Apple’s stock was getting demolished this morning after AT&T reported a massive decline in iPhone sales.Coupled with Verizon’s drop, investors are worried that Apple’s total iPhone sales are going to be worse than expected.
Brian White at Topeka Capital put out a note on why the panic is over stated. He says that Apple has staggered the release of the iPhone 4S, and this should more than offset any weakness we’re seeing on a quarter to quarter basis at Verizon and AT&T.
Here is his note:
Post Launch, AT&T Usually Drops Significantly as a Percentage of iPhone Sales. In our earnings preview yesterday, we indicated that the staggering of five phases of the iPhone 4S launch will make the U.S. carrier data less relevant.
For example, the iPhone 4S was launched in the U.S. and six other countries on October 14, 2011, followed by 22 countries on October 28, 15 countries on November 11, 26 countries on December 26 and 22 new countries (including China) on January 13 of this year.
Using our 29.6 million iPhone unit forecast for the March quarter, we estimate AT&T would account for 14.5% of total iPhone shipments and down from the 20.5% in 4Q11.
During 2011, AT&T represented a quarterly average of just over 18% of total iPhone shipments. Taking a look back at the launch of the iPhone 3GS (6/19/09) and iPhone 4 (6/24/10), AT&T’s percentage contribution of total iPhone shipments fell substantially during the first full quarter after the launch. For example, AT&T contributed approximately 43% of 3Q09 iPhone shipments but dipped to 35% in 4Q09. During 3Q10, AT&T approximately contributed 37% of iPhone shipments but this fell to 25% in 4Q10.
Due to the decline in U.S. iPhone activations after a launch and the ramp of international markets, we believe it is difficult for investors to read much into either AT&T or Verizon’s (VZ, $38.57, NR) iPhone activations to estimate total iPhone shipments for this March quarter.