'iPhone 8' production problems force late shipments, but little impact on Apple stock, ana...

Posted:
in Future Apple Hardware edited May 2017
If the so-called "iPhone 8" does not ship by the end of the third quarter, pent-up demand will only increase the subsequent holiday quarter's sales, rather than hurting Apple, one analyst believes.

Render of the 'iPhone 8' based on a CAD file, via Engadget
Render of the 'iPhone 8' based on a CAD file, via Engadget


Timothy Arcuri from Cowen & Company issued a note to investors on Wednesday saying Apple is still working on increasing yields of the AuthenTec Touch ID solution embedded in the screen of the "iPhone 8" -- and that will hold up mass production somewhat. Arcuri believes that yield issues in the Touch ID solution, plus possible issues with the layered motherboard on the "iPhone 8" will push mass production from a "normal" July or August timeframe to October or November.

As a result, the analyst expects that iPhone shipments in Apple's fourth financial quarter will be lower than Wall Street's predictions of about 47 million, and will hit about 44 million. On the other hand, the delay in availability will push the holiday quarter's iPhone sales up to about 90 million, and Arcuri believes that Wall Street's estimates for fiscal year 2018 sales are "way too low."

Even with lowered sales predictions because of no "iPhone 8" in the quarter, the average selling price of iPhones in Apple's fourth fiscal quarter should rise year-over-year. Arcuri expects average selling price to climb in the quarter to a "conservative" $626, up slightly from 2016 even without any sales contribution from the "iPhone 8."

Arcuri still believes that investors aren't giving Apple's Services segment enough credit for Apple's earnings. Should that change, impact from seasonal sales variations wouldn't hit the stock so hard, and the stock could hit $175 in 2017.

In 2016, the iPhone 7 started shipping in the middle of September, with pre-orders arriving and limited retail stock hitting on September 16. Supplies of the iPhone 7 Plus remained constrained into the first calendar quarter of 2017. However, the vast majority of Apple's iPhone 7 family sales were in the holiday quarter, and not in the ending days of Apple's fourth fiscal quarter of 2016.

The "iPhone 8" is predicted to sport an edge-to-edge OLED panel with a 5.1-inch user space -- the rest dedicated to virtual buttons. Slimming or removing the bezels would allow Apple to cram a larger battery into a form factor similar in size to the 4.7-inch iPhone 7. Also expected is a new 3D facial scanner .

With a complete redesign, plus the inclusion of a 2.5D curved glass back with wireless charging, some reports have pegged the starting price of the "iPhone 8" at more than $1,000.

Comments

  • Reply 1 of 12
    virtuavirtua Posts: 206member
    Here at Apple insider we have come up with the best rumour we've ever made.  Building in the same story of yields and delays we report on every year we've improved on it by introducing analysis of the possible impact on stock.  Amazing s/
  • Reply 2 of 12
    irnchrizirnchriz Posts: 1,560member
    What happens if it doesn't appear till September 2018 and only the 7S and 7S Plus comes out this year?
  • Reply 3 of 12
    This is old news at this point. Rehashing stuff from months ago.

    It will launch in limited quantities along side the 7s line. 
  • Reply 4 of 12
    clemynxclemynx Posts: 1,501member
    These concurring rumors on a small delay are actually reassuring since to me they mean that the fingerprint sensor will be embedded into the display. I doubt there would be such a delay just for the implementation of OLED.
  • Reply 5 of 12
    maestro64maestro64 Posts: 4,227member
    Just to be clear and why finance people should not be talking about manufacturing and design related things. You can not have production yield issue when something is not in production. I think everyone would agree that Apple's next phones are not in production yet we are still a few months away from them actually ramping production. Apple is probably in the final stages of Design validation testing (DVT) and they probably only built a few hundred phones and most of them were probably built in house not on an actually manufacturing line.
  • Reply 6 of 12
    macguimacgui Posts: 848member
    Exactly how much later than the delivery date that Apple announced? Oh.


    It will launch in limited quantities along side the 7s line. 
    I expect this will be the case, and worst case it will be announced along with the 7s line but ship a little later.
  • Reply 7 of 12
    irnchriz said:
    What happens if it doesn't appear till September 2018 and only the 7S and 7S Plus comes out this year?

    Then the stock will crash.


    If Apple does release the iPhone 8/edition in the last two months of 2017 then they will have the initial purchaser rush like every year, but after a few months users will just wait for the 2018 iPhone, the Samsung S8 Plus, or the Samsung S9, especially if the iPhone 8 looks similar to these mock-ups. These proposed iPhone 8 designs look very similar to the iPhone 6 series, but the competition like the Samsung S8 model looks much more advanced.


    I think the iPhone is at an inflection point. A large portion of the iPhone base hasn't upgraded to newer models because the design looks the same year after year. Why buy the same looking phone, car, house, etc. every year or two? If the next iPhone doesn't look more modern than these mock-ups people will begin to leave the platform in greater numbers, or they will continue using their current phones until Apple releases something more compelling. Also, Android switchers will significantly diminish.

  • Reply 8 of 12
    irnchrizirnchriz Posts: 1,560member
    irnchriz said:
    What happens if it doesn't appear till September 2018 and only the 7S and 7S Plus comes out this year?

    Then the stock will crash.


    If Apple does release the iPhone 8/edition in the last two months of 2017 then they will have the initial purchaser rush like every year, but after a few months users will just wait for the 2018 iPhone, the Samsung S8 Plus, or the Samsung S9, especially if the iPhone 8 looks similar to these mock-ups. These proposed iPhone 8 designs look very similar to the iPhone 6 series, but the competition like the Samsung S8 model looks much more advanced.


    I think the iPhone is at an inflection point. A large portion of the iPhone base hasn't upgraded to newer models because the design looks the same year after year. Why buy the same looking phone, car, house, etc. every year or two? If the next iPhone doesn't look more modern than these mock-ups people will begin to leave the platform in greater numbers, or they will continue using their current phones until Apple releases something more compelling. Also, Android switchers will significantly diminish.

    I'm not so sure. Apple insider etc have on many S model years gone on and on about the new model being the next number only for there to be an S model and Apple continue to sell millions of them regardless of navel gazers and armchair pundits on the forums. 
    edited May 2017
  • Reply 9 of 12
    irnchriz said:
    irnchriz said:
    What happens if it doesn't appear till September 2018 and only the 7S and 7S Plus comes out this year?

    Then the stock will crash.


    If Apple does release the iPhone 8/edition in the last two months of 2017 then they will have the initial purchaser rush like every year, but after a few months users will just wait for the 2018 iPhone, the Samsung S8 Plus, or the Samsung S9, especially if the iPhone 8 looks similar to these mock-ups. These proposed iPhone 8 designs look very similar to the iPhone 6 series, but the competition like the Samsung S8 model looks much more advanced.


    I think the iPhone is at an inflection point. A large portion of the iPhone base hasn't upgraded to newer models because the design looks the same year after year. Why buy the same looking phone, car, house, etc. every year or two? If the next iPhone doesn't look more modern than these mock-ups people will begin to leave the platform in greater numbers, or they will continue using their current phones until Apple releases something more compelling. Also, Android switchers will significantly diminish.

    I'm not so sure. Apple insider etc have on many S model years gone on and on about the new model being the next number only for there to be an S model and Apple continue to sell millions of them regardless of navel gazers and armchair pundits on the forums. 

    That last S (6s) cycle saw a substantial decrease in the number of iPhones sold compared with the iPhone 6 cycle. It can be argued 6 sales were such a huge increase from 5s sales, and 6s sales were still higher than the 5s sales that the total amount of 6s phones sold in that cycle should of been good enough for stock owners. Unfortunately, many investors didn't feel that way and AAPL stock crashed.


    Today, things have changed slightly. Apple services is a huge and growing business, and there might be a very compelling reason for more people to purchase the Apple Watch such as blood glucose monitoring. AR/VR is also another exiting prospect, but currently the iPhone is the cash cow. If they sell the same or less iPhones during fiscal 2018 as they have over the past two years then stock price will suffer regardless of these other businesses.


    How could iPhone sales be less than optimal? There are many factors such as a maturing smartphone market, but one glaring concern has been the elongation of the  iPhone upgrade cycle. Users are not upgrading as much as they did a few years ago. The second major concern is sales in China have decreased over the last several quarters. Why is this? My argument is people think the iPhone design hasn't changed very much over the years, so why should they upgrade. Others think some competitors have good enough designs at much cheaper prices, and some consumers believe certain competitors have even exceeded the iPhone designs over the last year or so. 


    If Apple offers an iPhone 8 that looks like an iPhone 6 except with smaller bezels then many people will complain it is an iPhone 6sss. It will be an inflection point. As a result, many consumers either won't make the purchase, or they will switch platforms.

  • Reply 10 of 12
    shapetablesshapetables Posts: 201member
    Pent up demand into Q4 but inability to catch up to demand that started with the leaks in Q2...
  • Reply 11 of 12
    bluefire1bluefire1 Posts: 800member
    Yogi Berra was right: This is "dejà vu all over again."

  • Reply 12 of 12
    maestro64 said:
    Just to be clear and why finance people should not be talking about manufacturing and design related things. You can not have production yield issue when something is not in production. I think everyone would agree that Apple's next phones are not in production yet we are still a few months away from them actually ramping production. Apple is probably in the final stages of Design validation testing (DVT) and they probably only built a few hundred phones and most of them were probably built in house not on an actually manufacturing line.
    Exactly. Test, correct, test, correct, test, correct. All production GANT charts have allocated time for many multiples of test/correct. "Production issues" have long ago been dealt with, with changes in design, process and suppliers (if necessary) been made to adhere to a very well defined development production schedule. Apple won't start production until end of July/beginning of August. Any claims if difficulties at this stage are, at best, uniformed, and at worst outright fabrications. In addition to Rosenblatt you can add the following: Barclay's Capital (P/T $123) BGC Partners (P/T $125) Daiwa (P/T $117) Oppenheimer (P/T $120) There are many others with targets that are under water, but that is to be expected with an equity appreciating as fast as is AAPL. But those listed standout as consistently wrong.
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