Analyst: Q3 iPhone Sales “Robust” Despite Expected Refresh

iPhone 4
Apple’s iPhone sales continue to be robust, according to Sterne Agee analyst Shaw Wu. The analyst said that checks with Apple’s suppliers showed stronger than expected sales of iPhone 4, which he characterizes as “remarkable” in light of a widely anticipated refresh to the product line in September or October. The analyst raised his September quarter (Apple’s 4th fiscal quarter) estimates for iPhone to 18.5 million units, up from 15.7 million.

“The biggest surprise we are picking up is unexpected strength in Apple’s iPhone business,” Mr. Wu wrote in a research note obtained by The Mac Observer. “The reason why this is remarkable is demand for iPhone 4 remains fairly robust despite it being well known that there will be an upcoming iPhone 5 refresh.”

Apple is expected by rumor mongers, pundits, Wall Street analysts, and mainstream media outlets to announce a new iPhone (expected to be called the “iPhone 5”) in September for an October release. This has not only been all over the news in many and varied forms, the iPhone 4 itself was introduced 15 months ago.

Because of that, Sterne Agee has modeled for lower sales during the current quarter as Apple drew down its inventory as part of a product ramp-up for the new device. The reality from the company’s suppliers, however, is that the iPhone 4 continues to sell well.

Mr. Wu also told clients that Apple has improved iPad capacity enough to warrant an increase in his iPad estimates for the quarter, too. He now expects Apple to ship 12 million iPads during the quarter, up from 10.4 million. The primary reason behind the bump is the addition of another supplier for the panels used to make the display on the genre-defining device.

All told, he is now forecasting Apple to report revenues of $29 billion for the quarter, up from $26.2 billion, and earnings per share (EPS) of $7.47, up from $6.22. This puts him slightly ahead of consensus estimates of $28.7 billion in revenue and $7.00 in EPS.

Not surprisingly, he reiterated his “Buy” rating on the stock, as well as his $500 price target.

Shares of AAPL moved lower on Friday amidst a broad sell-off, ending the week at $377.48, down $6.66 (-1.73%), on strong volume of 20.2 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.