The Zacks Analyst Blog Highlights: Apple, Nokia, Motorola Mobility Holdings, AT&T and United States Steel Corporation

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Feb 01, 2012, 09:30 ET

CHICAGO, Feb. 1, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Apple Inc. (Nasdaq: AAPL), Nokia Corp (NYSE: NOK), Motorola Mobility Holdings Inc. (NYSE: MMI), AT&T Inc. (NYSE: T) and United States Steel Corporation (NYSE: X).

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Here are highlights from Tuesday's Analyst Blog:

iPhones Reign in 4Q11

Apple Inc. (Nasdaq: AAPL) has toppled Samsung to become the leader in the smartphone market in the fourth quarter of 2011. According to the data compiled by research firms Strategy Analytics and IHS iSuppli, Apple returned to its former glory in the smartphone market, buoyed by robust holiday sales of iPhone 4S.

In terms of units sold, Apple sold 37 million iPhones during the October- December period, while Samsung shipped approximately 36.5 million smartphones. Nokia Corp (NYSE: NOK) sold 19.6 million smartphones during the same period to grab the third position. Sony Ericsson ranked fourth, with 6 million units sold, while Motorola Mobility Holdings Inc. (NYSE: MMI) sold 5 million units to settle for the fifth spot.

In the U.S. market, among the 9.4 million smartphones activated by AT&T Inc. (NYSE: T), the second-largest wireless carrier in the country, 7.6 million were iPhones. Of the 7.7 million smartphones activated by Verizon Wireless, the largest provider, 56% were iPhones.

Apple with its launch of iPhone 4S in October, which featured voice recognition facility, caught the imagination of the holiday crowd. Not only did this help Apple climb to the top, but it also helped the company in reporting impressive first quarter earnings results. In the recently concluded quarter, the year-on-year growth of Apple's iPhone sales was a staggering 128.0%.

Though Apple, with its 23.9% market share in calendar fourth quarter 2011, has gained a slender lead over Samsung's 23.5% share, data from Strategy Analytics reveals that the iPhone maker is short of Samsung's 19.9% market share as against Apple's 19.0%, when compared on a full-year basis.

The figures clearly show that the smartphone market is being dominated by Apple and Samsung, with others falling way behind. Though Nokia is still the highest cell phone maker by volume, its sluggish share of the smartphone market (12.6% in the fourth quarter) is due to its dull touchcreen smartphone portfolio and limited U.S. market penetration. Other smartphone makers also lag the the top three in terms of innovation.

Apple remains the biggest growth story, based on its superior product pipeline, Apps, recently launched iCloud and iPhone 4S, as well as the upcoming update of iPad and Apple TV. Apple is also well positioned to gain from a loyal customer base and international expansion, in our view.

Particularly, Apple's expansion in China, Brazil, Russia and in other emerging economies in the Asia-Pacific region will lead to incremental growth over the long term. Apple's ability to spread the popularity of its products in developing nations, where pricing is often an important consideration, will go a long way in deciding the company's future growth.

However, legal complexities and patent litigation cases against Samsung will remain the primary headwinds in the near term. Moreover, competition from other smartphone makers will remain an overhang on the stock.

We maintain our Neutral recommendation on Apple over the long term (6-12 months). Currently, Apple has a Zacks #1 Rank, which implies a Strong Buy rating in the near term.

U.S. Steel Disappoints in 4Q

United States Steel Corporation (NYSE: X) reported disappointing fourth-quarter 2011 results. Net loss came in at $226 million or $1.57 per diluted share.

Excluding the $51 million of net foreign currency losses and an $11 million after-tax environmental remediation charge, adjusted fourth-quarter 2011 net loss came in at $164 million, or $1.14 per diluted share, much below the Zacks Consensus Estimate loss of 82 cents per share.

For full-year 2011, U.S. Steel reported a net loss of $68 million, or 47 cents per diluted share compared with a net loss of $482 million, or $3.36 per diluted share in full-year 2010.

First Quarter 2012 Outlook

U.S. Steel expects to report a significant improvement in its operating results in the first quarter of 2012 compared with fourth quarter 2011, mainly driven by improved average realized prices and shipments for Flat-rolled segment.

U.S. Steel expects good results for Flat-rolled segment in the first quarter of 2012 as a result of increased average realized prices and shipments, as improving end user demand and lower customer inventories began to significantly improve market conditions late in the fourth quarter of 2011.

Excluding the loss on the sale of U.S. Steel Serbia, the company expects the first quarter 2012 results for European segment to improve sequentially due to the elimination of operating losses associated with Serbian operations. European spot market prices appear to have bottomed and are expected to increase throughout the remainder of the quarter. However, contract prices are expected to decrease compared with the fourth quarter.

First quarter 2012 results for Tubular segment are expected to continue to retain solid performance as the demand for oil country tubular goods (OCTG) and line pipe remain strong. Shipments are expected to increase modestly from the fourth quarter while average realized prices are expected to remain comparable with the fourth quarter.

Overall, shale resource development and oil-directed drilling continue to drive the rig count, while natural gas drilling is being affected by the high levels of natural gas in storage.

Total accounting costs for pension and other benefits plan are expected to be approximately $535 million in 2012 compared with approximately $600 million in 2011. The company's payments for these plans in 2011 were approximately $630 million, which included a voluntary contribution of $140 million to main defined benefit pension plan.

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