Analysts: We Told You the iPhone 4S Would Do Well

| Apple Stock Watch

Big Piles of Money

While some tech pundits were pronouncing the iPhone 4S a dud, most Wall Street analysts called it an important upgrade with a new software feature, Siri, that would assure its success. Two analysts, UBS’s Maynard Um and Sterne Agee’s Shaw Wu, issued research notes on Monday pointing to pre-order sellouts as evidence that the iPhone 4S will be the most successful iPhone launch to date.

Apple and its U.S. iPhone carriers all announced that their collective stock of pre-order iPhones were sold out over the weekend, and Apple announced on Monday that more than one million iPhones had been ordered on the first day alone. That broke the record for one-day iPhone sales of 600,000 units, which was set by the iPhone 4 when it was announced in 2010.

“While the 3GS sold a million units in its first 3 days,” Maynard Um told clients, “we expect 4S to well exceed this in its first day and expect continued strong sales into the holidays.”

He added, “We believe these data points should ease concern over 4S demand and expect further major carrier launch expansion beyond this year to be catalysts. We continue to view our estimates as conservative, particularly as the pre-order data does not include any iPhone 4 and 3GS demand, which we believe are also strong.”

Shaw Wu of Sterne Agee said that the strong pre-sale numbers, “should help alleviate concern that the iPhone 4S could do poorly.”

Looking ahead for the rest of the quarter, he wrote, “While it is still early, we are comfortable with our December quarter iPhone forecast looking for 24 million units.”

That would be a record quarter, as Apple announced earlier this year that it sold 22.5 million iPhones during the June quarter, setting a new record. The company announces results for the September quarter later this month.

Both analysts maintained their “Buy” rating on AAPL, as well as their price targets. Maynard Um currently has a price target of US$510 per share, while Shaw Wu has his price target at $500.

Shares in Apple rose Monday, propelled in part y the pre-sale iPhone numbers. AAPL ended the day at $388.81, up $19.01 (+5.14%), on moderate volume of 15.8 million shares trading hands.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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27 Comments Leave Your Own

Nemo

I had a teacher of economics who told us that if we determined to become Wall Street economists, who are thus obliged to predict, the success of our careers could be enhanced, if not ensured, by observing these two rules:  (1) Predict often, and (2) always try to predict after the event.  It seems that the same rules apply to Wall Street analysts.

mifd118

just goes to show that if you starve sheep long enough they will eat [expletive deleted].

Bryan Chaffin

Most analysts said immediately that iPhone 4S would do well, that it was a solid upgrade, and that Siri is going to be the bee’s knees. Certainly both of these analysts did so in the 24 hours after the announcement.

It was the tech press that took the opposite opinion.

aardman

just goes to show that if you starve sheep long enough they will eat [expletive deleted].

Actually, your case just proved that the opposite is true:  If you starve [expletive deleted] long enough, they will start feasting on sheep.  Or at least try.

At Maximo's

I call all these Anal-lists Community College grads. We have a ton of them out there and a lot more. They have no bases but their hopes for a different chassis. Lots of them are just plain idiots. The moment the 4S was announced,  I consider it the best iPhone ever. They need to have a little brain to consider having 2 antennaes and all frequencies in one (world phone). Those alone are way major and not even Motorola or any copy cat countries like Korea and Taiwan can be compared with. The A5 is another killer and, Siri, my gosh - Over 15 years passed and most software companies, including Microsoft and Google, can not deliver a human like Virtual Assistant like Siri.

I’d say, go back to where you all came from, that is your Community College where most of them originated from if ever they have one.

mifd118

Actually, your case just proved that the opposite is true:? If you starve [expletive deleted] long enough, they will start feasting on sheep.? Or at least try.

sorry, i dont claim to be the most intelligent person on the planet,but at 50 years of age, college education plus 8 years at 2 culinary colleges i am not the most stupid either, but i’m sorry what you wrote makes absolutely no sense whatsoever.

Bryan Chaffin

I just re-read my piece and my comment. I am convinced that I made it quite clear that analysts were on board with the iPhone 4S from the moment it was launched, especially these two analysts.

Nemo

Bryan:  Your point is well taken with respect to certain analysts.  But I am confused by your story’s report that Messrs. Wu and Um released their respective research notes on Monday.  If the Monday in question is today, then, for analysts who have sources of information all along the supply and distribution chains, then they almost certainly did predict after the fact, after they had info about how Apple and the carriers’ sales went on 7 October. 

If they released their research notes on 3 October, then they made their predictions prior to Apple introducing its iPhone 4S on 4 October, which again almost certainly means that they either had some advance information about the iPhone 4S, or they were just guessing.

mifd118

I call all these Anal-lists Community College grads. We have a ton of them out there and a lot more. They have no bases but their hopes for a different chassis. Lots of them are just plain idiots. The moment the 4S was announced,  I consider it the best iPhone ever. They need to have a little brain to consider having 2 antennaes and all frequencies in one (world phone). Those alone are way major and not even Motorola or any copy cat countries like Korea and Taiwan can be compared with. The A5 is another killer and, Siri, my gosh - Over 15 years passed and most software companies, including Microsoft and Google, can not deliver a human like Virtual Assistant like Siri.
why is it that apple fans write off features as insignificant if iphones dont have it, but then shout its praises when apple finally copies it from others & includes it as a feature? perhaps apple fans are so insular that they simply dont know that the rest of us have been enjoying all this for quite some time now. i have had unified notifications ever since i switched to android, i ask my phone what the tallest building in the world is,, i get the answer, i tell my android phone to remind me call my friend tomorrow, it does,,, also, siri was bought by apple,, not invented by apple. of course the iphone4s is the best iphone to date,,, not hard when you begin with a phone that is 12 months behind the curve. the sad thing is that iphone users dont even know is they could have all these features for the last two tears like the rest of us.

Bryan Chaffin

I am mystified as to where the confusion lies, Nemo.

1.) The iPhone 4S was announced on October 4th.

2.) Analysts far and wide said “w00t!” on October 4th and 5th (some of that news was occluded by the death of Steve Jobs on the 5th).

3.) Today, these two analysts released notes in response to Apple’s announcement of one million units presold. In those notes they iterated their stances that the iPhone 4S was a significant upgrade that would sell well, as evidenced by the pre-orders.

Bryan Chaffin

mifd118, the smartphone market is definitely a game of leapfrog.

You are being highly selective in your choice of cherry picked features.

For instance, Android was bought by Google, not invented by Google.

How does that take away from the fact that it is a fine smartphone OS with many strengths. Even if that mattered, most of that development has been under Google’s stewardship.

Siri was bought by Apple, but how does that take away from the fact that it is at least two generations ahead of anyone else’s voice interaction/controls? Even if that mattered, much of Siri’s development has taken place under Apple’s stewardship, and its implementation on iPhone requires Apple’s hardware advancements and infrastructure.

To re-invoke the leapfrog metaphor, Siri is as much a leapfrog over Android’s voice controls as Android’s were over Apple’s limited voice actions before Siri, at least according to those who have worked with it.

Additionally, iPhone/Apple fans haven’t been shy in praising Android’s voice actions as being best-in-class (until Siri), despite your claims to the contrary.

Being late: Apple is late to the game with unified notifications, but then Android was years late to the game with multitouch. Once seems a tad more deficient than the other, but in the grand scheme of things, neither matter once both have them.

In that the iPhone 4S resets the bar, I personally can’t put much stock in your assertion that it is 12 months behind the curve.

mifd118

sorry Brian, you have some good points but perhaps you are the only apple user (if you are one) that i have heard praising anything android. generally my experiences over the last 12 months have shown me that either iphone users simply dont want to know about anything that the iphone doesnt do,, or,,, some iphone users have actually said they need to get off apple once they saw what my thunderbolt can do. of course the eye candy, slick animations & attention to details are nice & produce plenty of “wow thats cool” comments but they are slight compared to what my android phone is capable of. as far as the iphone goes ,, yes the iphone sets the bar for iphones, but i can assure you that my assertion that the iphone4S is twlve months behind the curve is quite valid. check up the specs, functions & features of the HTC thunderbolt which is nearly 12 months old now & it still outperforms apple’s newest phone,,, therefore,,, apple is behind the curve,,,apples’ best falls short of my old thunderbolt & i’m about to upgrade to the new nexus prime. how long are you willing to go without all the sweetest functions for the price of simplicity?

mifd118

after re-reading my comment i noticed my point about slick animations, eye candy & attention to detail could be misconstrued to think i was taling about iphone having all the “cool,, wow factor , slick,,animations,,etc” to clarify, my gingerbread thunderbolt has all the “cool,, wow” that i was referring to.

Paul Goodwin

As I surmised last week,  the stock continues to go up.  It went backwards briefly in part due to general market conditions, and partially to due to the uninformed press. I bought at $265/share…. Not many shares, but it made $358 today…..yea!!! Buy now, it’s still cheap. some of the analysts put at $550 max. Last week I timelines it at about 20 months to that number. I think that’s as good an estimate as any idiot can make. It may beat that since the phone is selling like popcorn. Yes, the game is leapfrog, and Apple has leaped a decent amount. I’m still happy with my iPhone 4, and will be for while.

Nemo

My confusion, Bryan, was about when the analysts that you cite, supra, released their research notes.  You’ve now clarified that they released those notes on 4 October, after Apple introduced its iPhone 4S.  So that is fair enough.  However, it places me in the uncomfortable position of sharing an opinion with analysts, that the iPhone 4S would be a hit, or rather an out-of-the-park grand slam.

mifd118

wondering if i can get an honest answer. i have asked this of a few people and have never gotten what i felt to be an honest answer. so,, ok,, i think we can all agree that as far as hardware specs go the iphone( especially the iphone4S) is not up to the current standard of smartphones. thats just raw specs, of course the original iphone was better than the worlds very first touchscreen smartphone as we know them today which came from LG and was realeased to the world about 4 months before the iphone. i think we can all agree that apple expects its users to go without the latest features for the sake of simplicity. so,, knowing that an iphone is not going to have the latest & greatest features before anyone else & knowing that an iphone comes up short in specs,, why do people still buy them?

mifd118

similar to what i found to be a puzzling phenomenon when the nintendo gameboy was released. the atari lynx was released & as far as specs & features compared to the lynx, the gameboy was a fail. the lynx was colour screen, gameboy monochrome, lynx graphics far exceeded gameboy, lynx was able to be used left or right handed & could link to other lynx players. the lynx made the gameboy look positively pathetic,,, just like many top shelf android phones does to iphone,, & yet the gameboy was the game platform of choice over the lynx,,, just goes to show if you market an inferior product well it can be a winner in sales,, just like iphone.

Bryan Chaffin

However, it places me in the uncomfortable position of sharing an opinion with analysts, that the iPhone 4S would be a hit, or rather an out-of-the-park grand slam.

Fair enough, Nemo, but I have to say that Shaw Wu is as sharp as they come. Maynard Um has also been spot on in his analysis time and time again.

Nemo

Bryan:  What I don’t like about analysts is that their advice and prognostications are contaminated with conflicts of interests.  Can we have forgotten already how those conflicts were so clearly exposed by the most recent financial debacle and the not too distant dot.com bust?  In each of those disasters, analysts played an essential role in misleading average investors, whenever their firms wished sell something or otherwise manipulate the value of securities.  UBS, Mr. Um’s firm, is in trouble here for a range of misconduct.  And though Sterne Agee’s reputation has not to my knowledge been impeached, it too has many of the same conflict that would make it quite profitable to use analysts to manipulate the prices of securities.

I always that the view that when someone tells me something, I want to know why.  That is especially true when the person is sharing valuable information with me and a million of his other friends, without any immediately apparent commensurate consideration for his services.

However, in this particular instance, the information really wasn’t that valuable, because predicting that the iPhone 4S would be a hit really wasn’t a tough call.  So what were Messrs. Wu and Um trying to do?  Impress the naive by making an easy call, while, of course, the really good, valuable analysis is reserved for their own traders and paying clients? 

The conflicts affecting analysts’ opinions are real; very difficult for their firms to control, even in the too rare circumstance where they wish to control them, and have never been effectively regulated by the SEC, with the result that analysts do a poor job in advising investors on how to invest, as numerous studies have shown time and time again, and have too often helped to illicitly manipulate the market for securities in ways that benefits their firms or their firms’ clients or both.  Or as Mr. Wu’s firm puts it:

“Our industry too often confuses doing well with doing right. Clients, wise to the difference, are increasingly skeptical of anything we try to say. To overcome that skepticism, we must convince people through our actions that we are different.”

I certainly hope that Stern Agee’s actions are as good as its words, and I would it were so for the entire securities and money management industry, but alas, events have proved the opposite to be true.

Paul Goodwin

According to mifd118, 1,000,000 were wrong to choose an iPhone 4S on day one. We buy Apple products because they are great products. I didn’t buy the iPhone 4 because of some marketing ploy or ad campaign. I’ve been buying Apple products since 1988 because they design great integrated products, they work forever, and they don’t go obsolete as fast as other vendor’s products.

Nobody is bad-mouthing Android phones here. If you want to bad-mouth the new iPhone, go to an Android Gab Site and bash away.

John Dingler, artist

To Mifd,
I don’t respond to commenters who make run-on sentences, employ bad grammar, and punctuate badly; These three make for non-standard writing, hence difficult to understand what the points are which, if misunderstood, would allow you to say, “No. That’s not what I said,” and perhaps even add an ad hom. or two. This is why I don’t even attempt to respond to your comments as valid as they may seem in your own mind.

Bryan Chaffin

i think we can all agree that as far as hardware specs go the iphone( especially the iphone4S) is not up to the current standard of smartphones.

As noted above, this assertion is without merit.

mrmwebmax

+

so,, knowing that an iphone is not going to have the latest & greatest features before anyone else & knowing that an iphone comes up short in specs,, why do people still buy them?

I can only speak for myself, of course, but as one who buys iPhones, I’ll happily answer your question from my own point of view.

Apple products, iPhone included, have never been about a spec sheet. They have always been about the end-user experience. So let’s talk about where the iPhone 4S “comes up short” regarding specs. Is it the 3.5"screen? As Apple seems to have no problems building devices with larger screens (iPad/iPad 2 is 9.7”) this is obviously a design choice, not an inability to include a larger screen. I like my iPhone 4’s size. I have friends with big-screen Droids, and they look clunky by comparison. So is it not being up to spec, or rather Apple’s belief that a more compact device is more desirable for one’s pocket?

Is it lack of 4G? Apple never jumps on the bandwagon of new tech merely for the sake of a spec sheet. At present, 4G is not nearly as widely supported as 3G. Plus, there are issues of battery life and device size. The iPhone remains incredibly compact, compared to Android phones. Apple kept it compact, kept the battery life the same, and still squeezed a lot of new technology into the iPhone 4 form factor. Obviously 4G couldn’t make the cut in this go-round.

Again, Apple doesn’t compete on specs. They compete on overall user experience.

So…what other features does iPhone 4S lack, that Android has in spades? Doesn’t matter to me. I’ll take the seamless user experience, the stability, Siri, and the better camera. I just found out this morning that come December I’ll be eligible for an upgrade, and will most likely do so. Why? Because the iPhone 4S has everything I want, and need, in a smartphone. My answer is that simple.

Toefats

(sorry for the anonymous comment, forgot my login)
@mifd118
I have a similar question.  It’s very clear that Picasso really couldn’t paint nearly as well as Renoir, but people buy Picasso for amounts of money that make me sweat.  I can’t get an honest answer on that at all. And to make it even more bizarre, sales of Harry Potter have outstripped War and Peace. Can you imagine?

daemon

My main problem with Analysts is that their expectations are ridiculous, and then they make stupid estimates of initial sales based upon going to a single store in Manhattan….

It strikes me as nothing more than stock price manipulation. I’m of the personal opion that as long as Apple sells 100k iPhones on launch day, it’s a huge success. I have my doubts as to whether they’ll be able to match supply to demand, but time will tell.

Ross Edwards

& yet the gameboy was the game platform of choice over the lynx

You just answered your own question, sir.  The software experience is most important.  And much like the Gameboy had better games (in general) even in pea-soup graphics than the Lynx did in color, the iOSX ecosystem offers a better software experience than Android does.  By an order of magnitude, really.

And I say this as a guy who owned both Gameboy and Lynx, and also as a guy who has owned and used a Blackberry, a Moto Droid, and finally iPhone… and who won’t be switching back to either of the first two.

At the end of the day, 4G and a big slab of a screen don’t matter nearly as much as: Were you able to use your phone the way you wanted to use it, without any cruft, hacking, or workarounds being necessary to get it to that state or to use it thus, and without your experience being in any way diminished by the device’s design?  For BB and my original Droid, the answer was “No,” and based on the design of current and upcoming Android devices, continues to be “No.”  For iPhone, my answer is and continues to be “Yes.”

TellNo

mifd118 must be the kind of new visitor this site is going to attract and the kind that will lead others to read the articles and pass on the comments. Proves that the mouth of this village’s rat continues to spout on in another of his incarnation. Encourage him. This experiment needs to run its course.

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