updated 08:00 pm EDT, Thu July 18, 2013
Wells Fargo, Morgan Stanley confident Apple will beat Street on iOS sales
Newly-released sales figures of the iPhone on Verizon in the calendar second quarter of 2013 may foretell surprising success for Apple in its core iPhone business, says UBS analyst Maynard Um. The analysis, which relies on Verizon maintaining about the same average of total iPhone sales as it has for the past year and a half, projects that Apple may have sold as many as 34.7 million iPhones between April 1 and June 30 this year, what Apple calls its fiscal third quarter. Wall Street consensus on Apple's Q3 iPhone sales calls for only 26.5 million units sold.
The project comes from Verizon's long-standing average of accounting for about 11 percent of global iPhone sales, which it has maintained since the beginning of 2012. Earlier on Thursday, the company reported it had sold 3.87 million iPhones, a significant rise year-over-year but a small decrease from the previous quarter. If, as Um suggests, 3.87 million represents about 11 percent of total sales for the quarter, then Apple has sold about 34.7 million iPhones, reports AppleInsider.
The figure obviously assumes that all other carriers worldwide sold about the same percentage as they did previously as well -- but barring any large changes (such as those in India and Russia, though both countries' sales are too small to affect the total) -- Um could be closer to the actual figure than Wall Street consensus. Indeed, the figures surprised even Um, who had originally estimated 26 million iPhones for the quarter.
Any performance significantly above the Wall Street average would show off the surprising staying power of Apple's iPhone line, the newest of which is nine months old -- and still gaining share in North America, outselling Samsung's newer and more heavily-promoted Galaxy S4 and other "flagship" smartphones like the HTC One, BlackBerry's Z10 and Nokia's Lumia line. If Um's estimate -- which is higher than even Morgan Stanley analyst Katy Huberty's optimistic outlook of 29 to 32 million units -- turns out to be anywhere near accurate, it will be a major coup for the company, which has seen normal declining post-holiday sales as well as some early waiting for an expected new model coming this fall.
Huberty suggested that some of the strength of Apple's iPhone line may be coming from a surprising source -- sales of iPhone 4S and 4 models to budget-conscious consumers who have decided that a well-supported but older (and cheaper) iPhone is a better option than a more-expensive, quickly-discontinued premium Android phone. The news that the iPhone 4 and 4S will both be able to run iOS 7 -- though those models will not gain every feature available in the iPhone 5 -- may have boosted sales with consumers concerned about longevity.
Apple's iPhone 3GS, originally introduced in mid-2009, was only just discontinued last October and was supported under iOS versions 3 through 6. Likewise, the iPhone 4 has just passed its three-year anniversary.
While nobody knows if Apple can reach the nearly 35 million iPhones sold mark -- a huge jump from the 26 million shipped in the year-ago quarter -- the figure bodes well for AT&T's yet-to-be-announced Q2 iPhone sales, which may further strengthen Apple's position, at least in the US. Should Apple also beat consensus on iPad estimates -- currently rated at around 17 million units sold -- analysts will have to take much harder look at both AAPL as a stock and their own methodologies for iOS sales predictions.