Consumer Electronics
Are 75 Million iPhone Sales Enough?
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As Apple Inc. (NASDAQ: AAPL) earnings approach, nothing matches the importance of iPhone sales, particularly in China. The consensus among analysts is that Apple sold 75 million iPhones in the quarter it is about to announce. Anything short of that will be disastrous for its share price, which has been under pressure for months.
Sales in the fourth quarter depended heavily on holiday sales, sales in China and consumer appetites for an aging iPhone family. While aging depends on an odd definition for Apple, a few quarters of sales of a new generation of the smartphone move some customers to the point where they either have iPhones already or a desire to wait for the iPhone 7, which probably will be released in the second half of this year. Apple’s new ad campaign has a tag line for its newest smartphone, the iPhone 6s, that reads, “The only thing that’s changed is everything.” Apple did not make that claim when the iPhone 6s was new. So, the company is pushing features that are many months old.
Hanging over both iPhone and iPad sales is the specter of the success of Alphabet Inc.’s (NASDAQ: GOOGL) Google Android OS, which is used in almost all non-Apple tablets and smartphones sold in the world — leaving aside progress made by Microsoft Corp. (NASDAQ: MSFT) and its new mobile versions of Windows. Samsung, once Apple’s worthy competitor, counts on new Android phones to get share back from Apple. The effort just might work.
In Apple’s most recently reported quarter, its revenue from Greater China was $12.5 billion, up 99% from the same quarter the year before. That was against Apple’s global sales of $51.5 billion. Tim Cook, Apple’s CEO, has made the point that China sales must rapidly become a much larger portion of his company’s revenues or overall growth will stumble.
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Apple has always faced the challenge of consumers who want the newest iPhone and may wait until it is shipped. How many people will hold their “old” iPhone 6 models and wait for the iPhone 7? No one knows, but it is a threat to sales.
Apple’s stock has slightly recovered from a brutal sell-off that has driven its shares down 30% in the past six months. Over the past five days, the stock is down 3%. Even those figures will worsen if the Apple sold fewer than 75 million iPhones in the quarter about to be announced.
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