Calling the iPhone this quarter was going to be a challenge. This was a transition quarter where an old lead model would be replaced with a new one. The launch of the iPhone 4 was going to affect the volumes, but nobody could predict how. We’ve had a few such quarters and they were volatile. The number of sales days varied and the distribution of the old product was much different. The problem was compounded by the leak of the prototype and the uncertainties of launch day logistics. My forecast had been 8.5 million units.
In the event, 8,398,000 iPhones were sold. This included 1.7 million iPhone 4s which means about 6.7 million 3GS phones sold. That’s quite remarkable given the end-of-cycle timing. 8.7 million 3GS were sold in Q2 which means the sell-in was down only about 2 million for the transition.
The even more remarkable story is the average selling price. It came in at $635.15. The iPhone has ranged from $437 to $674 ASP over the last three years (see chart). This figure places it near the top of the range, a great performance for the end of a product cycle quarter.
I estimate gross margin at 56%, a drop from the more typical 60% due to iPhone 4 launch. With revenues of $5.33 billion and cost of sales of $2.2 billion, Apple created operating profit of $3.13 billion–we’ll take a look at that number relative to other vendors later.
Growth year-on-year were 74% for revenues and 61% on units. For a transition quarter, these numbers are spectacular. For comparison, during 2009′s transition quarter (Q4) revenues grew at 5% and units 7%. Furthermore, according to Apple’s management, iPhone unit sales in the June quarter were running 90% above the year-ago period prior to the company draining thechannel ahead of the iPhone 4′s release. In the December and March quarters, unit sales were 100% or more above prior-year results. This means that 100% growth is sustainable though going forward I’m keeping forecast at 65% growth.
Seventy percent revenue growth cannot be seen as anything other than a sign of rude health.
Losses from mobile phones totaled 120 billion won ($101 million) in the second quarter, compared with profit of 620 billion won a year earlier, Seoul-based LG said in a statement today. The loss, the division’s first in four years, was triple the size projected by the average estimate of five analysts surveyed by Bloomberg.
via LG Posts Record Handset Loss on IPhone, Smartphones – BusinessWeek.
MacDailyNews – Yankee Groups Howe sets the record straight on Apple iPhone and Android devices.
• No other manufacturer can claim nearly the loyalty of iPhone owners. RIM BlackBerry owners see a touch-screen device as the antithesis of their hard keyboards. However, even in this category, 23 percent of respondents plan to buy an Apple iPhone. We see similar results with all other mobile phone owners. In fact, 36 percent of Google-branded Android phone owners say they plan to buy an iPhone, surpassing the 32 percent of Google-branded phone owners who intend to buy another Android phone.
Earnings Smackdown: The best and worst Apple analysts – Apple 2.0 – Fortune Tech.
From the data above, it’s clear that although my accuracy on units and sales was pretty good, my EPS was too high. The reason for this was the lower margins for the iPad. It’s very likely that these margins will improve after the launch quarter (as they did for the iPhone).
From Apple’s FQ3 press release:
“Apple sold 3.47 million Macs during the quarter, representing a new quarterly record and a 33 percent unit increase over the year-ago quarter. The Company sold 8.4 million iPhones in the quarter, representing 61 percent unit growth over the year-ago quarter. Apple sold 9.41 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter. The Company began selling iPads during the quarter, with total sales of 3.27 million.”
My unit forecast.
In millions of units.
Product Asymco Actual Diff Error
iPhone 8.500 8.398 0.102 1.2%
Mac 3.462 3.472 -0.010 -0.3%
iPad 3.300 3.270 0.030 0.9%
iPod 9.398 9.406 -0.008 -0.1%
Rankings of various analyst forecasts are at :