Strong iPhone SE launch suggests 15M incremental 2016 sales for Apple, RBC says

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in iPhone
Since it launched just over a week ago, the iPhone SE has seen demand outstrip supply, indicating to one investment firm that the new budget-priced 4-inch handset could offer some upside to shareholders.




Analyst Amit Daryanani of RBC Capital Markets issued a note to investors on Friday, a copy of which was provided to AppleInsider, in which he said shortages of the iPhone SE both in stores and online bode well for Apple.

In his view, Apple is likely to sell more than 40 million 4-inch iPhones in 2016. And while some of those will cannibalize sales that would have otherwise went to larger handsets, Daryanani believes the iPhone SE will drive 15 million more incremental iPhone sales for Apple this year.

With a bill of materials estimated at around $260, and a starting price of $399 for the 16-gigabyte model, Daryanani believes Apple will achieve gross margins around 35 percent with the iPhone SE. That's much lower than margins for the iPhone 5s and iPhone 6s, which were believed to be in the mid-40-percent range.

Nonetheless, he estimates that the iPhone SE could drive $6.8 billion in revenue and 23 cents in earnings per share for Apple in calendar year 2016. His estimates assume an average selling price of $450, factoring in the $499 64-gigabyte capacity.

AppleInsider was first to note on Wednesday that Apple continues to see stock-outs and shipping delays for the iPhone SE. New free deliveries in the U.S. aren't advertised to arrive until April 25 through 28.

Wait times are slightly shorter in China, where estimated deliveries are slated to arrive between April 19 and 22. Daryanani speculated that the lead time is shorter in China due to a higher inventory allocation by Apple, as the company looks to tap into new users in emerging markets.

RBC Capital Markets has maintained its "outperform" rating for AAPL with a price target of $130.
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Comments

  • Reply 1 of 37
    foggyhillfoggyhill Posts: 4,767member
    You don't say ;-). Apple will probably make as much profits from those 40M phones than Samsung from all their 300M phones...
    calinolamacguyrobjnjes42
  • Reply 2 of 37
    mike1mike1 Posts: 1,808member
    Not sure why everybody is so surprised that there are lots of 4, 4S, 5 and 5S owners who will upgrade and would not have considered the larger phones.
    calibaconstangjes42mr onetmage
  • Reply 3 of 37
    I'm ordering my rose gold one on TuesdayI :)

    cali
  • Reply 4 of 37
    I don't understand how 15M is considered a success, especially at a lower than expected price and gross margin, when there are 300 Million people using 3 or more years old 4-inch iPhones, tens of millions of people in China and India alone becoming "middle class" each year, and a ton of people who regrettably upgraded to larger screen iPhones because 4-inch form factor hasn't been updated in years. Apple should be selling over 100 million of IPhone SE's not 15M!!!
    6Sgoldfishjes42
  • Reply 5 of 37
    sflocalsflocal Posts: 4,400member
    I don't understand how 15M is considered a success, especially at a lower than expected price and gross margin, when there are 300 Million people using 3 or more years old 4-inch iPhones, tens of millions of people in China and India alone becoming "middle class" each year, and a ton of people who regrettably upgraded to larger screen iPhones because 4-inch form factor hasn't been updated in years. Apple should be selling over 100 million of IPhone SE's not 15M!!!

    The SE got introduced three weeks ago.  What the heck kind of exceptions (as well as Analysts) do you have?  Any Scamsung iCloners would kill to have that kind of success with a new device.  Period.
    nolamacguyjes42netmage
  • Reply 6 of 37
    cintoscintos Posts: 104member
    I don't understand how 15M is considered a success, especially at a lower than expected price and gross margin, when there are 300 Million people using 3 or more years old 4-inch iPhones, tens of millions of people in China and India alone becoming "middle class" each year, and a ton of people who regrettably upgraded to larger screen iPhones because 4-inch form factor hasn't been updated in years. Apple should be selling over 100 million of IPhone SE's not 15M!!!
    Well, the article actually says they will sell 40 Million SEs. After cannibalization they are suggesting net 15 Million more iPhones in total during 2016.
    baconstangjes42netmage
  • Reply 7 of 37
    jungmarkjungmark Posts: 6,633member
    I don't understand how 15M is considered a success, especially at a lower than expected price and gross margin, when there are 300 Million people using 3 or more years old 4-inch iPhones, tens of millions of people in China and India alone becoming "middle class" each year, and a ton of people who regrettably upgraded to larger screen iPhones because 4-inch form factor hasn't been updated in years. Apple should be selling over 100 million of IPhone SE's not 15M!!!
    Troll quote analogous to "I don't know how anything can be a success considering there's 7-8 billion people in the world". 
    calinolamacguyanantksundaramroundaboutnowbaconstangjes42netmage
  • Reply 8 of 37
    badmonkbadmonk Posts: 749member
    15 million incremental sales seems conservative.  I don't think the SE will cannibalize the sales of 6s/7 phones.  The people who will purchase the SE are very cost conscious consumers who have been holding onto their 4/4s/5/5s/5c phones forever and need an affordable path to upgrade.
    calinolamacguyjes42
  • Reply 9 of 37
    wood1208wood1208 Posts: 1,770member
    We don't have to be wall-street analyst or accountant to do the math. Two sets of smartphone users. Millions of people still holding on to 4S/5/5S and want to upgrade for similar footprint iphone SE. And those who never had iphone but still like smaller iphone will buy iphone SE. The process of iphone SE upgrade will be steady upward for years. So, 15M or 50M, wait and see. Looks all good because not many alternatives in high end, smaller phone other than iphone SE. Parents of middle and highschool students would buy iphone SE for minimum possibility of damaging screen due to it's size, handling..
    edited April 2016 baconstangjes42
  • Reply 10 of 37
    bobschlobbobschlob Posts: 1,074member
    mike1 said:
    Not sure why everybody is so surprised that there are lots of 4, 4S, 5 and 5S owners who will upgrade and would not have considered the larger phones.
    Oh, we 'considered' them. Just ultimately rejected them.  ;)
    netmage
  • Reply 11 of 37
    radarthekatradarthekat Posts: 2,933moderator
    foggyhill said:
    You don't say ;-). Apple will probably make as much profits from those 40M phones than Samsung from all their 300M phones...

    ---

    The SE will likely generate more revenue by the time the Tesla Model 3 launches than the Model 3 will generate by the time Tesla fills the 325,000 orders they have for it, which will take years.  Unless Apple buys Tesla, in which case they could fund the production ramp and get those Teslas rolling.
    calinolamacguybaconstangjes42palomine
  • Reply 12 of 37
    calicali Posts: 3,495member
    "In his view, Apple is likely to sell more than 40 million 4-inch iPhones in 2016."

    aww what happened to 14 million sold in 2016??
    jes42
  • Reply 13 of 37

    So, shall we go ahead and just all agree to pretend that the 16GB SKU doesn't exist and quote $499 as the starting price for discussion's sake? 

  • Reply 14 of 37
    Will the SE cannibalize sales of the larger phones? That's like saying that sedan sales are going to eat into sales of minivans. I bought an SE because I care about having a fast processor and a phone that fits well in my hand and my pocket. I only owned a 6 because I trusted Apple to deliver me the best phone, and cared more about processor speed than I did screen size. And I regretted it the whole time I owned it. Apple has created a great phone that meets the needs and wants of a significant portion of it's install base. My parents who are more price conscious than me will probably upgrade to whatever last year's 4.7 inch phone is around black Friday. I would have paid the same price for the SE as I did my 6 if they had both been on sale when I bought my 6. They're positioning it as an entry level device. But in my opinion it's the best iPhone Apple currently offers. (Also no damned camera bump! Wish my iPad Pro didn't have one!)
    baconstangjes42
  • Reply 15 of 37
    tzeshantzeshan Posts: 1,856member
    sog35 said:
    foggyhill said:
    You don't say ;-). Apple will probably make as much profits from those 40M phones than Samsung from all their 300M phones...
    For 2015 Samsung Mobile (phones/tablets) had operating profits of $8.6 billion.

    Apple's operating profit margin is 30% 

    If Apple sells 40 million SE phones at $450 = $18 billion in revenue
    At a 30% operating profit that would be $5.4 billion in operating profit

    iPhone SE = $5.4 billion in profit
    Samsung Mobile = $8.6 billion in profit
    Now throw in App sales and services revenue generated from the SE.
    Now subtract Samsung profits from Tablets from the $8.6 billion.


    Crazy that Apple's 'low end' phone will generate almost as much profit as the entire Samsung Phone lineup.
    Because Samsung is selling Galaxy S7 at half the price which means Galaxy S7 is cheaper than SE.  
    jes42
  • Reply 16 of 37
    nolamacguynolamacguy Posts: 4,758member

    So, shall we go ahead and just all agree to pretend that the 16GB SKU doesn't exist and quote $499 as the starting price for discussion's sake? 

    why on earth would we do that? cost conscious consumers like my parents would never drop the extra 100 bucks to upgrade their storage. your needs may vary. dur.
    baconstangjes42netmage
  • Reply 17 of 37
    lkrupplkrupp Posts: 6,618member
    I don't understand how 15M is considered a success, especially at a lower than expected price and gross margin, when there are 300 Million people using 3 or more years old 4-inch iPhones, tens of millions of people in China and India alone becoming "middle class" each year, and a ton of people who regrettably upgraded to larger screen iPhones because 4-inch form factor hasn't been updated in years. Apple should be selling over 100 million of IPhone SE's not 15M!!!
    Crawl back into your Android spider hole.
    jes42
  • Reply 18 of 37
    While you all sit here and debate the relative merits of such a device, I'm going to enjoy the 4 of them that I bought for my family. It was cheaper for me to upgrade to 4 of these than it was to hang on to three iPhone 6's. The price point here is undeniable attractive, and after using one for almost a week now, the phone itself is equally attractive in ownership. It's blazingly fast, ridiculously light, and fits in a pocket so well you almost forget it's there. It's the best iPhone I've owned in years. 

    And with the friends I have either already purchasing them, or looking at these for their next purchase, I'd definitely say I see a sleeper hit in the making. 
    baconstangrobjnjes42
  • Reply 19 of 37
    5150iii5150iii Posts: 96member
    Let me throw this out there as I've been following this quietly thus far. It's great that the 4" phone crowd is getting a powerful update but I wonder if Apple plans to bring a 3rd choice(4") to the flagship lineup. If they happen to release a 4" ip7 I wonder how that will go over with the SE crowd that thought this was there only bone to grab for the near future and went for it. I guess it's not a big deal I just remember I replaced my crushed 3G with a full price 4 in August of that year(2011?) only to see the 4S come out shortly after. That event has informed my decisions on phone purchases since then and while I am still in the ecosystem I am buying the cheaper model if it's close to a new release.

    jes42
  • Reply 20 of 37
    tzeshantzeshan Posts: 1,856member
    5150iii said:
    Let me throw this out there as I've been following this quietly thus far. It's great that the 4" phone crowd is getting a powerful update but I wonder if Apple plans to bring a 3rd choice(4") to the flagship lineup. If they happen to release a 4" ip7 I wonder how that will go over with the SE crowd that thought this was there only bone to grab for the near future and went for it. I guess it's not a big deal I just remember I replaced my crushed 3G with a full price 4 in August of that year(2011?) only to see the 4S come out shortly after. That event has informed my decisions on phone purchases since then and while I am still in the ecosystem I am buying the cheaper model if it's close to a new release.

    There will not be a 4" ip7 this fall.  
    baconstangjes42netmage
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