KGI: iPhone sales forecast at 54M in Q3, Apple Watch demand 'tepid' at 4M shipped units

Posted:
in AAPL Investors edited July 2015
Before Apple reveals official numbers for its third fiscal quarter of 2015, a report from well-connected KGI analyst Ming-Chi Kuo estimates the company's iPhone and Mac lineups put in strong performances, tempered somewhat by sluggish iPad and Apple Watch sales. Upcoming hardware like yellow and rose gold Apple Watch Sport models and buffed iMacs could spur sales, however.




In a research note obtained by AppleInsider on Saturday, Kuo estimates Apple shipped 54.2 million iPhones, 8.8 million iPads, 5.4 million Macs and 3.9 million Apple Watches over the three-month period ending in June. Compared to the same time last year, iPhone and Mac shipments are up 54 percent and 21.6 percent, respectively, though iPad faced yet another decline to the tune of 33.5 percent.

For iPhone, the analyst says "robust" replacement demand for iPhone in China contributed to strong sales in the region, consequently moving the needle worldwide. Looking forward, potential Force Touch sensor manufacturing issues could drive quarter-over-quarter shipments down 26-percent to 40.1 million units in the fourth fiscal quarter. Apple's bread-and-butter iPhone business usually experiences a nice uptick starting in September, due in large part to the hardware's yearly refresh cycle.

Aside from iPhone, industry watchers are perhaps most interested in Apple Watch, the first project to move from inception to release under CEO Tim Cook. Kuo describes consumer response as tepid, however, saying that while shipments will rise 41.1 percent sequentially next quarter to 5.5 million units, gains can be attributed to availability in new markets. Overall, total Watch shipments are expected to reach 15 million units for 2015.

Interestingly, the analyst speculates that Apple might be looking to offset perceived demand slowdowns and spur interest by releasing a new aluminum Apple Watch Sport model with yellow or rose gold coating.

iPad sales bottomed out this quarter, Kuo says, noting that Apple's future tablet sales should be buttressed by a new iPad mini iteration featuring an upgraded processor and even thinner and lighter chassis. He refers to the next-gen slate as a "essentially a mini version of the iPad Air." While shipments are expected to increase over sequential quarters to 11 million units next quarter, that number will be a year-over-year drop of 28.3 percent.

Finally, Kuo attributes this quarter's Mac sales growth on the release of new MacBook models. He believes strong sales will continue as new iMac models with upgraded CPUs hit the scene sometime between fiscal quarter four 2015 and quarter one 2016.

Apple is scheduled to announce earnings for the third quarter on July 21, to be followed by an investor conference call. AppleInsider will be providing live coverage of the event.
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Comments

  • Reply 1 of 115

    The iPhone demand was tepid initially as well, it takes time for these things to build. The iPad was an anomaly.

  • Reply 2 of 115
    slurpyslurpy Posts: 5,179member
    How the **** is an expectation of 15,000,000+ of a 1gen product, within 6 months, that REQUIRES an iPhone, "tepid"? **** these analysts without an ounce of context or perspective. If Apple Watch sells anywhere near 15million in 2015, it would have shit on every single 1st gen Apple product, ever, by a massive margin.
  • Reply 3 of 115
    phone-ui-guyphone-ui-guy Posts: 1,018member
    Quote:

    Originally Posted by Slurpy View Post



    How the **** is an expectation of 15,000,000+ of a 1gen product, within 6 months, that REQUIRES an iPhone, "tepid"? **** these analysts without an ounce of context or perspective. If Apple Watch sells anywhere near 15million in 2015, it would have shit on every single 1st gen Apple product, ever, by a massive margin.

     

    Take it a step further... 15,000,000 x $349 (cheapest model) = $5,235,000,000

     

    Most companies would wet themselves for achieving greater than $5 Billion in revenue for a new product line in 6 months...

  • Reply 4 of 115
    asciiascii Posts: 5,941member

    I would like to know if the constantly growing Mac (or these numbers in general) are partly due to China. 

     

    Ubisoft (the game publisher) released their first quarter 2015 sales recently and the biggest platform was PS4 (27%), followed by PC (23%), then XBox One (11%), XBox 360 (11%), PS3 (11%) and Wii (3%). People are speculating that the Chinese prefer PCs over consoles for gaming. https://www.ubisoftgroup.com/comsite_common/en-US/images/d20150709034318ubisoft q1 fy16 english finaltcm99211244.pdf

     

    China is a huge market and if people over there prefer the combination of a phone and computer for their computing needs, it could explain why the iPhone and Mac are going from strength to strength every quarter while other form factors are not as strong.

  • Reply 5 of 115

    Please stop referring to Ming as "Well Connected". This guy throws darts at a wall and comes up with his "Estimates" which are more often incorrect than correct, especially when it comes to release dates.

     

    Kreskin or Chris Angel have better and more accurate track records.

  • Reply 6 of 115
    zroger73zroger73 Posts: 722member

    The Apple Watch is one of the few Apple products I just never could get excited about. I might be more interested if it were less expensive, thinner, and had longer battery life. Perhaps the next generation will grab my attention.

  • Reply 7 of 115
    anantksundaramanantksundaram Posts: 19,387member
    Quote:

    Originally Posted by Lord Amhran View Post

     

    Please stop referring to Ming as "Well Connected". This guy throws darts at a wall and comes up with his "Estimates" which are more often incorrect than correct, especially when it comes to release dates.

     

    Kreskin or Chris Angel have better and more accurate track records.


    LOL.  Many of us have repeatedly made this request over the years. Good luck.

     

    All I can figure is that there is some type of monetary arrangement. Nothing wrong with that, if that were the case, but AI should disclose it.

  • Reply 8 of 115
    frugalityfrugality Posts: 410member

    When I got my first clam-shell cell phone, I was more than happy to get rid of my wristwatch.  Haven't worn one since, and every time I try one on, it feels like a strange annoyance on my arm that doesn't belong there.

     

    First there were clocks, and then someone miniaturized them to the point that they could be carried on your person -- pocket watches.  Then someone came up with the idea of affixing them to your wrist.  Now with cell phones in our pockets, there's less of an incentive to have a watch on your wrist, too.  There are times, like in meetings, when it'd be nicer to glance at a watch rather than dig my phone out to see what time it is and whether the meeting was going to end soon.  But generally, I don't miss that thing on my wrist.

  • Reply 9 of 115
    9secondko9secondko Posts: 929member
    The Apple watch is more successful than Xbox one, Wii u, and ps4 combined per quarter and its "tepid?" Lol

    Not to mention dominating its own device category.

    Not bad for a device that isn't a fundamental aspect of daily life like a phone.
  • Reply 10 of 115
    Quote:

    Originally Posted by Phone-UI-Guy View Post

     

    Take it a step further... 15,000,000 x $349 (cheapest model) = $5,235,000,000

     

    Most companies would wet themselves for achieving greater than $5 Billion in revenue for a new product line in 6 months...


     

    Apple: creator of the term "multi-billion dollar failure".

  • Reply 11 of 115
    9secondko9secondko Posts: 929member
    AAPL should be twice what it is now.

    Sheesh.
  • Reply 12 of 115

    BREAKING: "Research note obtained by AppleInsider"

  • Reply 13 of 115
    hmmhmm Posts: 3,405member
    Quote:
    Originally Posted by Slurpy View Post



    How the **** is an expectation of 15,000,000+ of a 1gen product, within 6 months, that REQUIRES an iPhone, "tepid"? **** these analysts without an ounce of context or perspective. If Apple Watch sells anywhere near 15million in 2015, it would have shit on every single 1st gen Apple product, ever, by a massive margin.

    I think he's comparing it against his previous prediction, but it is absolutely ridiculous. 15 million would be insane for something that isn't even a completely standalone product, especially when it doesn't displace or consolidate other devices.

  • Reply 14 of 115
    bdkennedy1bdkennedy1 Posts: 1,459member
    Where's my rose gold iMac??
  • Reply 15 of 115
    Quote:

    Originally Posted by Slurpy View Post



    How the **** is an expectation of 15,000,000+ of a 1gen product, within 6 months, that REQUIRES an iPhone, "tepid"? **** these analysts without an ounce of context or perspective. If Apple Watch sells anywhere near 15million in 2015, it would have shit on every single 1st gen Apple product, ever, by a massive margin.



    Because Tizen and Android Wear are winning.

  • Reply 16 of 115
    rogifanrogifan Posts: 10,669member
    What are these Watch estimates based on? I'm guessing not Watch 2.0 software and the holiday buying season (with possibly new color options). And a bit curious that this research note comes out a couple days before earnings. Google reported an OK quarter and their stock jumped 16% the next day. They're up over 25% in the past week. I'll bet any money Apple reports a good quarter and the stock is down the next day. I'm seeing analysts say a good quarter is already baked in to the stock price.
  • Reply 17 of 115
    rogifanrogifan Posts: 10,669member
    9secondko wrote: »
    AAPL should be twice what it is now.

    Sheesh.

    Google's PE is 33 right now. Gained $60B in market value in one day. And their quarter was nothing to write home about. Last quarter Apple beat on the top and bottom line, beat on EPS, gross margin and guidance and the stock was down 2% the next day. I seriously wonder sometimes why I'm in the stock market.
  • Reply 18 of 115
    I sure wish my Apple Watch's "Hey Siri" feature would work more reliably. It works about 70% of the time.

    Also, I'm noticing the watch isn't producing notifications for my text messages consistently. Sometimes it just doesn't give me a notification.

    In other words, Apple's now usual quality control problems are making me feel pretty so-so on my Watch.
  • Reply 19 of 115
    isteelersisteelers Posts: 738member
    sog35 wrote: »
    15 million Watch sales in the first 8 months of release will be the fastest Apple product launch ever.

    These analyst are constantly moving the goal post in an attemp to make Apple look bad.

    First they say the Watch wont move the needle since its such a small fraction of total revenue.
    But then when Watch sales isnt as great as they estimated they bash the stock! Now they change the story and say Watch sales are important.

    I bet if Apple announces Watch sales that are higher than these analyst estimates the anals will say Watch sales isnt that important after all.

    Its fricken frustrating when a company like Google announces weak 11% revenue growth and stock explodes 15%. If Apple announces 11% revenue growth the stock would probably tank 20%.

    Wall street bullsiters are constantly giving Google excuses. Blaming foreign exchange rates, allow Google to report non GAAP earnings which dont include billions in stock compensation and billions in write offs from failed acqusitions (motorolla).

    They say Apple does not get the benefit of the doubt because they rely to heavily on iPhone. Yet Google makes 99% of there profits from advertising and thats no problem.

    Apple is showing much higher growth in revenue, profits, and EPS than Google. Yet their PE is half of Google. The Wallstreet bullshiters say its because Apples growth is unsustainable. But what about Google? There Q2 revenue growth went from 22% last year to 11% this year. So you tell me whos grow is not sustainable.

    Analysts do not understand why people are so loyal to Apple because they are such an enigma compared to every other company on the planet. They have so many passionate fans and almost as many passionate haters. Every time they predict a product from them will fail, it ends up a smashing success and that kills them. They try to predict behavior based on normal companies and are constantly proven wrong, yet they never learn.
  • Reply 20 of 115
    Quote:
    Originally Posted by Phone-UI-Guy View Post

     

     

    Take it a step further... 15,000,000 x $349 (cheapest model) = $5,235,000,000

     

    Most companies would wet themselves for achieving greater than $5 Billion in revenue for a new product line in 6 months...




    To my knowledge, no completely new product from any other company has ever generated revenues of $5 Billion in its first year on the market. If any other company reported such results it would be hailed a miracle of capitalism. Since this is Apple, analysts and commentators look for any excuse to belittle this accomplishment.

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