“Shares of Apple Inc. took a hit Tuesday morning after wireless carrier AT&T issued disappointing activation numbers for the iPhone for the last two days of the second quarter, when the device first went on sale,” Dan Gallagher reports for MarketWatch.
“In addition, a telecommunications analyst issued a report before the opening bell that said demand for the device at retail outlets has seen a ‘significant decline’ in recent days,” Gallagher reports.
“The iPhone went on sale at retail outlets operated by Apple and AT&T on June 29, leaving less than two full days before the end of the second quarter,” Gallagher reports.
“AT&T said it activated about 146,000 customers who bought the iPhone during those two days,” Gallagher reports. “Before Tuesday, analysts had been projecting opening-weekend sales for the iPhone of between 200,000 and 400,000 units. A few projections reached as high as 500,000 units…”
“‘We have noticed decent inventories [of the iPhone] at stores, and thin demand at best,’ analyst Ittai Kidron of CIBC World Markets wrote in a report Tuesday. ‘In fact, most Apple store visitors were not looking at the device and only a very small subset bought it,'” Gallagher reports.
“Investors will likely get a fuller picture of actual iPhone sales when Apple posts its own results for the June quarter on Wednesday,” Gallagher reports.
Full article here.
Now, after the typical hysterical Wall St. reaction, let’s apply some logic to the information.
AT&T’s quarter ended June 30, 2007. Apple’s iPhone went on sale in the U.S. on Friday, June 29th at 6pm local time. So, the totals are for about a day and a half, not two days, as widely reported. And when did AT&T actually stop their iPhone activation count exactly?
[UPDATE: 1:29pm EDT: An AT&T internal newsletter states, “Although it went on sale just 30 hours before the quarter ended, we had 146,000 activations in that period.” So, 30 hours, not 48. – Thanks, Robert.]
In addition, AT&T’s numbers measure only iPhone activations through June 30th, not sales. Some number of iPhone users experienced activation delays that may have delayed activation until after the June 30th end of AT&T’s quarter.
How many? We don’t know.
What of the iPhones that were sold online that weren’t activated by June 30th?
How many? We don’t know.
In the initial lines were many enthusiastic iPhone buyers. Reports from MacDailyNews readers (and also witnessed by MDN staff) show that many of these early iPhone buyers purchased two phones (Apple’s limit at Apple Retail Stores). When we asked fellow iPhone-waiters what they would be doing with their iPhones, many who were buying two stated that the other phone was intended as a gift. These iPhone gifts may not have been given to their recipients and activated by June 30th; therefore, they wouldn’t appear in AT&T’s provided count.
How many? We don’t know.
It should be obvious that iPhone sales would see “significant decline in recent days” as the initial frenzy of camping out and long waiting lines had set the bar at its highest point. Decline is a given after the long lines are served and the stanchions are removed.
Describing inventories as “decent” is a meaningless measure as Apple has never reported how many iPhones were manufactured and shipped for the initial supply. Based on reports and Apple’s own online resource for iPhone availability, Apple seems to have done a good job of keeping supplies of iPhones flowing and Apple retail stores, at least, resupplied on a regular basis. We don’t know how many iPhone units Apple supplied, so saying inventory is “decent” tells us absolutely nothing about the product’s actual unit sales.
And just how extensive were CIBC’s “checks?” They certainly don’t match our experiences of iPhone interest at Apple Retail Stores (and “on the street” with our iPhones) in recent weeks.
The analysts’ projections (200,0000 – 500,000) are for the entire weekend of iPhone sales, not the first 30 hours of activations.
Need more input, Stephanie.
As Gallagher mentioned in his report, we hope to get better idea of initial iPhone numbers when Apple reports their Q3 07 results (ended June 30, 2007) after market close tomorrow.
Hmmmm.
So all the reports of AT&T’s network being “overloaded” by the unusually high volume of activations in those early days are because of… lower than expected activation numbers?
Something doesn’t seem right here.
I was just in the Irvine, CA Apple Store this past weekend, and overheard an employee telling a girl “Sorry, we only have 1 4 GB iPhone available at the moment.” Meanwhile there were at least a dozen people around the iPhone display either playing with, or clamoring to play with, the iPhone.
@ MDN
Short Circuit? Wow, that’s digging. ;P
Seems like to be inline to what some of my friends that are in the mobile industry. Basically saying that the iPhone is nothing more than a dumbdown smartphone thats overpriced. It would never sell or even dent the smartphone market. So the numbers pretty much jive. I don’t agree with them, but this report sorta gives them the ammo at the moment.
I thought that AT&T stores, only 1800 or so, sold out in two days or so, and Apple stores weren’t much better. That we know.
So what do AT&T’s activation numbers have to do with the first two day sales? Tip of the iceberg. How big was the iceberg? Apparently about the same size as the available inventory at introduction.
Also, if sales are to be taken into income over 24 months, then two days sales would be completely excluded, a fulll month has to transpire to book one-twenty fourth of the income. In other words, for Apple, no income booked at all until July is over.
CIBC has lost a lot of cred with this call. Is it in the business of talking stock down to make a killing on the over-reaction?
RIM is down $5.64 whilst AAPL is down $3.40 as I write @l.43 p.m. Why is RIM down, competition from AAPL? Fear?
AT&T stores had very limited supplies on the 29th. I bought (i.e. paid for) mine at 8 pm on the 29th, but didn’t receive it until the 3rd.
A company can’t book a sale that has not shipped so no online sales will show in Apple’s qtr either. It would surprise me to see that activations thru 12 counted but claim appears to be from internal newsletter and says 30 hours so 12 eastern would seem to be the cutoff. Lots of people will not have completed activation of sold units so I’m expecting a large surprise from Apple tomorrow evening.
My guess: they sold about 160,000 on Friday and Saturday and about half that rate every day since (on average). So by now they’ve sold about 1.1 million.
Is that 30 Hours on the East coast or West coast?
Several friends and business associates have seen and been impressed by my iPhone. I know of 5 who plan on buying later in the year, as soon as their current contracts with other carriers expire. They see no point in giving $200 to T-mobile right now. I think long term growth for the iPhone is assured.
I stopped at an AT&T store and played with an iPhone the other day and I was the only one doing so and still no assistance from the help. I’m quessing Apple is going to so kick AT&T’s butt in the numbers that all phone manufactures are going to be looking closely at the current business model. Imagine if RIM had a way to buy a blackberry where a knowledgable assistant helped you. Nokia has just one US store last I knew and from what I’ve read the numbers blow away other phone retailers.
So surprise surprise the current method of having dips- – -‘s just focus on getting you to sign a contract and leave is messed up. Who has not needed to call customer service at least once following the purchase of a new phone, upgrade or not.
Apple clearly needed the network but wanted to leave AT&T out of the sales game based on the inventory levels handed over for the launch. Whatever numbers we see are from 1800 stores with just a handful of inventory and Apple’s 180 odd outlets. With just this it will probally still end up being the fastest selling gizmo to break a million units.
I bought mine at a local AT&T store at 8ish on the 29th. The clerk said they had already sold 40-45 iPhones…x 1800 stores +however many from the Apple stores = a helluva lot more than 150k. I believe Apple sold somewhere North of 350k in those first 30 hours. Easily.
Which other phone, smart or not, sold (activated) 146,000 units in 30 hrs?
blame it on the Zunes.
Let’s see, 30 hours divided by 146,000 activations comes to 81 activations/minute.
How many could AT&T handle per minute that first weekend?
yes, there is plenty missing from this – reality of the situation being one of them.
i bought my phone and my rooommate’s phone Friday evening. He activated his the next day. I sat around waiting for T-Mobile to release my number until 8 pm Saturday night before just reactivating with a completely new number from AT&T. So, had I not done that my activation may not have been counted either – it still might not have since it happened at almost 9PM on a Saturday night.
Wall St. is sad. They’re hysterical little middle school girls and ignore the reality of the world before making knee jerk reactions. I hope that the people who can are buying shares of Apple while it’s down at the moment. I hope you enjoy it and make plenty of money off it!
Much of today’s stock price decline can be blamed on this story, but a lot of traders were recommending a short term sale of AAPL over the past couple days. There is a lot of profit taking ahead of the qrtly report tomorrow. Most of today’s sellers will be back in shortly.
I ordered my iPhone late on Friday the 29th, and received it last Monday. Activating it took a couple minutes for me to be able to call out, but it took three days and two calls to T-Mobile customer service before T-Mobile released my number and incoming calls were ringing on the iPhone instead of my old Sony-Ericsson. It’s not clear when AT&T would consider my activation to have taken place.
-jcr
What I don’t understand is that Verizon did not have the capacity to handle 81.11 iPhone activations per minute in the 30 hours left in the quarter?
I was in a Radio Shack the other day and in the course of 5 minutes, two people came in looking for an iPhone and the AT&T stores nearby seem to always have someone playing with them…no lack of interest here in Boston. I think the online sales figures could be a fascinating surprise factor since none of the so called analysts with all their formulas have factored that in. I can’t wait to hear the real numbers!
Their stupidity is your buying opportunity.
sorry ATT
Hope y’all are ready for the stock train wreck tomorrow. Buy those puts now, ya hear?
Charko said, “I think tomorrow, Steve Jobs should announce the up-to-date number sold. “
Sorry, that is not the way the game is played. Sales will be released thru the end of the quarter, which is usually close of business the last business day of the quarter. OK so here they will strech it a bit but, really, sales are for the quarter, not current. That number will climb and climb until Apple is ready to punch the market and pundits once again.
” width=”19″ height=”19″ alt=”grin” style=”border:0;” /> He is not “our” Steve for nothing.
My guess is when they reach say 5 million (1/2 of the way to the end of 2008 ) that they will announce and let everyone know how far ahead they are.
When was the last time you heard about iPod sales???
ITs all a Game, and the analysis all play so badly. 🙁
en
It’s been hacked! It’s unuseable unlless you want your phone taken over and running out of your hands by remote control… and now it’s not selling!
It’s a complete and utter failure !!!
Yes the above its true … why? … because I said so …
Oh yeah … and WTC 7 was destroyed by fire …
You do believe me … don’t you??
Die Apple … die …
MicroTurd New World Order Lackey ….