One month on from Apple’s iPhone 5 launch and market scribblers are rushing to upgrade their earnings forecasts for the tech giant, and raising their price targets ever higher.

Some might consider that this could be a mistake, especially if next week’s forthcoming Q4 earnings release comes in short on sales. With this in mind, the statement is likely to be closely scrutinised for any shortfall in headline numbers with particular attention paid to revenues and units sold.

Some early estimates have put the number of units sold at 30m iPhones and 20m iPads; and with quarterly revenues of about $40bn, these sales figures will be key when looking at expectations in the run-up to Christmas.

In addition, we have seen a lot of expectation about the launch of a mini iPad and this could impact on iPad volumes given that we didn’t get an announcement when the iPhone 5 was launched last month.

It says a lot  about analyst expectations for Apple that 5 million sales on the first weekend was greeted with disappointment and saw Apple shares drop soon after the announcement.

Even a botched launch of Apple Maps on its new operating system, iOS6, was shrugged off as users clamoured for the new slimmer and lighter handset, though there has been some downward pressure on the share price over some supply issue concerns.

(Source: CMC Markets)

The Apple share price is continuing its seemingly relentless move higher, however given the distance between the price and the 200 day moving average there remains significant room for disappointment if full year results come in below analyst expectations.

Typically, prices tend to revert to the mean once they become too detached from their long term average.

As things stand, the share price is up from $411 at the beginning of this year to be over 60% higher, which could suggest there remains more downside than upside potential in the near term especially looking at the price distance from the 200 day MA.

Apple is also not completely having its own way with respect to mobile handset sales with Samsung’s popular Galaxy S3 smartphone.

Both companies have been embroiled in lawsuits against each other over patent infringements, with Samsung firing the latest salvo in this particular war by adding the iPhone 5 to its lawsuit against Apple by claiming that the new handset infringes two standards patents and six features patents.

With the handset market worth over $219bn, the stakes could not be higher with the Galaxy phone outselling the iPhone in the UK market for the first part of this year, as Apple wrestles with supply shortages. While the recent unrest in China could also affect Apple’s supply chain after one if its major suppliers in China, FoxConn, saw rioting amongst its employees resulting in production shutting down during September.

The ‘old hands’: Nokia and Research In Motion

While these two sector heavyweights slug it out, two old hands in the handset market have been noticeable by their inability to react to the fluidity and flexibility of the new players in the handset market.  The result is that Android and iOS now share 93% of handset sales in the US and 83% in Europe.

Both Nokia and BlackBerry owner Research in Motion have had well documented problems over the past few years with the share prices of both companies dropping sharply over the last six months as they fight over the scraps left by Samsung and Apple.

Given the depressed valuations of both companies, speculation about a break-up has seen volatility in the share prices of both companies increase.  In addition, RIM’s problems have been well documented with respect to service reliability after two network outages in the last 12 months, amd even experiencing an outage on the very day that the iPhone 5 was launched.

Nokia’s shares have shown some flickers of life after the company launched its latest Lumia phone to much fanfare, and its tie up with Microsoft has the potential to revive it but it still lags behind RIM in terms of market share, particularly in Europe.

With Microsoft’s brand backing Nokia, the potential is there for Nokia to close the gap, especially with Windows 8 in the pipeline.Unless RIM gets its act together, the Blackberry owner could well see further declines in sales and may ultimately fall behind Nokia.

RIM’s market share in Europe was 12% of sales a year ago; however this has dropped to 6.4%.  Nokia has jumped from 3.8% a year ago to 5% year to date. 

Both companies remain vulnerable as they look to turn around their business with the value of the patents that both companies own likely to be the compelling reason behind any potential bid prospects.

Please remember that any information relating to past performance of an investment does not necessarily guarantee future performance.