Apple Is Set-Up For Another Record Quarter

Apple will release its September quarter results after the markets close on Thursday, October 28. This year’s results will be helped a little by the new iPhone 13 models being available on Friday, September 24, which is the day before the September quarter and fiscal year ended on Saturday, September 25. Last year the new iPhones were not available until October.

There are multiple indications the iPhone 13 is off to a strong start

Lead-times for Apple’s new iPhones are a bit tricky to read since one never knows if long or lengthening lead-times are due to strong demand, a lower pre-launch build number or production challenges overall.

While there is a two-edge sword situation for Apple with long lead-times due to wanting to fulfill demand and not lose any sales to competitors, it does create buzz for the iPhone. Additionally, from a cost perspective a smoother production cycle is more cost effective than a huge ramp over a short time period just to fulfill the initial demand surge. However, for Apple’s results it is better to sell iPhones quickly.

Launch day sees customers lining up or storming stores

John Gruber at Daring Fireball shot this video of people queuing to buy the new iPhone 13 in Philadelphia on Friday, September 24, at 2 pm, the first day it was available (I counted about 75 people in line). He noted, “I’ll bet the line was longer than it would have been without COVID restrictions, but still — this is the 15th generation of iPhones and people are still lining up to buy them on the day they’re available.” It was probably also longer in the morning.

He added, “iPhone Day is a de facto annual holiday for untold millions of people around the world. That’s not true of any other product in the world.”

To see how crazy demand for iPhones in China is watch this YouTube video from the South China Morning Post (that I found via Apple 3.0). There are literally hundreds of customers running to an Apple store in a mall.

Counterpoint Technology Market Research also has pictures of lines at an Apple store. It points out that, “we have seen people line up again to pick-up orders or reserve an iPhone for a later time. It’s not like the massive lines for the iPhone 6 or iPhone 7 launch events, but it’s still showing a return to brick-and-mortar to an extent.”

Lead times continue to move out

Counterpoint also tracks iPhone lead-times. Customers could start ordering iPhone 13 models on Friday, September 17, with the first day of availability being Friday, September 24. This table shows the various models with the midnight/graphic color and the lowest memory configurations.

The color-coding indicates:

• Green: available on the first day or shortly thereafter
• Light yellow: available in 7 to 10 days
• Orange: available two weeks after first day availability
• Pink: available about 12 days to a month out
• Red: A month or later

As you can see the dates for the Pro Max versions were the farthest out. This is typical for an iPhone launch, as early buyers tend to be power users and want higher-end iPhones.

In checking Apple’s website this morning for various models, colors, memory sizes and carriers it has:

• 13 Mini: October 13-18
• 13: October 21 to 26
• Pro and Pro Max: November 2 to 9

It appears as almost another week has gone by that the lead-time for the 13 Mini and 13 have kept the same dates (meaning availability is better) but that the Pro and Pro Max moved out a week.

Strong double-digit iPhone growth

Apple provided “guidelines” vs. guidance for its September quarter when it held its June quarter results conference call. The major input is for revenue to exhibit “strong” double-digit revenue growth but lower than June quarter’s 36% result.

Toni Sacconaghi at Bernstein is projecting iPhone unit growth of 33% with revenue growth of 63%. The driver of much higher revenue growth is due to his estimate for the iPhone’s Average Selling Prices or ASPs increasing from $662 a year ago to $814 (down from $837 in the June quarter). With the 1 TB Pro Max version costing $1,599 Sacconaghi’s ASP forecast may be a bit on the low side. He is expecting total revenue growth of 38%.

Katy Huberty at Morgan Stanley MS is projecting a 17% increase in iPhone unit shipments for the September quarter and 9% for the December quarter. She is expecting iPhone revenue to increase by 52% and total revenue by 29% in the September quarter.

Stock has faltered in September

Apple’s shares had a tough September when they closed at $141.50. They declined 6.8% from $151.83 on August 31 and 9.7% from their closing high of $156.69 on September 7. There seems to be a pattern that the stock does well going into the yearly iPhone announcement but sells off afterwards.

The shares are in an oversold position with their RSI or Relative Strength Index, the top portion of the chart below, at 36.79. This should be positive for the shares, at least in the short-term, as long as the company announces positive results and outlook.