A second analyst group sees upside in demand for Apple Inc. (NASDAQ:AAPL)’s iPhone this year. Morgan Stanley analyst Katy Huberty and her team say their AlphaWise tracker suggests demand is higher than their estimates. This week another firm, BlueFin, also suggested that demand for the handset could be higher than they expect, although BlueFin’s estimate is much higher than Morgan Stanley’s.
iPhone supply versus demand
Morgan Stanley’s AlphaWise Smartphone Tracker uses web search analysis. It suggests that iPhone shipments for the current quarter are ahead of estimates. Huberty and her team have been projecting that Apple Inc. (NASDAQ:AAPL) will report sales of 38 million iPhones during the quarter. However, she says their tracker data suggests that there’s demand for 42 million iPhones, which suggests upside to iPhone revenue and Apple’s earnings per share.
According to Huberty, their tracker has been a “very good indicator” of Apple Inc. (NASDAQ:AAPL)’s number of iPhone shipments. In fact, she states that it has been more accurate than consensus estimates over the last year.
Why demand might be better than expected
She cited a number of reasons for why Apple Inc. (NASDAQ:AAPL) may be having better than expected demand. She states that supply chain production usually leads the company’s revenue recognition. As a result, as production of the handset declines from its peak in the previous quarter, demand may outstrip supply.
In addition, she said new U.S. carrier promotions during the current quarter could be driving incremental demand, compared to late last year when carriers were being very strict about their two-year contract requirements. She also notes that a number of major retailers in the U.S. ran iPhone promotions in the current quarter as well.
Apple shows improvements
According to the analyst, Apple Inc. (NASDAQ:AAPL)’s iPhone sales improved in all the major regions they track except for China. Once again, she points to U.S. promotions as being a key part of the company’s U.S. improvement. She also states that Western Europe received a boost from the improving macro environment and that Japanese carrier NTT DoCoMo’s launch boosted demand there.
She states that comparisons in China are more difficult now because the iPhone launched earlier this past year than it has in previous years. Also she suspects that China Mobile offset the difficult comparisons slightly, but she believes most of the benefit from the addition of that carrier will come late this year as subscribers wait for the iPhone 6, which is expected to have a larger screen.
