Apple is Anticipating Strong Demand for Its Next iPhone

Apple is Anticipating Strong Demand for Its Next iPhone

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Apple is anticipating strong demand for its next generation iPhone, according to Pacific Crest analyst Andy Hargreaves.

Although it is early and we lack visibility into the critical December quarter, our initial estimates of iPhone component orders in FQ4 suggest Apple is anticipating demand in the next iPhone cycle that is ahead of our current expectations. A meaningful decline in F2016 iPhone unit sales has been our largest concern, so the slightly higher-than-expected initial order volume reduces risk to the shares, in our view.

Hargreaves notes, that as expected, the iPhone 6s is unlikely to see the same upgrade activity as the iPhone 6. “We do not anticipate the same rush of upgrade and switching activity in the 6s cycle as Apple experienced in the 6 cycle, which seems likely to drive slower sequential growth in sales volume in FQ1 (Dec.) and a slower associated ramp in component orders through December.”

Notably, orders for the current iPhone 6 still appear to be high as well.

iPhone demand appears to have remained solid in recent months, which, along with checks at suppliers, suggests the potential for Apple to sell 50 million to 52 million iPhones in FQ3 versus our estimate of 46.8 million. This could add as much as $0.20 to our FQ3 EPS estimate of $1.86, which is already $0.10 ahead of the Street estimate of $1.76.

As for the Apple Watch, Hargreaves believes that Apple is positioned to meet or exceed their FQ3 unit estimate of 5.5 million and F2015 unit estimate of 11 million. That being said the analyst believes that due to mixed reviews on the watch, component order volume for FQ3 and FQ4 will be about 13.3 million, less than the expected 15.5 million.

Hargreaves adds that a "dramatic increase in functionality is likely needed to grow unit sales and meet current expectations for F2016 unit volume". However, any downside from the Apple Watch will likely be limited by iPhone profits, extremely high retention rates, strong cash flow and buyback activity.

"This is likely to limit downside, which creates a slightly more positive risk/reward, in our view," said the analyst.

[via Barrons]


Apple is Anticipating Strong Demand for Its Next iPhone
Marc - June 17, 2015 at 7:40pm
Hi Assi, can I call you ass for short. Are you a thinking intelligent individual? No! I just heard you say no. See, now this is a real pity, I was hoping to have an engaging conversation.
assi nine - June 17, 2015 at 10:29am
Apple, are you telling me that with all of your "newest" innovations, you can't manufacture the iPhone without the rear camera lens being flush, so it doesn't protrude 1mm ? Personally I find the current iPhone iteration aesthetically lacking, not too mention all of the ridiculous bloatware you force users to have permanently installed.
Nat - June 18, 2015 at 1:41am
Apple did not long ago acquire a camera company, yet it's unclear how that will affect the camera, but the fact that every phone company has cameras like that means that the technology isn't there yet for flushed cameras, but it won't matter when you finally buy a case for it
Cedeño66 - June 17, 2015 at 2:50am
Are they planning on improving the battery at all?? Gosh I hope they can double the battery life. It still sucks and I refuse to get the 6plus phablet just for a few extra second of battery life. I'm really enjoying my 6 right now but the battery is still GARBAGE.
Nat - June 17, 2015 at 3:05am
The 6 plus has a few more house, yet my 5s lasts up to 2 days even if I use it a lot, or better yet to say I own an Ampy and I never went back to using my wall outlet or any charger ever again. The only thing I do plugging it into anything else now is my MacBook. You'll thank me when you find out what Ampy really is.
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