“Apple introduced the new 3G iPhone model on July 11th, and sales thus far look to be impressive. Using the OS market share data from Net Applications and the IMEI tracking data from the Mac Observer’s Apple Finance Board, iPhone sales appear to have approached 6 million units since launch,” Turley Muller writes for SeekingAlpha.
“By the end of this quarter [Q4], I predict iPhone sales will reach 7-8 million. Most estimates on the Street are calling for unit sales to come in under 5 million units. Perhaps the most important aspect is the effect on cash earnings. Since Apple spreads iPhone revenue over 8 quarters, reported EPS will see little effect. However, cash earnings should increase more than $2.00,” Muller writes.
Full article, with analysis and explanation of how Tully arrived at his 7-8 million iPhone sales for Q4 estimate, here.
So Apple has already passed the 10 Million mark? I believe that 1gen iPhone sell about 6mil.
I think there is a factual error in the article. I thought Apple only spread the first generation phone revenue over 24 quarters. I thought the 2nd generation 3G was accounted for immediately.
^^^^^ prior post should have said “24 MONTHS”, not 24 quarters
I believe you are correct. The spread was due to the piece of the two year contract they were getting from ATT.
I do not think it has to do with the contract with ATT. Apple is spreading the revenue on the iPhone and AppleTV also due to free software features added over the life of the product.
I may be wrong, but I believe Apple is still recognizing iPhone G3 revenues over eight quarters. If they don’t do this, GAAP requires them to charge for any updates that include new features. Deferred revenues lets them add features whenever they want.
Nothing to do with AT&T;at all. It’s to do with Sarbanes-Oxley. Apple presumes the useful life of the iPhone is 2 years, and during that life presumes that it may continue to add functionality. Sarbanes-Oxley requires Apple to charge additional fees for that additional functionality. Apple in its foresight decided to just amortize revenue over that 2 year period instead. Nothing to do with AT&T;.
Thus, expect Apple to continue amortizing revenues from iPhones.
However, an investor should look closely at free-cash flow, as Apple should be generating tons of it this quarter.
“So Apple has already passed the 10 Million mark? I believe that 1gen iPhone sell about 6mil.”
Depends. Remember that Apple was going to sell 10 million iPhones in calendar year 2008 (go back and look at the video). Before shipping the iPhone 3G, they were at about 2.5 million.
So if Apple shipped 7.5 million iPhone 3Gs, they’ll have hit 10 million.
My guess is that Apple will beat 10 million, but I think the final number will be around 12-13 million for CY2008.
I’m guessing 12,724,386 for CY 2008.
@Modbus,
I bid $1, Bob.
How you say in the english? …Bath of the blood?
What happened to that guy’s estimate based on the serial numbers of iPhones? That seemed pretty interesting, and it was around 5.6M a few weeks ago…
Nice TPIR reference, Cubert! I suddenly hear yodeling.
Raul:
Baño de sangre.
I just hate it when analysts start making predictions of huge numbers of shipping product well before the quarter even closes.
What often happens is the street gets to thinking these guesses have a real basis in fact rather than just being an analyst’s guess. Then if Apple barely meets these inflated numbers (or worse misses them) the street punishes Apple’s stock.
First these analysts were predicting 3-4 million iPhones for this quarter. Then to out do others some started predicting 5+ million. Now one has started the 7-8 million band wagon going. At this rate it would not surprise me if between 1 Oct and the earnings conference call that some analyst predicts 10+ million iPhones in this quarter alone. Then even if Apple ships 9.8 million iPhones (extremely unlikely) they will have “missed” the prediction — and the stock drops like a rock.
No one wins at this game other than the analysts themselves. To me it is no different that certain bloggers (I *won’t* call them journalists) who intentionally make wrong or misleading statements about Apple to get hits on their websites.
@Shadowself
I think you have quarters and years mixed up…
@ Tyler. No. The numbers are for the current quarter.
Initially analysts were predicting 3-4 million iPhone 3G sales over the three models would be sold in the current quarter (especially since Apple only sold 2-3 million of the first gen iPhone in total during the first half of 2008). Then analysts inflated this 3-4 million to 5+ million. Now someone has inflated it to 7-8 million (twice the original predictions). All numbers are for just the iPhone 3G which has *only* been selling *this* quarter. Thus the numbers for these predictions are for this *quarter*.
I’m saying I would not be surprised if some analyst says s/he predicts 10+ million in this quarter alone just to “one up” previous predictions so that people will read his analysis and he gets his 15 minutes of fame. The hazard is that people on the street will take this new, ridiculous number as having some basis in reality.
The number most quoted for this calendar year is 10 million based upon a statement made by Steve Jobs. Clearly, most people watching the iPhone sales rates believe that 10 million for the full calendar year will be beaten easily — although there were many in the April/May 2008 time frame that did not believe this.
@Modbus,
I hear the gentle sounds of Plinko.