So How Many iPhones Did Apple Inc. (AAPL) Really Sell Last Quarter?

25 Jan 2015 | Author: | No comments yet »

Apple Inc.’s Q1 Earnings Preview.

UBS’ Apple analyst, Steve Milunovich, raised his revenue and EPS estimates for the company’s December quarter due to a larger contribution from the iPhone 6 Plus.Apple (AAPL) stock is up 30 cents, or 0.3%, at $112.70, reflecting some positive data from suppliers’ earnings reports but also a lukewarm view from Deutsche Bank’s Sherri Scribner.UBS‘s Steve Milunovich this afternoon reiterates a Buy rating on shares of Apple (AAPL), and a $125 price target, writing that a third-party survey suggests better results in the December quarter for iPhone 6 sales than he’d previously estimated.

Apple Inc. (NASDAQ:AAPL), which is set to announce its earnings for the first quarter of fiscal year 2015 (1QFY15) on Tuesday, January 27, is yet again expected to beat consensus estimates on account of massive global demand and sales of its iPhone 6 and iPhone 6 Plus smartphones. Scribner, who has a Hold rating on the stock, this morning raised her estimate for December-quarter iPhone sales to 67 million from 65 million, ”although we believe expectations are likely closer to 70M.” Still, she writes, “we see limited catalysts.” On the positive side, chip maker Maxim Integrated Products (MXIM) is up 94 cents, or 2.9%, at $33.95, after yesterday afternoon beating fiscal Q2 expectations.

The Street is currently at $67.5 billion and $2.59, respectively, while Apple’s guidance is $63.5 to $66.5 billion and I calculate the high-end of implied EPS guidance to be $2.54. First quarter growth has come on the back of the previous one, which saw Apple capture 50% of the market in smartphone activation in the US and gaining considerable share in Asia.

The 6 Plus had only been 13% of total iPhone sales in the September quarter (with the model 6 at 32%) but that isn’t surprising since it was only available for nine days and probably was more supply constrained than the model 6. Willard thinks the company might endure another decline after its FY2015 Q1 results are released. “Everyone will be wondering how much they should be modeling for the Apple Watch,” Willard explained. “Those are numbers that are really all over the place. Since he is materially above consensus and revenue guidance it would be typical for an analyst’s gross margin projection to be above others, especially since his higher revenue number is based on a higher gross margin product.

Accordingly, Morgan Stanley’s estimate indicates a 35% year-over-year (YoY) rise in iPhone shipments from the same quarter last year, when Apple reported 51 million unit sales. Milunovich is slightly above revenue consensus for the March quarter ($54.7 billion vs. $53.7 billion) but is about a dime higher at $2.09 in EPS vs. either $1.99 cited in his note or $2.01 in Yahoo!

For March, Milunovich expects “solid” results “and remain optimistic on the gross margin at near 39%.” He’s modeling sales of 48 million iPhones, at an average $658 price, for revenue of $54.69 billion, and EPS of $2.09. However, Apple has a history of exceeding iPhones sales estimates, and could very well report unit shipment of around 72 million, beating the Street’s estimates.

For this year, Credit Suisse estimates Apple selling close to 215 million iPhone units. iPhones comprise Apple’s price flagship brand and accounts for the largest portion of company revenue. An offsetting factor to March quarter’s revenue guidance coming in higher than the past two years is again the pent up demand for iPhone 6’s and 6 Plus’s with Apple wanting to have 5 to 7 weeks of supply in the channel (which they won’t be close to exiting December).

Higher demand for larger display pertains to higher-than-traditional upgrade cycle for the iPhone users, as well as those switching to iPhones from Android phones. According to a research note from Counterpoint Research, the Korean smartphone market had never previously witnessed an overseas company taking hold of a market share above 20%.

An equities security research firm, Consumer Intelligence Research Partners, LLC (CIRP), did a survey on smartphone preference from a sample of 500 buyers. Consumers had to wait up to two weeks in September 2014 to get their hands on the smartphone; this, combined with the fact that Apple struggled to keep up supply with overwhelming demand, bodes well for iPhone sales figures.

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