Apple iPhone 5 Release May Face Supply Constraints: Why This Could Boost AAPL Stock

on September 05 2012 2:31 PM
iPhone 5

Rumored supply chain issues may have an impact on the release date for the iPhone 5, as it was reported that Sharp Co is behind schedule in producing the device's display. However, this influence may not be a negative one. New analysis has found that constraints have actually had a positive effect on Apple's stock price, reports Apple Insider.

According to analyst Rob Cihra of Evercore Partners, AAPL stock has performed 2.2 times better a quarter after the company said that the iPhone supply was constrained. Additionally, the stock performed 1.2 times better in a quarter after it was noted that the supply of the iPad was constrained.

During the June 2010 quarter in which both the iPhone and the iPad were said to be constrained, as Apple executives noted, the Cupertino, Calif.-based company's stock price grew by 26 percent over the next three months. However, in October of 2011, Apple did not report that either of these devices were constrained and the stock price saw no growth over the following three months.

This pattern could stem from the idea that Apple customers will wait for an Apple product to be released rather than buying an alternative device, Cihra speculated. Investors recognize this trend, and the analyst added that if supply exceeds demand, investors begin to imagine what numbers could have been if Apple had met supply.

Cihra predicted that 24 million iPhones would be sold during the September quarter, representing a 39 percent year over year growth. As for the holiday quarter, he expects 49 million iPhone units to be sold, setting a new record for the company. Even with that number of sales, Cihra still thinks that demand will exceed early supply, as Apple Insider reports.

The constraint may be caused by the production of the in-cell touch panels said to be features on Apple's iPhone 5. Sharp Corp, one of the three manufacturers partnered with Apple, has reportedly fallen behind schedule just weeks before the iPhone 5 is rumored to be announced. Reuters reported at the end of August that the "Japanese display maker is struggling with high costs that have cut into its margins on the screens."

A source said to be familiar with Sharp's production operations had spoken to the news wire service, but did not specify how far behind schedule the company is. Other suppliers on board with Apple include LG Display Co and Japan Display.

Supply is also predicted to slow for the 28-nanometer basebands from Qualcomm. This lull is expected to last until at least December, according to Apple Insider.

                                                                      Making Wall Street History

Apple's (AAPL) stock is currently at approximately $673, a decrease of about .23 percent after a late-day surge on Tuesday put the company at $674.97. The increase is likely due to high anticipation surrounding the iPhone 5, as Apple sent out invitations on Tuesday to its press event on Sept. 12, heightening speculation that the flagship smartphone will be unveiled that day.

At the end of August Apple shattered stock market records and became the most valuable publicly traded stock, beating out competitor Microsoft who previously held the record.

The release date for the iPhone 5 is expected to bring the biggest handset launch in history, with analysts predicting that sales will reach up to 10 million in its first week. Gene Munster of Piper Jaffray shared this information with AllThingsD.

"We believe that if the 21st is the actual ship date, Apple could sell six million to 10 million iPhone 5s in the final week of September, barring supply issues," Munster said to the tech news source.

This means that the iPhone 5 would need to have a spectacular opening weekend to bring in numbers that big. First-weekend sales of iPhones have proven to produce high sales numbers in the past, with the iPhone 4S selling more than four million in its initial weekend. The iPhone 4 sold more than 1.7 million during its weekend debut and the iPhone 3GS pushed out more than one million units.

                                                                 An Early Release Date For China?

It has also been reported that the iPhone 5 is set for a release date at the end of 2012 in China, Apple Insider reported on Wednesday. Sources at China Unicom have allegedly said that the company recently negotiated with Apple regarding the next-generation iPhone.

China Unicom Deputy General Manager Li Gang and other unnamed executives visited the United States last month in a trip that was describes as "successful" by Sohu IT. This resulted in a release date that may be earlier than expected for the iPhone 5, reportedly.

In the past, Apple has staggered product launches, with China typically left waiting months after the United States debut of a device. If these rumors hold up to be true, China may be getting the iPhone 5 quicker than the country has received any Apple product in history.

Last October, the iPhone 4S launched at the same time for the United States, Canada, Australia, the United Kingdom, France, Germany and Japan. The device was made available to buyers in China nearly three months later in January, although rowdy crowds pushed Apple to delay the official release date.

                                                            Features Roundup: What To Expect At Launch

Apple's iPhone 5 is expected to bring a host of new features with its iOS 6 operating system and redesigned hardware.  Additions to come with iOS 6 include many improvements with Siri, all-new Apple Maps that will replace Google Maps, Passbook, more Facebook and Twitter integration, and improved iCloud integration. The iWallet and 3D photography are also expected to arrive with the next iPhone.

In terms of physical features and specs, the iPhone 5 is expected to come with a longer and sleeker 5-inch display, tougher glass, redesigned speaker grills, OLED display, a larger front plate, a new dock connector and more.

The iPhone 5 is likely to be accompanied by redesigned earbuds also, as a video of these alleged headphones surfaced recently.

See the full list of anticipated features here.