Apple iPhone demand may be better than thought: Morgan Stanley

Apple Chief Executive Tim Cook is known for being a football fan, and specifically of the Tigers of his alma mater Auburn University. As such, it’s possible he knows a thing or two about say, running a play-action pass (that’s when a team sets up to look like it’s going run the ball, but then lets go with a pass play) and how to fake out and take advantage of your opponents.

So, could Cook have been reaching into his bag of trick plays back in January when he said Apple expected iPhone growth to show a year-over-year decline during the first quarter of 2016?

We won’t know for sure until Apple reports its fiscal second-quarter results in about a month. But there’s a growing sense among Wall Street analysts that iPhone sales might turn out to be better than Cook suggested two months ago.

The latest Apple follower to raise expectations for the iPhone’s performance was Morgan Stanley’s Katy Huberty, who on Tuesday cited evidence suggesting Apple could end up selling 56.5 million iPhones during the quarter that ends March 31. Huberty noted that the latest data surpasses Apple’s own expectations of 52 million iPhone sales, and her own earlier forecast for sales of 49 million iPhones in the quarter.

Huberty said one of the key factors in Apple’s favor is the situation in China, which appears to have improved beyond what Apple was seeing earlier this year. Huberty said China “remains the country with the strongest growth” in Morgan Stanley’s research, with year-over-year sales appearing to be up through the end of February.

It’s no secret that China is important to Apple’s future business prospects. China accounted for $18.4 billion of Apple’s $75.9 billion in total revenue in the company’s fiscal first quarter, and sales in China rose 14 percent from the same period a year earlier.

Huberty also said that a new, 4-inch iPhone “could provide an additional boost” for Apple in the months ahead. Apple has an event set for March 21 in which it is expected to unveil a new, smaller iPhone model that is being called the iPhone 5SE.

The chance that Apple’s iPhone sales won’t be as bad as feared was enough to give Apple’s shares a boost of 2.2 percent, to reach $104.81 Tuesday.

Now, those iPhone sale possibilities that Huberty mentioned still fall short of the 61.1 million units Apple sold during the second quarter in 2015. But, if Apple does end up selling more iPhones than it has forecast, Cook may just have a new trick play to keep around as part of Apple’s game plan.

Photo: Apple CEO Tim Cook speaks during an Apple event in San Francisco, in March 2015. (AP/Eric Risberg)

 

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