Apple Inc. (AAPL) is due to report earnings on January 24th. The Street expects the company to earn $9.89 per share on $38.31 billion in revenue. Last quarter, Apple reported weaker than expected iPhone sales due to the highly anticipated "iPhone 5". While iPhone sales are expected to be strong due to the introduction of iPhone 4S and lower price of iPhone 3GS, iPad sales could be weaker than expected due to strong sales numbers of Amazon's Kindle Fire, and the anticipation of the iPad 3, which is expected to be available this spring.
Details
In 4Q11 Apple reported:
- Revenue: $28.27 billion
- Gross margin: 40.3%
- EPS: $7.05
- Mac shipment: 4.89 million, +26% y/y due to strong Mac notebook sales. I note that Mac shipment was especially strong compared to IDC's global PC shipment which was only 3.6%
- iPad shipment: 11.12 million, +166% y/y due to strong sales from Asia (+139% y/y), specifically sales from China was up 270% y/y
- iPhone shipment: 17.07 million, +21% y/y. While iPhone sale was strong, it came in weaker than expected due to anticipation of iPhone 4S
- iPod shipment: 6.62 million, -27% y/y. Decline in iPod shipment is expected to continue as users substitute traditional MP3 players with their smart phones
Expect strong iPhone sales
The iPhone shipment for 4Q11 came in below the consensus of 20 million due to the widespread anticipation of the new iPhone model. That said, iPhone sales are expected to pick up this quarter due to strong demand and increased carrier distribution.
The demand for iPhone will be strong, as indicated by the opening weekend launch when Apple sold 4 million units of the new iPhone 4S. In addition, the lower pricing point on the iPhone 4 and the iPhone 3GS will likely attract Android and Blackberry users to switch. Going forward, iPhone 3GS, which is offered for free at certain carriers with long-term contract, will likely be the entry level smart phone that can negatively impact the demand for low-end BlackBerry and Android models.
Increased carrier distribution will also provide an upside for iPhone sales this quarter. At the end of 4Q11, Apple had 230 carriers in 105 countries that carry the iPhone model but only 7 countries carried the iPhone 4S model. The company was expected to expand iPhone 4S's geographic reach to 22 countries by the end of October, which will likely maintain iPhone's strong sales momentum for this upcoming quarter.
But iPad sales could be weak
Like the anticipation involving the "iPhone 5" that negatively impacted iPhone sales, iPad sales for this upcoming quarter could experience a slight weakness due to the anticipation of the iPad 3, which is expected to be released by March or April. The iPad 3 is expected to feature increased speed with a quad-core processor, higher resolution display, 1 GB memory and Siri, the voice-activated personal assistant that is featured in the new iOS. I believe that the speculation from the press and other sources will put a pause on consumer purchases of iPad 2, despite the wide-spread optimism over iPad 2 sales during the holiday.
Finally, Amazon (AMZN) likely sold 4.5 to 6 million Kindle Fire tablets over the holidays, which could further hurt iPad 2 demand for the quarter.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
No comments :
Post a Comment