Will Apple Meet Quarterly iPhone Sales Expectations Next Week?

[avvpiras]

Quote of Steve's statement

At the September 9 media event Steve said exactly:

« I'm thrilled to report to you today that little over two years we have sold 30 millions iPhones »

So, he did not say: "today we have sold 30 millions iPhones", but he did say: "today I report to you" that "little over two years we have sold 30 millions iPhones".

Given that iPhone first went on sale on June 29, 2007, "little over two years" could literally mean ANY date between June 30, 2009, and obviously September 9, 2009. Of course, surely Steve was not referring even the big rounded number to a date only one or two weeks after June 30, 2009, given that the total number of iPhone sold at the end of June 2009 quarter, from the Apple quaterly financial statements, results to have been 26,369,000.

Consider, also, that Steve's keynotes, and slides, are meticolously prepared along several days, if not weeks, and he would never use a not rounded number to announce a milestone.

Last, I don't think Apple itself could have had the exact total number of the iPhones sold all over the world the same day, or a few days before, the media event.

So I think it is absolutely uncorrect to use the "30 million" number given by Steve, minus the total exact number of the iPhones sold at the end of the June 2009 quarter, as resulting from the official quaterly financial statements of the same and preceding quarters, and then extrapolate matematically the resulting number to the end of September 2009 quarter, as if 30,000,000 was the exact total number of the iPhones sold worldwide exactly at September 9, 2009 date.

 

[sjo]

Nothing wrong about being conservative on your numbers, provided that those 'in the know' do not use their position to make advantageous stock positions.

Nothing wrong about being conservative when announcing future expectations (eg for next quarter), completely different tihng to lie about sales already realized.

 

[gnasher729]

Wouldn't that be kind of illegal? Apple already being under the investigation of SEC to further play the investors would be potentially extremely damaging for the company.

Could be. But there can be a wide range of statements that could be considered "true". If Apple states "we sold 31.8 million iPhones", then it better be between 31.700 and 31.900 millions. If Apple says "30 million iPhones", that can be a huge range. And Steve Jobs could be excused if some happy bean counter told him six weeks ago "we just sold our 30 millionth iPhone", and he repeated that number six weeks later. Then the SEC would have to prove that there was the intent to mislead, and not just repeating a six week old number.

On top of that, Apple can choose to consider iPhones sold into the market as "sold", or only iPhones that have reached final customers; that could easily be a million difference.

 

[dernhelm]

FM tuners in iPod touches.

How is that innovative?

 

[cg0def]

granted that I haven't done any extensive market research on the subject, from what I've seen I can tell you that Apple will most likely meet the expectations and actually exceed them in some geographic regions. The US will fall behind largely due to the horrible AT&T deal but the EU sales will be through the roof and at the end Apple is going to have a very fiscally sound quarter.

Of course all this is mostly speculation.

 

[mr.steevo]

My first mobile phone will be an iPhone.

If the monthly contract rate drops.

s.

 

[samab]

I don't think the iPod media event numbers are something that can prosecuted. If a company got in trouble for misrepresenting themselves at media events...there would be no more companies.

Incorrect, companies can either shut their mouths completely or have to tell the truth if they are giving out "material" information that affects stock price. This is why the SEC has been investigating Steve Jobs' supposed "nutritional problems". Apple didn't have to say a single thing about Jobs' health --- but simple nutritional problem is very different than close to dying and requiring a liver transplant.

Several Wall Street analysts have commented that historically Steve Jobs announced nice round numbers --- like a billion songs sold, or a billion apps downloaded.

Sure Apple rounds those numbers off --- maybe by tens of millions songs or apps up/down. But the problem is that those are not "material" numbers that would affect stock price. You round off 10 million songs at 99 cents each with the music studio getting 80-90% of the money --- that's only $1 million difference for Apple. Samething for apps downloaded, the vast majority of the apps downloaded are free apps and the paid apps are averaging $2 each --- so if you round off by tens of millions of apps, you are only talking about a couple of million dollars. Those kinds of rounding off is not going to move Apple stock price by a penny.

Rounding off 1 million iphones is worth $600 million in revenue for Apple (and with gross profit margin close to 50%, that's $300 million profit for Apple) --- and that moves Apple stock price (and that makes it a "material" information). So Apple can't round off that number by a lot.

 

[xxmendozaxx]

I hope that they don't. Just so they improve it more.
I own a iPhone 3G S.

 

[avvpiras]

The point, in my opinion, is that Steve did NOT refer the rounded number to the media event date. He said only "little over two years"

How much time is "little over two years"? Two years and one week? Two years and one month?

Perhaps, two years and two full months (August 31, 2009) can't be said to be "little over".

I have myself put the numbers on a speadsheet. If you put 31,500,000 at August 31, 2009, the extrapolated number at the end of September results 7,696,500.

 

[avvpiras]

How iPhones sell in Italy

The CEO of "3", one of the three italian carriers that sell subsidized iPhones with a two year contract (also, the full price unlocked iPhones are available directly from the italian Apple Store online, the two Apple Store retail in Rome and Milan, and the Apple Premium resellers in Italy) stated to the press, just a few days ago, that they, only "3", are selling 20,000 iPhones a month because they can't manage to have more from Apple, and, if they could have 50,000 a month, they would easily sell all of them.

 

[samab]

The point, in my opinion, is that Steve did NOT refer the rounded number to the media event date. He said only "little over two years"

How much time is "little over two years"? Two years and one week? Two years and one month?

Perhaps, two years and three full months (August 31, 2009) can't be said to be "little over".

I have myself put the numbers on a speadsheet. If you put 31,500,000 at August 31, 2009, the extrapolated number at the end of September results 7,696,500.

Doesn't matter whether Apple refer it directly or indirectly --- it is a "material" number that can be calculated by any kid who knows how to do simple addition and subtraction.

In fact, perm Apple bull Munster --- agrees with the 3.6 million iphones sold figure as that matches his estimates so far (by sending his interns to various Apple stores and stand there all day to count how many iphones sold at that store).

http://www.appleinsider.com/article...ses_apple_announcements_seen_as_positive.html

Munster REALLY REALLY believes that Apple is going to sell 3.4 million iphones in the last 3 weeks. Actually, Munster raised the sales figure estimate to 7.5 million iphones the last few days --- so he REALLY REALLY believes that Apple sold 3.9 million iphones in the last 3 weeks.

 

[PeteLP]

I'm certain that the "30 million as a round number" argument is strongest here. It could have been a milestone that was passed a month before - maybe the MI hadn't been done for a while before the keynote, maybe Apple didn't want to use preliminary figures. So 30 million could have been 30 million a month earlier, so instead of it being 10 weeks into a 13 week quarter, it would have been ~6 weeks in, implying far far higher sales by the end of the quarter.

I completely agree with Hattig, and want to give a thumbs up on the original MacRumor article. I'm often fully underwhelmed by so many of these analysts, but in this case, I'm pretty impressed by the original author's clear thinking.

As far as the round number argument goes, when has steve ever given a media event with anything other than round numbers? For other than actual earnings reports, it's always VERY round numbers, and often referring to some previous point in time.


Pete

 

[avvpiras]

Doesn't matter whether Apple refer it directly or indirectly --- it is a "material" number that can be calculated by any kid who knows how to do simple addition and subtraction.

The problem is NOT the material number, but if, and how much, it was rounded by Steve, and what Steve intended when he said "little over two years".

The exact date where you put the number is critical. If you put exactly 30.000.000 at the exact date of September 9, 2009, the iPhones sold from July 1 to September 9 are only 3,631,000, and Muster should think that sales have been suddendly skyrocketing in the only 21 days after.

I think that either Appleinsider report of September 9 Munster statement was inaccurate, or Munster has not, still today, counted the total number of iPhones sold till June 30, 2009, as resulting from the official Apple quaterly financial statements.

 

[samab]

The problem is NOT the material number, but if, and how much, it was rounded by Steve, and what Steve intended when he said "little over two years".

The exact date where you put the number is critical. If you put exactly 30.000.000 at the exact date of September 9, 2009, the iPhones sold from July 1 to September 9 are only 3,631,000, and Muster should think that sales have been suddendly skyrocketing in the only 21 days after.

I think that either Appleinsider report of September 9 Munster statement was inaccurate, or Munster has not, still today, counted the total number of iPhones sold till June 30, 2009, as resulting from the official Apple quaterly financial statements.

No, the problem is that since it is a material number --- Apple is constrained by SEC regulations on how much Apple can round off those numbers. Apple doesn't have to say anything about iphone sales, but they did say something during the keynote --- and that something affects Apple stock price.

Do I think that Steve Jobs rounded off the 30 million iphone figure? Sure, 100% likely. Do I think that it could have been 30.3, 30.4, 30.5 million iphones? Very likely. Do I think that it could have been 31, 32 million? Very unlikely, because a 2 million iphone round off is 1.2 billion dollars.

Very unlikely that Munster would have calculated the cumulative iphone sales figures incorrectly. You don't even have to calculate it yourself, it's on the wikipedia.

http://en.wikipedia.org/wiki/File:IPhone_sales_per_quarter.svg

It's not that hard to think that Munster is counting on Apple to stuff a million iphones into the chinese carrier channel in September for the chinese carrier to sell in October. Everybody else is thinking the same thing on the stuffing the chinese channel as well.

http://blogs.zdnet.com/BTL/?p=24077

 

[avvpiras]

No, the problem is that since it is a material number --- Apple is constrained by SEC regulations on how much Apple can round off those numbers. Apple doesn't have to say anything about iphone sales, but they did say something during the keynote --- and that something affects Apple stock price.

Do I think that Steve Jobs rounded off the 30 million iphone figure? Sure, 100% likely. Do I think that it could have been 30.3, 30.4, 30.5 million iphones? Very likely. Do I think that it could have been 31, 32 million? Very unlikely, because a 2 million iphone round off is 1.2 billion dollars.

I'm not saying that Steve gave a too much rounded number referring it to the exact date of the media event, but that Steve could have had, at that date, a number of 31 or 31.5 or 32 million, and he used the rounded 30 million number referring it to "little over two years" of iPhone sales, so little over two years from June 29, 2007.

Little over two years could mean that the exact 30 million milestone has been reached at the end of July, or in mid August, or at the end of August, etc.

For sure, if it has been reached on September 9, even with the imaginative 1 million iPhones sale to China Unicom in the last week of September (but China Unicom denied, the preceding week, a rumored buy of 0.5 million iPhones), it is VERY VERY unlikely that Apple could have sold more than 6 millions iPhones in the quarter.

 

[avvpiras]

Sorry, I don't know how to delete the entire message. It was an unintentional duplicate post of the preceding message.

 

[Brien]

I have seen far too many iPhones around for them to not have had great sales.

 

[samab]

I'm not saying that Steve gave a too much rounded number referring it to the exact date of the media event, but that Steve could have had, at that date, a number of 31 or 31.5 or 32 million, and he used the rounded 30 million number referring it to "little over two years" of iPhone sales, so little over two years from June 29, 2007.

Little over two years could mean that the exact 30 million milestone has been reached at the end of July, or in mid August, or at the end of August, etc.

For sure, if it has been reached on September 9, even with the imaginative 1 million iPhones sale to China Unicom in the last week of September (but China Unicom denied, the preceding week, a rumored buy of 0.5 million iPhones), it is VERY VERY unlikely that Apple could have sold more than 6 millions iPhones in the quarter.

As I said earlier, Apple doesn't have to say anything at all --- but if they say anything, they better be accurate on the important material stuff.

Did Steve Jobs have a hormonal imbalance? Sure, that's 100% correct. Why did he have a hormonal imbalance? Because his liver was shot (and requires a liver transplant) and the liver is an important part of the human endocrine system that regulates a few important hormones. Without those hormones, you die.

Apple can't mess around with iphone sales figures in keynote speeches. It's as simple as that.

 

[twoodcc]

i think they'll meet them

 

[charlituna]

Incorrect, companies can either shut their mouths completely or have to tell the truth if they are giving out "material" information that affects stock price. This is why the SEC has been investigating Steve Jobs' supposed "nutritional problems". Apple didn't have to say a single thing about Jobs' health --- but simple nutritional problem is very different than close to dying and requiring a liver transplant.

yep. specifically they are investigating the issue of whether Jobs and Apple knew at the time that statement was made that the concern was more than they claimed. or if, as is possible with such a condition, his doctors told him it was a hormone issue and after making that statement, they got back results of further tests that told them that the nutritional problem wasn't as simple as hormones but in fact his liver was near failure and he needed a transplant like yesterday. causing him to activate emergency plan alpha etc

 

[gnasher729]

yep. specifically they are investigating the issue of whether Jobs and Apple knew at the time that statement was made that the concern was more than they claimed. or if, as is possible with such a condition, his doctors told him it was a hormone issue and after making that statement, they got back results of further tests that told them that the nutritional problem wasn't as simple as hormones but in fact his liver was near failure and he needed a transplant like yesterday. causing him to activate emergency plan alpha etc

Apart from the very questionable ethics behind people's obscene interest in someone's health, Apple has demonstrated quite clearly over the last year that the company runs just fine without Steve Jobs. Apple is only responsible to disseminate information that is relevant to the performance of the company, and Steve Jobs' health clearly isn't. Apple is not responsible to disseminate information that irrational stupid idiots who shouldn't be left near the stock market use to make stupid, irrational decisions.

 

[gnasher729]

Do I think that Steve Jobs rounded off the 30 million iphone figure? Sure, 100% likely. Do I think that it could have been 30.3, 30.4, 30.5 million iphones? Very likely. Do I think that it could have been 31, 32 million? Very unlikely, because a 2 million iphone round off is 1.2 billion dollars.

You are not making sense. If the total sales in dollars had been a round number, then Steve Jobs could have very easily said "we sold 20 billion dollars worth of iPhones" when the exact number was 21 or 21.5 or even 22 billion dollars. A round number like 30 gives a lot of leeway. In addition, Apple usually doesn't want its competitors to know too much, so giving a nice, rounded number is what they _would_ do.

 

[stylinexpat]

I am in Hong-Kong now and they an barely keep them in stock here due to the demand from the mainlander in China. China now ha 3G in China so the demand for this new fashion icon is beyond huge and they are selling for big bucks over regular price in China. Most of the shops here in Hong-Kong are out of stock of the Iphone 3GS unless you buy them with contract from a telecom company here in Hong-Kong.

Apple is making a killing selling these Iphones.

 

[samab]

Apart from the very questionable ethics behind people's obscene interest in someone's health, Apple has demonstrated quite clearly over the last year that the company runs just fine without Steve Jobs. Apple is only responsible to disseminate information that is relevant to the performance of the company, and Steve Jobs' health clearly isn't. Apple is not responsible to disseminate information that irrational stupid idiots who shouldn't be left near the stock market use to make stupid, irrational decisions.

The SEC doesn't agree with you at all.

Stupid idiots can make A LOT OF MONEY because of OTHER more stupid idiots making even more stupid decisions. Buying a sports team is the best example of the bigger idiot theory. You buy a professional sports team that doesn't make any financial sense at all, you lose money every year --- yet in 5-10 years, a bigger (and richer) idiotic will buy the team from you for a lot more money than you paid for it.

You are not making sense. If the total sales in dollars had been a round number, then Steve Jobs could have very easily said "we sold 20 billion dollars worth of iPhones" when the exact number was 21 or 21.5 or even 22 billion dollars. A round number like 30 gives a lot of leeway. In addition, Apple usually doesn't want its competitors to know too much, so giving a nice, rounded number is what they _would_ do.

You are not making any sense at all. Apple is a public company making official public statements about the performance of one of their most important products --- which moves Apple's stock price. They don't have to say a thing at all, but they did say it. And many people buying Apple stock is going to interpret that they did only sell 3.6 million iphones in 9 weeks in Q2. It's not about Apple's competitors, it's about Apple's shareholders.

 

[charlituna]

Apart from the very questionable ethics behind people's obscene interest in someone's health, Apple has demonstrated quite clearly over the last year that the company runs just fine without Steve Jobs. Apple is only responsible to disseminate information that is relevant to the performance of the company, and Steve Jobs' health clearly isn't.

well sure, as we have seen, they did fine with him not being there day to day and perhaps 'directing by email'. and yes they probably have the next 5-10 years planned out and underway in the secret Apple Labs has we speak. And given that Jobs handpicked his team and probably handtrained them it is believable that his heir has been picked even if we don't know who. So Apple will be fine

but that's not the point of the SEC issue. that point is whether Apple lied. Because to say nothing is one thing, but to lie

let's put it in not Job's health terms.

Lets say you are an Apple Store employee. And lets say that you know, because you were told by the bosses, that tomorrow there would be all new computers. big, faster everything, and cheaper.

Now I'm in the store today and I pointedly ask you if there are going to be new computers released soon. And you pointedly say no. So I buy that imac I'm looking at. And then tomorrow I see a new one that is faster, more ram, bigger hard drive and cheaper. I'm going to be pissed at you. I'm going to question if you flat out lied to me. Same as "is Steve Jobs seriously ill" being answered with "No, he's in great health"

Now, what if I asked you if there were going to be new computers soon and you said that there are rumors going around but nothing been announced. You never said yes or no. so you didn't lie. this is a kin to Apple Corp answering "is Steve Jobs ill" with "there is no evidence that the health of the employee would be materially affected by the health of the CEO therefore we must respect Steve's right to personal piracy and can not confirm nor deny any rumors about his health."