";display:n=ne;mso-hide:all"> =p class="MsoNormal">Key takeaways • Our checks from Asia suggest iPh 8 likely=ships 3-4 wks after LCD counter parts. We pro=ctively lower Sep/Dec iph 11mn/6mn * &nbs=; Issues: 1) placing finger print sensor below OLED screen, 2) packaging 3D=sensor and low yields • Mar 2018 iph units +10mn given push out. F17/F18 iph uni=s -11mn/+3mn (net 8mn lower units). Modest upside if fixed earlier</=pan> FULL REPORT <http://rsch.baml.com=r?q=bplifbWktOCuLD1MzvTg!w&e=richardkahn12%40gmail.com&h=SaAU=Q> =nbsp; <http://rsch.baml.com/r?q=bplifbWktOC=LD1MzvTglw&e=richardkahn12%.40gmail.com&h=SaAUrO.> <=div> Checks indicate 3.4 weeks delay for the OLED phone=/span> Our supply chain checks, as=part of our recent trip to Asia, suggest that the iPhone 8 with OLED displa= will likely ship 3- 4 weeks after its LCD counterparts. We expect Apple to a=nounce all three new iPhones (4.7" LCD iPhone 7S, 5.5" LCD iPhone 75 Plus, a=d OLED iPhone 8) at its launch event in the fall. However, the iPhone 8 may=ship with a 3-4 week delay given various production issues. We are proactiv=ly lowering our iPhone unit estimates for the Sep and Dec quarters, while r=ising March 18 quarter. While shares may see some near-term weakness, we re=terate our Buy on iPhone 8 super long cycle with higher ASPs, potential for=significant cash repatriation and associated optionality for incremental ca=ital return and M&A, and growth in Services revenue (target to double S=rvices revenue by 2020). Fingerpr=nt and 3D sensor potential causes for delay<=span> Our conversations with the Supply Chain suggest t=at the iPhone 8 will ship 3.4 weeks delayed given technological issues whic= Apple and its suppliers are working through. Initially, Samsung was having=problems in lamination of the OLED screens; however, that issue seems to ha=e been resolved. The remaining issues are 1) removal of the home button and=placement of the finger print sensor below the OLED screen, and 2) packagin= of 3D sensor and low yields. The supply chain is optimistic that the issue= around integrating the finger print sensor below the OLED screen, and issu=s with 3D sensing may be resolved by the end of August. LCD phone productio= starts sooner than OLED but demand for LCD could be lower given high deman= for OLED.<=pan style="font-size:9.5pt;line-height:140%;font-family:"Arial"=sans- serif;color:#231F2r> =span class="text1">Lower Sep/Dec ests, C1= mostly same, PO remains $180<=p> <=pan style="font-size:11.0ptline-height:140%;font-family:"Arial"=,sans-serif;letter-spacing:-.2pt">We project a delayed launch for the iPhon= 8 and are lowering Sep/Dec iPhone estimates (- 11mn/6mn units, respectively=. However Mar 2018 quarter moves up by 10mn. By the June quarter demand cou=d shift toward fall 2018 iPhones. In aggregate, our F17 iPhone units are 11=n lower, F18 units are 3mn higher (Fig 1). PO remains $180 on 16x C18 EPS o= $11.61. If the supply chain issues are resolved earlier, there could be so=e modest upside to our projections. Our derivatives research 2 EFTA_R1_01448922 EFTA02406596 team recommend= an options trade to protect against near term volatility and capture longe= term upside potential (details in note). <=p> MLPF&S=br>+1 646 855 3854 =/tbody> =/tbody> =/span></=pan> This report is intended for <=span><=pan style="mso-bookmark:_MailOriginal">amanda.ens@baml.com =/span> Click here =td style="background:#F5F3EE;padding:0in 22.5pt 0in 22.5pt"> The res=arch report and the link to such report are for the use of Bank of America M=rrill Lynch customers only and all copying, redistribution, retransmission,=publication, and any other dissemination or use of the contents thereof are=prohibited. There may be more recent information available. Please visit on= of the electronic venues that carry BofA Merrill Lynch Global Research rep=rts or contact your Bank of America Merrill Lynch representative for furthe= information. "Bank of America Merrill Lynch" is the marketing name for the=global banking and global markets businesses of Bank of America Corporation= Clic= <=span>http:=/rsch.baml.com/r?q=bp1!fbWkt0CuLD1MzvTglw&e=richardkahn12%40gmail.c=m&h=SaAUrQ4=pan> <http://rsch.baml.com/r?q=bplIfbWktOCuLIMMzvTg!w&e=r=chardkahn12%40gmail.com&h=SaAUrQ> This message, and any attachments, is for t=e intended recipient(s) only, may contain information that is privileged, c=nfidential and/or proprietary and subject to important terms and conditions=available at http:=/www.bankofamerica.com/emaildisclaimer <http://www.bankofamerica.com/emaildisclaimer> . 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