Santa Clarita Local Colleges - Apple Sells Nine Million iPhones Over Debut Weekend

Source      - http://online.wsj.com/
By            - DON CLARK
Category  - Santa Clarita Local Colleges
Posted By - Hampton Inn Santa Clarita

Santa Clarita Local Colleges

Apple Inc. AAPL +4.97% may have a hit with its new iPhone 5S, but prospects for the lower-price iPhone 5C are less clear.

Those conclusions emerged after Apple said Monday that it sold nine million of the two handsets in their first three days on the market—well above what analysts had anticipated. 

The company also said that its quarterly sales and profit margin would likely be at the high end of the company's previous forecast. Apple in July projected revenue between $34 billion and $37 billion and gross margin between 36% and 37%. 

The company's stock jumped $23.23, or 5%, to close at $490.64 on the Nasdaq Stock Market.

Apple also said that more than 200 million of its devices already were running iOS 7—a free overhaul released last week of the operating system used on iPhones, iPads and iPod Touch devices.

Apple's record volume for the new iPhones compared with five million iPhone 5 models sold on its opening weekend a year ago. Analyst had predicted that six million to seven million of this year's models would be sold in the debut weekend.

But there are caveats with the Apple figures, among them the decision to sell the phone in China in the opening weekend this year. 

And beyond sales by the company to consumers from its own stores and website, Apple's count includes sales to other retailers. While Apple appears to have exhausted inventory of the iPhone 5S, the nine million units include unsold iPhone 5C models at non-Apple retailers, analysts said.

"If you adjust for the 5C, it's not the blowout that it initially looks like," said Gene Munster, an analyst at Piper Jaffray. He estimated that three million to four million iPhone 5C models are with retailers and that the number of both handsets in the hands of consumers was 5.5 million.

Apple didn't break down its sales other than to say that demand for the iPhone 5S exceeded supply. "Thanks to all our amazing customers for the fantastic weekend," Chief Executive Tim Cook, a new Twitter user, said in a tweet Monday.

Assessing demand for the phones is particularly difficult because more countries are involved this year: 11, compared with nine for the iPhone 5 release last year. And China, in particular, is a huge smartphone market.

Toni Sacconaghi, an analyst at Sanford C. Bernstein, said the original iPhone 5 sold two million units in its first weekend of sales in China. He estimated that China likely contributed a similar amount this year.

The cautions aside, analysts still said the rollout was stronger than they expected, as indicated by longer lines at stores than last year. While some Apple analysts were disappointed that the iPhone 5C wasn't priced low enough to attract a new class of buyers, they said there remained a substantial number of iPhone users who wanted to upgrade their phones and that new trade-in programs made the process less expensive.

"People forget that there is a massive installed base out there," said Brian Marshall, an analyst at ISI International Group. As a result, when "each phone comes out, the launch gets bigger and bigger."

Several signs indicated strong customer preference for the iPhone 5S. Cantor Fitzgerald said its survey of buyers in New York found that 88% bought that model but that Apple's figures suggested that the less-expensive iPhone 5C also sold well.

Boston-based research firm Localytics said data generated from apps downloaded by users over the weekend indicated that the iPhone 5S sold 3.5 times as many units as the 5C. 

Raj Aggarwal, the firm's chief executive, cautioned that the initial data didn't necessarily show the long-term prospects for the iPhone 5C since sales on the opening weekend could have been distorted by hard-core buyers. "The people who are excited enough to stand in line on a Friday morning, these are the early adopters," he said. "They are more likely to want the more sophisticated top-end device."