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Wall Street braced for iPhone delays as Apple leaps forward

Wall Street is braced for delays to the launch of the next iPhone, as supply shortages and manufacturing problems threaten to push the smartphone’s release later than Apple’s usual September debut.

Reports from Apple’s supply chain have caused concern about a short-term squeeze on sales and could leave Apple vulnerable to renewed competition from Samsung. 

Investors will be examining Apple’s guidance when it reports results on Tuesday for any indication of a delayed launch schedule. The quarterly figures are also likely to confirm that Samsung overtook Apple’s quarterly profits in the three months to June. 

Guidance for Apple’s fiscal fourth quarter ending in September “has the potential to be highly volatile, depending on the exact timing of the launch”, Goldman Sachs analysts wrote in a recent note. 

Tim Cook, Apple’s chief executive, three months ago blamed early rumours about the forthcoming 10th-anniversary iPhone for Apple’s failure to meet analysts’ forecasts for sales in the three months to March. That same problem could be exacerbated if, as most Wall Street analysts now predict, the new flagship model is available in only limited quantities in the run-up to Christmas. 

Samsung has announced a press conference on August 23 when it is expected to release a new version of its Note smartphones. The large-screened, high-priced Note 8 will have to shake off the reputational damage of the recall of last year’s Note 7, but could provide an attractive alternative for customers who cannot get hold of a new, sold-out iPhone.

Anticipation is building for a big leap forward in technological capabilities in a new high-end iPhone, alongside more incremental updates to the two regular models of the device.

The new version is expected to have an OLED screen that runs edge to edge across the face of the device, accompanied by a new “augmented reality” camera system. Many analysts expect this “iPhone Pro”, as the rumour mill has dubbed it, to cost more than $1,000, a first for Apple’s most popular product as the company tests its pricing power with its wealthy and loyal customers. 

The complexity of producing this supercharged iPhone and the scarcity of some key components such as OLED displays has prompted many Wall Street analysts to scale back their forecasts for the quarter ending in September, fearing that the device will not reach a meaningful number of consumers until October or later. That means the millions of iPhones that would normally generate billions of dollars in revenue for the September quarter, which is Apple’s fiscal fourth quarter, will instead fall into the next financial year. 

“We expect the high-end device to see limited availability and high supply constraints through the December quarter,” said Angelo Zino, analyst at CFRA, citing “well-known production issues with components”.

Analysts at RBC Capital Markets said in a recent note the 5.5m iPhones that would normally be sold in the final days of September, when the iPhone has debuted every year since the iPhone 4 in 2010, could now fall into the December or even March quarters, which “creates risk” to Wall Street’s expectations of revenue growth in the current quarter.

“Based on incremental supply chain data points that suggest a more pronounced OLED iPhone delay, we think the flagship device may not see initial shipments until October . . . with volume shipments not occurring until the November/December timeframe,” RBC wrote. 

Some analysts, however, think the delay may ultimately prove beneficial to Apple’s share price by bolstering sales into the new year, when the effect of a September product launch usually starts to wane.

“The delay drives our [fiscal year 2018] estimates higher and creates a dynamic of much better than normal December and March quarter seasonality,” said Morgan Stanley in a recent note.


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