Apple Inc. (NASDAQ:AAPL) could report higher than expected sales of the iPhone during the quarter, but not because demand for the iPhone 5 is picking up. Instead, analysts at Canaccord Genuity say clearance prices of earlier iPhone models will likely be responsible for higher than expected Apple Inc. (NASDAQ:AAPL)’s iPhone sales.
In a report issued to investors over the weekend, analysts said their global surveys of handset sales show that demand for the Apple Inc. (NASDAQ:AAPL)’s iPhone 5 has declined consistently with seasonal patterns. However, they noted stronger iPhone 4 and 4S sales during the current quarter due to reduced prices on the handsets.
Thus, they have increased their estimates for Apple Inc. (NASDAQ:AAPL)’s iPhone sales. They raised their March quarter iPhone unit estimates from 34.5 million to 37 million. They also increased their June quarter estimates from 25 million units to 27 million units. In addition, the analysts lowered their average selling price estimate from $651 during the December quarter to $601 during the March quarter to reflect the increased numbers of lower priced models that are being sold.
The firm’s analysts said these adjustments increased their earnings per share estimate for fiscal 2013 slightly from $43.59 per share to $43.86 per share. They also increased their fiscal 2014 estimate from $50 per share to $50.16 per share.
You are the one that provided the report, it was not from Apple but rather Canaccord Genuity. Their statement that the price Apple sells their phone would be adjusted to $601. However with NO subsidy, the phone 4S is being sold at $449 through Virgin Mobile and they are making a profit doing so. The 4 is 100 less.
This report severely underestimates the reduction of profit margin and the lower price phones. Unit sales may be up but the profits will be down. This will also be seen dramatically with the iPad Mini at much lower margin taking sales from more lucrative iPad.