Analyst cites survey showing shift in Apple iPhone buying patterns in cutting earnings estimates

Analyst cites survey showing shift in Apple iPhone buying patterns in cutting earnings estimates
According to a survey by Consumer Intelligence Research Partners, a significant change in Apple iPhone buying patterns is taking place. While buyers of the Apple iPhone 4S averaged 30GB of storage, buyers of the Apple iPhone 5 are averaging 20GB of storage with fewer buyers selecting the 64GB model. In addition, demand for older models is now 50% during the Apple iPhone 5 cycle, compared with 33% during the cycle of the Apple 4S. This shift to lower priced, lower storage versions of Apple's iconic smartphone have led at least one analyst to cut his earnings estimates for Apple.

UBS analyst Steven Milunovich says that this shift to lower priced units combined with higher launch costs could cost Apple a reduction of 8 to 10 percentage points in gross margin in fiscal year 2013. As a result, the analyst now expects fiscal year 2013 profit of $44.68 a share, down from $47 previously estimated. For fiscal year 2014, he sees Apple reporting profit of $52.80 a share, down from his earlier forecast of $55.85 a share. Milunovich has cut his target on Apple's stock to $650 from $700 while keeping his "Buy" rating on the shares.

Milunovich see's a 2% to 6% drop in the phone's average selling price over the next three quarters, reducing his gross margin forecast by 1% over fiscal year 2013. His buy rating is based on a positive risk/reward ratio at current prices. He sees strong growth, a deal with China Mobile by the fourth quarter, and too much pessimism about Apple losing its edge in innovation, pushing the stock higher.

source: CIRP via Forbes

Related phones

iPhone 5
  • Display 4.0" 640 x 1136 pixels
  • Camera 8 MP / 1.2 MP front
  • Processor Apple A6, Dual-core, 1300 MHz
  • Storage 64 GB
  • Battery 1440 mAh(8h 3G talk time)
iPhone 4s
  • Display 3.5" 640 x 960 pixels
  • Camera 8 MP / 0.3 MP VGA front
  • Processor Apple A5, Dual-core, 800 MHz
  • Storage 64 GB

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7 Comments

1. MrJerry

Posts: 403; Member since: Oct 05, 2012

Expected result!!! And of course you dont need much space in ur iphone.. I just remember those days that I "had" to transform video files to mp4 to watch damm videos on my 3gs lol

2. tedkord

Posts: 17198; Member since: Jun 17, 2009

I need as much space as I can get in my phone. I have a 64gb card and 32gb built in, and the card is almost full with music and video. When 128gb microsdxc becomes available and reasonable, I'll buy one.

5. TheMan

Posts: 494; Member since: Sep 21, 2012

Those with large music libraries on their handset may become dinosaurs as many of us have moved to streaming or cloud-based tunes. Two or three years ago, my customers would scoff at having "only" 16 GB. Now, I get someone with a large music collection relatively infrequently.

8. darkkjedii

Posts: 30900; Member since: Feb 05, 2011

That's cool if u have unlimited data.

3. iPone.Lost.Momentum

Posts: 3; Member since: Jan 22, 2013

This sales record show that the HARDCORE user were moving away from iOS into Samsung land. The one who buy iPhone now is just a person who don't know that Android is better. Thus resulting the previous generation with lower RAM is selling better than newer generation... because this new customer just want CHEAP iPHONE. This is the sign that iPhone already PEAK, and will going down in 2013. 2013 will be remembered as the year iPhone becoming RIM

6. TheMan

Posts: 494; Member since: Sep 21, 2012

As much as I enjoy bashing the over-priced, over-hyped iPhone, I can't lump Apple with RIM. Too many resources there.

7. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

In the article quote of Steve Milunovich and in the last sentence by Alan, I see the words "skepticism" & "pessimism" used regarding further innovation by Apple and being a contributor to higher APPL value. How exactly does that work out? Did they both make the same grammatical error of leaving out a word like "despite" before mentioning skepticism & pessimism. Normally, those are detrimental to stock prices.

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