iPhone 5

Apple said it sold 5 million iPhone 5 devices over launch weekend, but that figure may have fallen short of the lofty expectations of Wall Street analysts.

The company's Monday press release landed as expected. Apple said it sold a bunch of iPhone 5 units and demand outstripped supply. Many preorders will slip to October and miss the current quarter.

Apple CEO Tim Cook said:

While we have sold out of our initial supply, stores continue to receive iPhone 5 shipments regularly and customers can continue to order online and receive an estimated delivery date. We appreciate everyone’s patience and are working hard to build enough iPhone 5s for everyone.

Now here's the catch---and the absurdity at times---of the expectation game.

As noted previously. Wall Street analysts such as Piper Jaffray's Gene Munster were looking at 6 million to 10 million units in the first weekend.

Munster had said:

We believe that the reported 2 million iPhone 5 pre-order unit number suggests that Apple could sell 6-10 million phones in the launch weekend. We believe Apple will issue a press release on Monday September 24th about launch weekend sales. The mid-point of our weekend sales total would suggest 100% y/y growth from the iPhone 4S launch. We note that iPhone 4S grew 135% y/y in its launch weekend compared to the iPhone 4.

In that context, Apple's 5 million units for the iPhone 5 look disappointing. It's unclear how supply hurt sell-through, but Apple shares are already selling off in premarket trading.

For comparison, Apple sold 4 million iPhone 4S on launch weekend in 2011.

Update: Analyst reaction was mixed. Munster said:

This morning Apple announced the sale of 5 million iPhone 5s in the first weekend compared to our 8 million estimate (6-10 million range). We believe there are two factors that negatively impacted the number. First, our sales expectation assumed that Apple would include all phones pre-ordered online. We believe that this may have been up to 1 million additional units as units pre-ordered after the middle of the first day were projected to be available in October. Second, we noted 1.25 days of Apple Retail inventory compared to 2.5 days during the 4S launch. Our 8 million estimate assumed full weekend availability and the counting of all online pre-orders. We believe that if supply were not a constraint and Apple included all pre-orders, the launch weekend number would have been closer to 7-8 million, assuming ~1 million October pre-order sales and an additional 1-2 million units at retail.

Wells Fargo analyst Maynard Um said:

Apple announced it has sold over 5 million iPhone 5s in the opening weekend, which exceeds the prior record of over 4 million sold when iPhone 4S was launched last October. However, Apple also noted that “while the majority of pre-orders have been shipped to customers,
many are scheduled to be shipped in October.” We believe this will cause some concern with regard to total iPhone 5 units in the September quarter, which we think expectations reached as high as 10 million units. We would note that (1) Apple will have 20 more country launches this Friday (9/28), where, based on our interpretation, means there have been no iPhone 5s sold yet in those countries (though Apple should recognize these as revenue because of its sell-in recognition policy), (2) our expectation was lower and also incorporated lower iPhone 4S sales due to the 5 launch (hence, we still believe there is upside potential to our estimates), and (3) while it may make sense to assume units
below 6 million units sold over the first three days (the interpretation of “over 5 million” sold), Apple has, in the past, also been conservative in its interpretation.

Barclays analyst Ben Reitzes said:

While our weekend checks suggested very robust demand, we witnessed very limited supply. First, nearly all the retail stores and carriers we canvassed reported no inventory. We believe initial shipments were very limited – with some non-Apple stores receiving below 20 iPhone 5’s. Second, our conversations also suggested inventories were almost fully depleted within the first few hours of operation on Friday. Third, we believe Apple is struggling to keep up with demand and guidance on new shipments remains vague or non-existent. Customers were being advised that it could take 2-3 additional weeks to receive the phone at this point which is consistent with today’s release. We believe this could be a result of 1) an expanded launch, as Apple included Hong Kong and Singapore 2) extremely robust demand and probably most importantly 3) in-cell supply constraints.