Why Apple sold only 17.1 million iPhones


Apple (s aapl) sold a lot of iPhones, iPads and Macs during the most recent quarter, yet Wall Street is very displeased. Since Apple announced its fourth quarter 2011 fiscal earnings of $6.6 billion in profit and $28.7 billion in revenue earlier Tuesday the stock has been pummeled by investors, sending it down $28 or about 6.5 percent. While Apple’s numbers were slightly below what those analysts had expected, it’s still above what Apple had forecast. So what gives? Based on the questions from analysts during the company’s investor call Tuesday, concern seems to center on the number of iPhones Apple sold during the quarter: 17.1 million versus the 20.1 million the previous quarter.

Here’s why that number concerns them and why it’s likely just a minor blip:

  • Apple says that this was a “record” September quarter for them. You would think that would mean record iPhone sales too. Sure, 17.1 million is a lot, but it’s still fewer than the 20.1 million iPhones Apple sold in the previous quarter, and perhaps more importantly to those keeping score on Wall Street, below the 18-21 million smartphones Samsung is believed to have sold last quarter. Samsung is Apple’s chief competitor, in many ways, and any sign of a slip is going to resonate with the investors who are closely watching Apple and its competition.
  • Apple, not surprisingly, said they saw this dip in iPhone sales coming. On the earnings call, CEO Tim Cook, looking on the bright side, said people were holding out for the iPhone 4S:
[It was] much less of a reduction than what we were expecting and that was a large factor in our revenue exceeding our guidance…We knew that there was great anticipation of a June or July new iPhone because that was the pace we had been on for the last several years. As we predicted, that sell-through decline did occur, but not really to the extent that we thought. So we significantly beat our guidance.
  • But besides the established schedule for a new iPhone, Cook, along with CFO Peter Oppenheimer also lay some of the blame at the feet of Apple rumor bloggers. “The reduction [in sales] happened largely in the back half of the quarter as speculation hit extreme highs,” said Cook. Oppenheimer later added, “The biggest impact was the rumors, which were very pervasive, especially at the end of the quarter.” In other words, it seems that the crush of Apple rumors and speculation recorded by blogs that drive up intense and frenzied interest in the company’s products are a double-edged sword for the company.
  • No matter who’s to blame, are lower-than-expected iPhone sales a harbinger of Apple being off its game? Very unlikely. Some things to remember: The company sold 4 million iPhone 4S units alone in the first three days it was available last week. So there’s clearly a demand for the new iPhone. About 25 million iOS devices were updated in the first five days the iOS 5 update hit Apple’s servers, which means older model device owners are keeping their products up to date with the latest software. And really, we’re talking about the slowing of sales of a 13- to 15-month old phone. Things could be worse.


His Shadow

If you were being accurate, you’d have put ‘only” in quotation marks.

Idon't Know

Apple met their projections. Wall Street didn’t meet their unrealistic projections. It’s that simple.


Apple failed to mention:

1) the east coast hurricane that stalled sales for at least three days throughout many of it’s biggest retail markets, and
2) the north east cost earthquake which again had an impact on sales, and
3) the London riots which caused several stores to close for days.

teddy cranzowski

The sequential drop should not have been a surprise for a few reasons. If you combine a quarter before a new launch you get inventory drawdown plus buyers delaying purchases. Given the extended period the iPhone 4 was in the market and then extent of the iPhone 5 rumors this was larger than usual. I addition, last quarter was unusually high as iPhone was rolled out at an unusually high number of new carriers and countries. The channel fill alone boosted the previous quarters numbers. You can add to that the mistake in the year over year growth projections that applied growth rates to a 2010 quarter that included the iPhone 4 release to match instead with a drawdown/delayed purchase quarter and you have the perfect recipe for people to be projecting numbers that are way too high.


Apple has never stated one way or another if the 4S was actually delayed or if in fact it was quiet shift of the yearly iPhone introduction cycle one quarter forward to take advantage of the Christmas buying season. Wharever the reason, Apple did pretty well avoiding the Osborne Effect.


Sales dip has nothing to do with competition from Android mainly and WP7 to a small extent but everything to do with Gizmodo and techcrunch. I was thinking exactly the same thing, I wonder if we did not have rumors last year.. or it is magical this year.

His Shadow

“below the 18-21 million smartphones Samsung is believed to have sold last quarter.”

Wait. Apple is getting beat up for beating it’s own numbers, but not the fantasy numbers Wall Street shits out, and as comparison they use a company that hasn’t produced it’s actual numbers?

Jesus, this analyst thing is easy. You just have to have no self respect or self awareness.

Bryan McKelvey

I replied above, but Apple’s numbers are fantasy, too. It’s just part of the delicate earnings guidance dance, and Apple’s strategy is to estimate as conservative as possible. The Street adds a bit on, then they ooh and ahh when Apple beats. Apple didn’t beat this time, for the first time in at least five years (that’s twenty quarters). Here’s a good article with a very clear graph on how actual figures beat Apple’s forecast:


Now, I don’t have a problem with Apple doing this (the short-term earnings game is brutal and stupid), but the context that they always lowball is pretty important.

tim jones

Apple overhypes crappy trinkets, so when the hype overshoots reality, there’s a big letdown

His Shadow

You know whose missing reality? People who still think that Apple makes trinkets. Grow some balls and just admit you don’t have the first idea of what you are talking about.

Raja Devanathan

The sales were not that low, especially considering the new iPhone 4S was on the horizon.

The Ziigster Team


17m + 4m {hold backs} = 21m = ??m for this quarter
Just noticed the numbers, doesn’t mean anything … really
The last thing they should worry about is “analyst”.


17m + 4m {hold backs} = 17m for this quarter. If you added the 4 million iPhones sold at launch to the previous quarter, you’d have to subtract them from the current one. You can’t count them twice.


Sales dipped because Apple failed to produce a new phone in a timely manner. Tim Cook is twisting the cause by saying people were waiting. The iPhone 4 was growing stale. For an iPhone.

Steven Van der Werf

What this means, in the most absolutely basic sense, is that Wall Street is run by complete dicks. Hands up if you’re surprised.
When vast chunks of the economy are handled by people who bet the farm on unsubstantiated rumours, it’s entirely unsurprising that things go bad occasionally. Or in the case of Wall Street, constantly.

Yup. The worlds most valuable and innovative tech company did better than they thought they would, but not as well as uninformed bloggers hoped they would.

guess which is more important to Wall Street.

there’s a whole lot of institutional pain right there.


Agree. Blind fredy could see that a dip was likely pending release of a new iphone and the attended mouth frothing speculation.

Bryan McKelvey

Actually, Apple routinely underestimates sales, it’s just a matter of how much. If anything, historically Wall Street’s been overly acceptant of Apple low sales estimates. It’s just part of the earnings kabuki. I worked for a company with an extreme focus on short-term earnings guidance, as well as another that refused to give it. The latter strategy made a lot more sense to me — it keeps your name out of the headlines, and the most-read headlines are the bad ones — and Apple seems to be following it in their own way (under-promise and over-deliver).

I work in finance, and I’d tell you not to trust wire house analysts anyway, but this isn’t an example of dickishness. It’s that Apple puts out lowball figures, Wall Street adds a tiny bit on, then everyone is shocked when Apple blows away consensus estimates. Investors caught on, and now when Apple fails to meet the Street, investors sell. The stock’s still up 30% year-to-date (the S&P is down 3%).


I am not an Apple fanbois….100% Android. That said…common sense would tell you iPhone sales last quarter should be lower. The iPhone 4 was getting pretty long in the tooth. Lots of speculation about the iPhone 5 and when it was coming out. That is the inherent problem of Apple’s one phone….one update per year strategy…..no one with any tech savvy wants to get stuck with a late in the cycle iPhone.

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