Can Ap­ple sell 92 mln iPhones?

Financial Mirror (Cyprus) - - FRONT PAGE -

There is no big­ger Ap­ple (NAS­DAQ: AAPL) fan among Wall Street an­a­lysts than Gene Mun­ster of Piper Jaf­fray. His op­ti­mism ex­tends to his pre­dic­tion that Ap­ple will sell 92 mln new iPhones this year alone. The early sales rates of the iPhone 6 and iPhone 6 Plus mod­els support Mun­ster’s pre­dic­tion. Ap­ple and wire­less car­ri­ers like AT&T Inc. say they are out of the smart­phones. As a mat­ter of fact, AT&T Mo­bil­ity’s CEO said the launch of the iPhone 6 was a mile­stone for the car­rier. Glenn Lurie, the chief ex­ec­u­tive of­fi­cer of AT&T Mo­bil­ity com­mented, “This is our big­gest iPhone, pre­order launch day ever.”

On Mon­day, Ap­ple said it re­ceived a record 4 mln first-day pre-or­ders of its new iPhone 6 and iPhone 6 Plus, mean­ing many cus­tomers will have to wait un­til Oc­to­ber for their new phones. Ap­ple said a sig­nif­i­cant num­ber of or­ders will be de­liv­ered to cus­tomers in stores in the U.S., Canada, Aus­tralia and some other coun­tries as of Fri­day, but many will be shipped in Oc­to­ber as de­mand out­strips sup­ply.

The first-day pre-or­ders for the new iPhones, which fea­ture larger screens, were dou­ble the 2 mln or­ders for iPhone 5 mod­els in 2012.

Ap­ple’s suc­cess could be its own great­est en­emy as it drives for record sales in the fi­nal three and a half months of the year. Its web­site says many ver­sions of the iPhone 6 will not be avail­able for three to four weeks (with free shipping). Ap­ple has a track record of un­der­es­ti­mat­ing de­mand, or keep­ing sup­ply con­strained to cre­ate the ap­pear­ance of de­mand. In ei­ther case, each day that its sup­ply chain can­not cough up phones is another day the 92 mln fig­ure is in jeop­ardy.

Another bar­rier to the suc­cess of the iPhone 6 is a po­ten­tial glitch in its per­for­mance, or some prob­lem that could cause the iPhone 6 to need some al­ter­ation or re­pair. Such a prob­lem is not sim­ply a mat­ter of imag­i­na­tion. In 2010, the iPhone 4 had antenna prob­lems. The so­lu­tion was for peo­ple to get a spe­cial case or hold the phone in a way that helped boost re­cep­tion. Although the trou­ble cre­ated a black eye, it did not ap­pear to curb de­mand. Yet, as is true of all con­sumer elec­tron­ics de­vices, there is al­ways a risk that a new prod­uct will not be glitch free.

Ap­ple’s web­site showed last week that the larger 5.5-inch “Plus” mod­els dis­played a wait time of up to a month. The 4.7inch ver­sion was avail­able for de­liv­ery on Fri­day.

The company rou­tinely grap­ples with iPhone sup­ply con­straints, par­tic­u­larly in years that in­volve a smart­phone re­design. The best sign for Mun­ster, as a fi­nan­cial an­a­lyst, is that Ap­ple will meet its share price tar­get. At more than $100 (up 1% at $101.94 on Mon­day), it is near a 52-week high. On De­cem­ber 31, 2014, the price may be as good an in­di­ca­tor as any other as to whether Mun­ster’s call was right.

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