UBS analyst Steve Milunovich is slashing his iPhone estimate for the holiday quarter to 38 million, down from 44 million, citing supply issues:
"Poor outlooks from Skyworks and Jabil along with our checks indicate that iPhone supply issues limit near-term shipments. In-cell display manufacturing yields ramping gradually likely is the culprit. This shortfall mostly appears to be a timing issue though we assume some lost sales in an effort to be conservative."
(Skyworks and Jabil are chips/supply chain companies.)
While Milunovich has 38 million as his official target, he says Apple could sell more, but it's unlikely it sells more than 40 million. (His exact language: "We are cutting our estimated iPhone shipments in the Dec quarter from 44mn to 38mn units with upside unlikely beyond 40mn." So, that's 38 million-40 million for a complete range.)
What's worse is that Apple will NOT get back those 6 million in lost iPhone sales, says Milunovich. He thinks rivals are going to capture the lost sales:
We have not added the “deferred” 6mn iPhones to future quarters in the conservative belief that shipment delays could result in some lost sales as competitive models come out. We continue to look for iPhone shipments of 44mn in Mar, 43mn in Jun, and 38mn in Sep for a total of 163mn units. Consequently, our F13 EPS estimate falls from $53.76 to $52.51 vs. consensus of $53.32. There may be iPhone upside, however, and we have not factored in incremental sales from the possible iPad mini launch.
Milunovich still has a buy rating on the stock and a twelve-month price target of $780.