Apple polishes forecast after selling 9 million new iPhones
By Poornima Gupta and Jennifer Saba, ReutersReuters--Apple Inc. sold 9 million new iPhones in an opening weekend for the product that included China for the first time and almost doubled sales from the last iPhone launch, and the company issued a more optimistic financial forecast.
September 25, 2013, 12:08 am TWN
Apple shares jumped more than 4.6 percent after the company said revenue in the fiscal fourth quarter would gravitate towards the high end of its previous forecast for US$34 billion to US$37 billion.
Apple, which began selling the top-tier iPhone 5S and cheaper, multi-hued iPhone 5C on Friday, rarely adjusts its outlook in the middle of a quarter. Since CEO Tim Cook took the reins, the world's largest tech company has begun to court Wall Street more visibly.
“The critics have told you Apple lost its magic,” said Daniel Ernst, an analyst with Hudson Square Research. “Customers are telling you something very different. Clearly, people like the product. That sentiment is almost more important than the number.”
Sales of the new models were nearly double those of the iPhone 5's 5 million in the first weekend after its launch a year ago, and far surpassed the roughly 6 million that analysts had projected.
The record unit sales and beefed-up forecast reinforced expectations of strong demand for Apples latest gadgets. Critics had said the iPhone 5C was priced too high to take advantage of pent-up demand in emerging markets.
Apple, which had grown notorious for providing conservative estimates that it routinely overshot, had resolved to improve its guidance for investors. Analysts have said the change will help rein in some over-the-top financial expectations.
The forecast for Apple's latest iPhone launch proved trickier than in the past for analysts, because the company introduced two models simultaneously in 11 countries including the crucial Chinese market. Apple launched iPhone 5 in just nine countries.
Another factor was that this time around, Apple signed on NTT Docomo, Japan's largest mobile carrier.
China joined the rollout that included Hong Kong, Singapore, the United States, Australia, Japan, Britain, Canada, Germany, France and Puerto Rico. Previously, Apple began selling phones in China only months after the global launch.
“We underscore one important caveat for investors: Apple's iPhone seasonality is likely to be exaggerated this cycle because of the addition of NTT DoCoMo, and particularly because of the early launch in China,” said Bernstein Research's Toni Sacconaghi, who has an “outperform” rating on Apple.
“Although upside exists for the September and December quarters, the risk exists that the fall-off in iPhone sales beginning in the March quarter could be more acute than history, potentially resulting in some downside to estimates.”
Demand for the iPhone 5S has exceeded initial supply and many online orders are scheduled to be shipped in the coming weeks, Apple said. On Friday, long lines formed outside stores in Tokyo, New York, San Francisco and other cities for the new top-of-the-line 5S and the less-expensive 5C. It was the first time Apple launched two iPhone models simultaneously.
The gold-colored version of the 5S, which also comes in silver and gray, was sold out as of Friday and will now ship only in October, according to Apple's website. As of Monday, the two other colors were also set to be shipped only in October.
“Thanks to all our amazing customers for the fantastic weekend!” said Cook in his second tweet, after he joined Twitter following a visit to Palo Alto Apple store last Friday.
Apple also said gross profit margin would come in near the top of a range of between 36 percent to 37 percent, in line with average forecasts for 36.7 percent. The more optimistic margin forecast should allay investor concerns that, at just US$100 les than the 5S, the 5C will draw buyers away from the premium gadget.