Apple’s latest iPhone offerings
It’s the time of the year that Apple (AAPL) enthusiasts anticipate. On September 12, Apple launched three new iPhones—the premium iPhone XS Max starting at $1,099, the iPhone XS starting at $999, and the base version iPhone XR starting at $749. Apple discontinued its $999 iPhone X launched in 2017 and is offering similar features in the $749 iPhone XR.
Apple also discontinued its iPhone SE and 6S phones and is offering the iPhone 7 as its entry-level phone. The iPhone 7’s reduced price starts at $449, depending on memory capacity. This product strategy discontinues all iPhones with headphone jacks, significantly impacting its headphone jack supplier Cirrus Logic (CRUS). Cirrus Logic earns more than 80.0% of its revenues from Apple.
Analysts’ mixed views about the new iPhone
Apple (AAPL) stock rose to its 52-week high of ~$229.00 a few days before the launch. However, its stock declined due to mixed views from analysts.
Analysts looked at the production volumes of iPhone manufacturers and component suppliers, preorder levels of the iPhone XS and iPhone XS Max, inventory levels of the existing iPhones, and selling prices of the new iPhones. All analysts agreed that Apple’s budget offering, the iPhone XR, would increase the company’s iPhone unit shipments. The analysts also concurred that Apple’s premium offerings—the iPhone XS and the iPhone XS Max—would increase its ASP (average selling price).
In an interview with Cheddar, KeyBanc Capital Markets equity research analyst John Vinh stated that Apple’s inventory of older iPhone models had reached a new low, indicating that customers might look for upgrades. CGS-CIMB analysts Ray Kwok and Mathew Hau added that the new iPhones might encourage iPhone 6 and iPhone 7 users to upgrade.
However, Yuanta Securities Investment Consulting analyst Nicole Tu is cautious about the sales of new iPhones due to the limited hardware upgrades, high prices, and the delay in the availability of the iPhone XR.
In this series, we’ll look at the estimates of iPhone shipments for the fourth quarter. We’ll also explore how the ongoing US–China trade war and tariff programs affect Apple, the future of its legacy iPhone models, and how the 5G revolution affects the company.
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