The iPhone 5 is Not a Weekend Phenomenon
Harsh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Earlier in September, Fool analyst Chuck Saletta gave us some compelling reasons that companies should end issuing quarterly guidance as a part of The Motley Fool’s Worldwide Invest Better Day campaign. The most important take away from Chuck’s article was quite simple – companies should focus more on building their businesses instead of losing sleep over not meeting numbers or being unable to satisfy the thirst of hundreds of Wall Street analysts who are ready with their own “guesstimates” even before the company has reported results.
After all, we value long-term performance over short-term outlook. I believe Chuck was right on target with the premise of his article. But just a few days after Chuck’s eye-opening article, the army of Wall Street analysts, with their most potent weapon -- i.e. “estimates” -- was firing at the world’s largest company, Apple (NASDAQ: AAPL). The reason – Apple sold “just” 5 million iPhone 5s over the weekend as compared to the lofty numbers analysts were “expecting.”
Does Better, Still Called Disappointing
The “whisper number” going around the Street regarding iPhone sales over the first weekend stretched from 6 million to 10 million units. And in comparison, Apple had “only” 5 million units to show for. The result – analysts were “disappointed” as the Cupertino-based Goliath failed to sell as many iPhones as they wanted. After taking stock of the situation and empathizing with the disappointed analysts, I just have one thing to say – please cut Apple some slack and don’t get too disappointed.
Apple has already sold 25% more iPhone 5s over the first weekend as compared to the iPhone 4S. Still, some think that the iPhone’s days of obscene growth are over. The pre-orders this time were double that of the iPhone 4S, the delivery schedule was extended and still, many are disappointed over the iPhone 5s sales figures for just one weekend.
Compare the initial sales figure to the iPhone’s nearest competitor, the Google (NASDAQ: GOOG) Android running Samsung Galaxy S III. The Android torchbearer took around two months to hit 10 million mark, and its biggest rival has overtaken half that figure in just three days. It seems Samsung’s ads blowing the iPhone away didn’t work too much. Moreover, Google’s baby, Motorola, huffed and puffed to the 5 million mark in its last quarter as a public company. And after the appearance of the iPhone 5, the Google Android army should be running for cover.
Thus, instead of digging up the wrong side, I had hoped that Apple analysts would take a wider view of Apple’s weekend sales and instead applaud the company. After all, the iPhone’s initial sales have improved from last year and it should easily surpass its chief rival, the Samsung Galaxy S III, soon.
And as far as what held Apple back over the weekend is concerned, Fool analyst Evan Niu has already covered that part and told us the reasons. There might be supply chain constraints pegging Apple back or there might be those customers who are still waiting for their contracts to expire before they upgrade to the iPhone 5, a fact very well explained in this article.
Looking Beyond Just a Weekend
Again, some might think that the lack of innovation in the iPhone 5 and the problem with the Maps has put off customers. There have been comparisons between Apple and Research In Motion (NASDAQ: BBRY) of late as well. The BlackBerry maker was quite rigid, lacked innovation, and didn’t change itself along with the times. As such, it is left hanging by a thread now and might see its end if its next line of phones running BlackBerry 10 fail.
But that’s not the case with Apple yet. If it was, we wouldn’t have seen the lines at the stores grow, or pre-orders and first weekend sales jump massively. The company gave its fans some good reasons to upgrade to the new iPhone and has some catalysts going forward. The holiday season is yet to come and I expect Apple will put its doubters to the sword when it reports results for its December quarter in January next year.
Moreover, the company is yet to sell the product worldwide. The iPhone will go on sale in another 22 countries on Sept. 28 and will cover more than 100 countries by the time 2012 draws to a close. So there’s still a lot of room for Apple to flex its strong iPhone muscle and we would be able to gauge the phone’s performance only after the seasonally strong holiday quarter is over.
The Bottom Line
As far as I think, it doesn’t make too much sense to bury Apple over just one weekend. Rome was not built in a day, the iPhone wasn’t designed in a day, and the iPhone 5 won’t disappear tomorrow. So it is not correct to get “disappointed” after just three days of sales. It is here to stay and seems well-positioned to smash some more records. Take a deep breath, think beyond just a weekend, forget about estimates and predictions and you will see the iPhone 5 shine in all its glory.
Know What You Own
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TechJunk13 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
