iPhone 5 Demand: While demand for the Apple Inc. (NASDAQ:AAPL) iPhone 5 remains strong, iPad sales for the holiday quarter may not live up to expectations. This is due in large part to iPad Mini sales “biting into” sales of the 4th generation iPad.
In a recent discussion with Apple’s supply chain, as shared by Fortune, Shaw Wu of Stern Agee found that one-day lead times are now commonplace, and are far better than the 2-4 day times that have been seen recently.
Courtesy: Apple Inc. (NASDAQ:AAPL) Press Info
Here are some points to take away from Wu’s most recent report, as it was periphrastically cited on CNN Money:
1) Wu raised his iPhone unit sales estimates for this quarter to 47.5 million from 47.3 million based on improving yields and availability. The iPhone 5 launched in Korea last week, and has a limited launch in China this Friday.
2) He lowered his iPad sales estimates to 23.5 million from 25 million. He wrote that “iPad mini demand remains strong, but shipments appear limited by supply constraints […] build plans for iPad appear to have been reduced likely due to some cannibalization by iPad mini.”
3) Wu lowered his Q1 revenue estimate to $54.4 billion from $54.6 billion, raised his gross margin estimate by 20 bips, and left his EPS estimates unchanged at $13.70. It’s worth noting that consensus expects Apple to earn roughly $13.56 next quarter.
So, what does all this mean for Apple Inc. (NASDAQ:AAPL) stock? Wu sums things up with the following statement:
“We believe AAPL shares will likely continue to be volatile until year end due to non-fundamental factors including profit taking as AAPL as been an outstanding performer in 2012 where many are opting to lock in gains and fears of higher “fiscal cliff” tax rates next year. However, we believe as we enter 2013, investor sentiment will likely shift back to fundamentals. We are at the beginning of two big product cycles that will likely last 3-5 quarters and see margins poised to improve with greater scale and improving yields.”
As always, when Apple Inc. (NASDAQ:AAPL) releases new products there is a lot of discussion. The iPhone 5 and iPad mini are no exception to this rule. Do you agree with Wu’s forecasts? Share your thoughts in the comment section below.
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