iPhone 5 falls short of analyst estimates despite massive sales

Selling 5 million iPhone 5s in the first weekend of availability certainly sounds like a win. Apple sold roughly 1 million more iPhone 5s in its first weekend of availability compared to the number of iPhone 4S’ that Cupertino sold in that smartphones first weekend of availability. Despite moving 5 million units the first weekend, the iPhone 5 fell short of some analyst estimates.

                                                BusinessWeek reports that supply constraints delayed shipments meaning Apple’s newest smartphone missed estimates put forth by some analysts. Apple has admitted that demand for the new smartphone was higher than availability of the device leading to delays of some early online orders. Shares in Apple stock declined, reports BusinessWeek, due to concern that supply constraints could hamper Apple’s ability to outpace rivals such as Samsung.
Analysts are concerned because the iPhone represents about two-thirds of Apple’s profits and is a crucial product for the company. Analyst Brian White from Topeka Capital Markets had said that he expected Apple to sell 6 to 6.5 million units, excluding Internet purchases that haven’t been shipped, in the opening weekend. He believes that Apple falling short of his estimates has to do with supply constraints rather than demand.
Apple stock shares fell 1.3% to trade at $690.79 at the close of trading. However, Apple stock has still gained 71% this year. Apple doesn’t figure Internet orders into its sales totals until the phones are delivered. That means that the presumably massive number of sales made online during the opening weekend that weren’t delivered aren’t counted in Apple’s 5 million unit record weekend. Analyst Brian Marshall from ISI Group expects that counting orders in transit right now, Apple moved 6,000,000 to 8,000,000 units.

Apple sells over 5 million iPhone 5s, investors worry about supply

Apple has said that more than 5 million iPhone 5s sold in the three days since it hit stores. (AFP/Getty Images)

NEW YORK: Apple Inc sold out of its latest smartphone, with more than 5 million iPhone5s sold in the three days since it hit stores, the company said on Monday. 

While sales were solid, analysts were concerned that Apple was unable to produce the new phone fast enough to meet demand. 

The early total for the iPhone 5 topped sales of the iPhone 4S, which sold more than 4 million units in its first weekend after Apple introduced it in October 2011. 

Expectations for new Apple products are so high that Wall Street appeared not to be wowed by the latest numbers. Investors sent shares of the stock down 1.4 per cent at $690.14 in mid-morning trade. 

"It appears investors were disappointed with the slowdown in growth in the first weekend," said BTIG analyst Walter Piecyk. 

Apple said while the majority of iPhone 5 pre-orders have been shipped to customers, many were scheduled to go out in October. 

The world's most valuable technology company is being closely watched for any supplier problems that may slow down the smartphone production. 

"We believe that sales could have potentially been much higher if not for supply constraints," William Power, an analyst with Baird Equity Research, wrote in a note. 

He forecast Apple selling 8 million to 10 million units in the fiscal fourth quarter ending in September. 

One of Apple's key suppliers for screens, Sharp Corp, is struggling with high costs and scrambling to raise funds to pay debt. 

Riots forces Chinese plant shutdown 

Taiwan's Foxconn Technology Group, which assembles iPhones, closed a plant in China on Monday after about 2,000 workers were involved in a brawl in a company dormitory. It was not clear how long the shutdown would last. 

Additionally, Apple is facing stiff competition from smartphones that run on Google Inc'sAndroid software, which has become the most-used mobile operating system in the world. Apple's key supplier as well as rival, Samsung Electronics Co Ltd, has taken the lead in smartphone sales. 

The iPhone 5 has been one of Apple's most aggressive international rollouts to date. The phone will be available 31 countries on Sept. 28 and in more than 100 countries by the end of the year. 

"Expectations for Apple are always white hot," said Colin Gillis, a research analyst with BGC. "It's not just enough for them to break records but to smash them." 

Apple signalled last week that pre-orders outstripped initial supply and that many phones would not be available until October. 

The iPhone is Apple's highest-margin product and accounts for half of its annual revenues. 

On Friday, fans lined up at stores in cities around the world to get their hands on the new phone, which is thinner and lighter and has a bigger screen.