Gene Munster previews next Tuesday’s Apple event

“If you’re in the market to purchase any of these updates, order early.”

From “Apple’s New Hardware Rides the Digital Transformation Wave” mailed late Thursday to Loup Ventures subscribers:

Apple’s September 14 “California streaming” event will be the biggest day of the year for hardware announcements. On top of that, we expect Apple will host an additional hardware event in October, with the new models announced at both events accounting for about 40-50% of the company’s revenue over the next 12 months.

Like every year, the tech industry will focus on the new products specs and pricing. Apple customers, on the other hand, will elevate to a higher view; that is, the reality that they increasingly depend on Apple’s integrated family of products, services, and support to equip for work and learn from anywhere. Addressing that consumer need will benefit demand for the next one to two years. Beyond that, these products will be foundational to the multi-year digital transformation wave which will gain momentum with 5G and AR.

Tip: If you’re in the market to purchase any of these updates, order early. Chip shortages likely mean long lead times, with supply demand equilibrium likely coming in the March 2022 quarter…

From an investor’s standpoint, the trajectory of the iPhone business over the next year has less to do about specs and pricing, and more to do with the age of the phone. Last year, we estimated the pool of iPhones three years or older to be 420m. That base will drive iPhone revenue growth in FY21 of about 40%, compared to a typical year of low single-digit growth. For next year, the Street is looking for 5% growth and 260m units. Given the pool of 400m iPhones three years or older iPhones, we see upside to the FY22 consensus growth estimate.  The larger the upgrade pool, the bigger the potential tailwind.

My take: A 40% bump in iPhone revenue growth would be pretty sweet and should please the Street.

4 Comments

  1. Michael Goldfeder said:
    Tony S.and Rod were expecting at least a 42% bump up. Exposing the fallacy of the purported “Super Cycle” of 5G.

    1
    September 10, 2021
    • Fred Stein said:
      Thanks Michael. Gene’s 420 M figure of upgrade-ready iPhones becomes a constant, especially as Apple nibbles away at the Android IB.

      0
      September 10, 2021
  2. Steven Philips said:
    My take: “SHOULD please the street” … but after 3 quarters of “should”, will it?

    1
    September 10, 2021
    • Gregg Thurman said:
      Ah, Steven, you beat me to it. Each of the last three quarters should have made WS deliriously happy. But they didn’t. It all comes down to WS doubting that Apple’s recent explosive growth is sustainable.

      A sample of one does not a trend make. A sample of two strengthens the argument. A sample of three should be convincing. But WS just isn’t been biting. It has to be hit squarely on the nose by a 2 X 4 before it sees the obvious. As proof I give you Tony Saccocrap. And, of course, there are exceptions to every rule. Jeffrey Kvaal of Wolfe Research, sporting a bloody nose, has recently recognized the obvious.

      In my opinion Apple’s superlative growth will last at least another year, then after that it doesn’t matter, as the smallest percentage of actual growth will be bigger than the Market Cap of 70% of the S & P 500 companies.

      0
      September 10, 2021

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