Apple is Anticipating Strong Demand for Its Next iPhone

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Posted June 16, 2015 at 6:13pm by iClarified

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

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Mas22 - 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.

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gamerscul9870 - 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

Cedeno66 - 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.

gamerscul9870 - 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.

iPhone 101 - June 16, 2015 at 7:41pm

The S models to me don't have high demands their just minor upgrades from the previous iPhone. Not everyone will pay for minor upgrades some people will wait til the iPhone 7.

stevenlacross - June 16, 2015 at 9:19pm

Which was better? The 3G or 3GS? How about the 4 or 4s? How about the 5 or 5s? I've had all the s models, 3GS first then 4s and I'm currently on the 5s... I like to let the suckers get the non s models as test dummies, then once Apple fixes all the issues with it, I get the s model

justabrake - June 16, 2015 at 9:49pm

i've had everyone myself and didn't upgrade last year and still have my 5s But I probably will go with a 6s because they always work out the kinks from the year before model !

gamerscul9870 - June 16, 2015 at 9:56pm

I always wait for the s models because after the newer iPhone, the s makes a fix from previous versions like what JAB mentioned! Plus when it comes to iPhone after the s versions, prices drop and sometimes they eventually become prizes. I once won a 6 after a few months of it being out like beginning 2015 and sold it to buy the 6s.

nmorillov - June 17, 2015 at 2:54am

It is relative... which one was better? 3gs or 4? 4s or 5? 5s or 6?...

stevenlacross - June 16, 2015 at 6:23pm

With how easily the 6 breaks, most of those people will be upgrading to the 6s to get away from the half assed ion glass, hopefully Apple will go back to gorilla glass

logical - June 16, 2015 at 6:36pm

I completely agree. My iPhone 6 looks to be in worse condition than my iPhone 4. No Gorilla Glass was a huge mistake. Probably GT Advanced's fault that there was no sapphire but why Apple didn't just go back to Gorilla Glass is beyond me. Maybe not enough time for production?

justabrake - June 16, 2015 at 7:23pm

So you and the rest could buy more silly !

stevenlacross - June 16, 2015 at 9:21pm

I think it had to do with Apple cutting their gorilla glass contract because they wanted sapphire glass, and then sapphire not working out the way they wanted so they had to make their own glass and gorilla was like, screw you a holes

gamerscul9870 - June 16, 2015 at 9:54pm

Or maybe Apple didn't have enough time to get enough displays after urging GT to help them, but gorilla wants trying to force them into anything or be right about anything, so why would they call them a holes?

Kenny - June 16, 2015 at 6:18pm

Since when has there not been a huge demand for the next gen iPhone on launch date? That's like saying we are expecting the sun to produce light today

Speaklogic - June 16, 2015 at 6:16pm

What the F this article is totally wrong "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.)

logical - June 16, 2015 at 6:34pm

Sounds right to me. There is never as much demand for the 's' model.