Q1 iPhone Sales Estimate

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    Posted: 22 October 2011 09:39 PM #31

    Gregg Thurman - 21 October 2011 10:46 PM
    adamthompson3232 - 21 October 2011 06:35 PM

    http://blogs.barrons.com/techtraderdaily/2011/10/21/aapl-42-5m-iphone-units-possible-in-q4-says-ubs/?mod=yahoobarrons

    Maynard’s analysis, based on US/International sales split, is very interesting.  I had overlooked where iPhones were actually being sold.

    As he noted, the rapidity of the rollout will impact that split.  Still….

    I should point out that at the Apple Store today there was a line of about 50 people getting the new iPHone 4S.  Online and most carriers still have a 1 to 2 week delay.  Yesterday we went international in 22 more countries.  By end of Nov and middle of Dec, I see us adding a ton more countries including China.

    35 million iPhones or higher is a real possibility.

         
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    Posted: 22 October 2011 09:57 PM #32

    Technically it’s just pre-ordering but your point still stands.  We’re getting to an addressable population of 1 friggin’ billion people in record time. 

    The iPhone 4 folks will be happy enough with their handsets for another year or few months while the rest of us should be very satisfied with the latest iPhone.  And I doubt Tim Cook will let a 17M iPhone quarter go by without swinging for the moon this holiday quarter.  It’s our first chance to see the Wizard of Ops? in action, managing a product family in volumes Apple has never experienced in its history (the iPod family topped out at 22.7M units sold in fiscal Q1 2009 - needless to say iPhone will smash that number, with a much, much higher ASP).

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  • Posted: 06 November 2011 10:46 AM #33

    There must’ve been inventory built up last quarter.  Don’t underestimate e effect of slashing prices on the older models.  For those who have never had a smartphone the unsubsidized iPhones are by far the best values.  Considering the relatively fast international rollout with the record domestic demand I expect 40 million this quarter which translates to about 13 bucks earnings

         
  • Posted: 06 November 2011 01:30 PM #34

    AndrewLing - 06 November 2011 02:46 PM

    There must’ve been inventory built up last quarter.  Don’t underestimate e effect of slashing prices on the older models.  For those who have never had a smartphone the unsubsidized iPhones are by far the best values.  Considering the relatively fast international rollout with the record domestic demand I expect 40 million this quarter which translates to about 13 bucks earnings

    Andrew:

    Would you mind sharing your formula for determining 40 million iPhone units sold would equal $13 per share in earnings? Did you include related operating expense growth and the impact of almost 25% taxes on the gross income generated?

         
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    Posted: 06 November 2011 07:22 PM #35

    Even if Apple could sell 40M units this quarter, it wouldn’t.  Tim Cook has a plan for iPhone growth and 40M units will be sold in a quarter.  Just not this one.

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    Posted: 06 November 2011 07:33 PM #36

    My WAG for total iPhone sales this quarter is 33m. I’l very VERY surprised if that # isn’t within 10% of actual.

    FWIW: The local Apple and Verizon stores were out of ip4S’s this morning. Had to order our second online. One week delay to ship. I smell victory (long term)!

      cheers
        johnG

         
  • Posted: 06 November 2011 07:36 PM #37

    Mav - 06 November 2011 11:22 PM

    Even if Apple could sell 40M units this quarter, it wouldn’t.  Tim Cook has a plan for iPhone growth and 40M units will be sold in a quarter.  Just not this one.

    Having a plan. Wow, what a concept. :  )

    I agree. While it would be nice to sell 40M units, the demand isn’t going to go away if you don’t produce that many. I can easily see Apple evening production out between FQ1 and FQ2.  I mean, why strain your supply chain during the December quarter, just to throttle it down for the March quarter.

    [ Edited: 06 November 2011 08:07 PM by Gregg Thurman ]

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  • Posted: 06 November 2011 08:58 PM #38

    DawnTreader - 06 November 2011 05:30 PM
    AndrewLing - 06 November 2011 02:46 PM

    There must’ve been inventory built up last quarter.  Don’t underestimate e effect of slashing prices on the older models.  For those who have never had a smartphone the unsubsidized iPhones are by far the best values.  Considering the relatively fast international rollout with the record domestic demand I expect 40 million this quarter which translates to about 13 bucks earnings

    Andrew:

    Would you mind sharing your formula for determining 40 million iPhone units sold would equal $13 per share in earnings? Did you include related operating expense growth and the impact of almost 25% taxes on the gross income generated?

    The 13 dollar number was off the top of my head assuming gross margins and unit sales are flat with the exception of the iPhone.  However I’m worried that margins may drop because of the price drops on iPhones.  My first instinct on the announcement of the iphone4s was that apple was going to drop margins in order to increase market share.  I figured they avoided a complete redesign in order to avoid manufacturing shortages like they had during the iPad2 ramp up.

         
  • Posted: 06 November 2011 09:21 PM #39

    AndrewLing - 07 November 2011 12:58 AM

    The 13 dollar number was off the top of my head assuming gross margins and unit sales are flat with the exception of the iPhone.  However I’m worried that margins may drop because of the price drops on iPhones.  My first instinct on the announcement of the iphone4s was that apple was going to drop margins in order to increase market share.  I figured they avoided a complete redesign in order to avoid manufacturing shortages like they had during the iPad2 ramp up.

    Andrew:

    For this forum, when you mention revenue, eps and margin numbers, please don’t do so off the top of your head. Many of the many track and watch these numbers closely.

    Are you referring to the price drop on the 3GS?

    I agree with Gregg in his post above. Apple is apt to pace the 4GS product introductions into FQ2 than ramp production of the iPhone to anywhere near 40 million units in a quarter.

         
  • Posted: 06 November 2011 09:23 PM #40

    AndrewLing - 06 November 2011 02:46 PM

    There must’ve been inventory built up last quarter.  Don’t underestimate e effect of slashing prices on the older models.  For those who have never had a smartphone the unsubsidized iPhones are by far the best values.  Considering the relatively fast international rollout with the record domestic demand I expect 40 million this quarter which translates to about 13 bucks earnings

    There was no channel inventory build up at the end of the September quarter. That’s one of the factors that drove down the rate of revenue growth.

         
  • Posted: 07 November 2011 03:45 AM #41

    DawnTreader - 07 November 2011 01:23 AM

    There was no channel inventory build up at the end of the September quarter. That’s one of the factors that drove down the rate of revenue growth.

    DT, help me understand your comment above. It is my understanding that Apple does not report channel fill as sales, that Apple only reports as sold as those units sold to end users.

    The lack of channel fill during FQ4, therefore, had no effect on reported revenue.

    If Apple does report channel fill as sold, then Apple is reporting just as is it’s competitors (shipped vs sold). This would also mean that achieving 35M units during the December quarter just got about 6,000,000 units (December quarter ending inventory ... 4 weeks March quarter sales) easier.

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  • Posted: 07 November 2011 07:11 AM #42

    Yes with only 17 mil units sold and with prices on both the iphone3gs and iphone4 about to drop they must’ve had increased inventory on hand to meet the new demand.  If not the iphone3gs and iphone4 would’ve been sold out everywhere.  It’s hard for me to imagine that apple would’ve slashed production ahead of such historic price drops

         
  • Posted: 07 November 2011 08:48 AM #43

    My understanding is that part of channel fill is counted as sold.  There is a definition of sold, I believe, that is part of GAAP.  Something to do with when the transfer of ownership happens.

    Correct me if my simplistic understanding is inaccurate.

         
  • Posted: 07 November 2011 09:25 AM #44

    roni - 07 November 2011 12:48 PM

    My understanding is that part of channel fill is counted as sold.  There is a definition of sold, I believe, that is part of GAAP.  Something to do with when the transfer of ownership happens.

    Correct me if my simplistic understanding is inaccurate.

    I believe that you are correct, roni. My understanding is that shipments to carriers and other resellers are immediately counted as sold because these sales channels basically purchase the items at the Apple dock and are invoiced immediately.

    Shipments to Apple retail stores are not counted as sold until they are bought by individual customers. I believe that as soon as an individual gives his/her credit card number for a purchase it is counted as sold.

    Unlike for Apple, the problem for Samsung et al is that their channel fill doesn’t actually get completely sold to individuals—sometimes only a fraction does—whereas essentially all of Apple’s channel fill is ultimately a “real sale”.

    Alan

    [ Edited: 07 November 2011 09:32 AM by Hannibal ]      
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    Posted: 07 November 2011 09:28 AM #45

    From the 10K

    The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company?s product sales, these criteria are met at the time the product is shipped.


    If we look back at the transcripts from some previous calls it is obvious that some of the inventory is already sold. 

    Q42009

    I would now like to turn to the iPhone. We are thrilled to have sold almost 7.4 million handsets in the September quarter. That?s a new company record and an increase of 7% over the prior September quarter when we increased channel inventory by 2 million handsets following the introduction of the iPhone 3G and the dramatic expansion of geographic distribution. iPhone sell-through in the quarter increased 38% year over year.

    Peter Oppenheimer
    Let me start with iPhone. The iPhone ASP in the quarter was just over $600 and this reflected both a high mix of the 3GS sell through and also the benefit of the rebalancing the ending channel inventory more towards the 3GS as a result of the introduction.

    Q32010

    I would now like to turn to iPhone. We were very pleased with iPhone sales of 8.4 million, including over 1.7 million iPhone?s 4s in the initial five countries where it was launched. This represents 61% year-over-year growth and is considerably higher than IDCs latest published estimate of 38% growth for the global Smart Phone market overall in the June quarter.

    Gene Munster ? Piper Jaffray
    Hi, good afternoon and congratulations. The iPhone number was strong despite a lot of moving parts in the channel in terms of inventory this quarter versus a year ago when you launched the 3GS. Can you talk a little bit about what those dynamics were and how they impacted the 8.4 million unit number you printed?
    Tim Cook
    Yes, Gene, it is Tim. We greatly reduced shipments of the previous generation iPhone beginning around June 7, which was our Worldwide Developers Conference, and coincided with the announcement of the iPhone 4. But as you probably know, we did not launch the iPhone 4 and the new figure by 3GS until June 24, which was only three days before the end of the quarter.
    The result of that was we had significantly lower sales after June 7 for that period of time, as we waited on the official launch. In fact, if you looked at our year-over-year growth rate prior to June 7, it was around 90%. And as you know we exited the quarter, you can see that from the data sheets, we exited the quarter with total iPhone sales up 61%. And so basically we did a channel adjustment. We pulled the previous generation of iPhones down significantly in channel inventory. We increased from zero the iPhone 4 inventory and the inventory of the 8 GB 3GS, and the net reduction in the channel was about a quarter of a million units from the beginning of the quarter.
    And I would remind you that as you probably guessed, the run rate associated with the sales of the new product are larger than the run rate associated with sales of the old product, and so in terms of any kinds of weeks of inventory it would be much less than where we were running before.

    Gene Munster ? Piper Jaffray
    Okay. So last quarter, I think your comment was you had about 2.7 million units in the channel. Is that correct?
    Tim Cook
    Yes, that is right, and so ended with about 2.45, and if you look at the ins and outs in that just to give you the numbers, the previous generation drawdown by the end of the quarter was slightly less than 1.3 million, and the combination of iPhone 4 and iPhone 3GS was up about a million. And the vast majority of the million was in transit at the end of the quarter lot available for sale.
    Gene Munster ? Piper Jaffray
    Okay. So, is it safe to say that you would have printed around 8.7 million iPhones if assuming more of a normalized inventory levels throughout the quarter?
    Tim Cook
    Well, if we would have held inventory flat from the beginning of the quarter, we would have done a little over 250,000 more units. However, what we really wanted to do is the ? if we had the opportunity quite frankly is to take inventory up quarter-over-quarter, beginning of the quarter, the end of the quarter because the sales run rate was larger at the end of the quarter with the new product.