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Demand for cheaper iPhones may have hurt Apple’s holiday quarter

Published Jan 11th, 2013 12:45PM EST
iPhone 4 Sales Estimates Q1 2013

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As rumors of a new lower-end iPhone that will debut later this year persist, a new report suggests stronger than expected demand for a cheaper iPhone may already be hurting Apple’s (AAPL) performance. Canaccord Genuity analyst T. Michael Walkley on Friday lowered his fiscal 2013 estimates after retail checks revealed “very strong” holiday demand for the iPhone 4, which is now free on contract in the U.S. The analyst said there was still strong iPhone 5 demand in the quarter, but shorter iPhone 4 supply could be a bad sign.

“We believe demand for the iPhone 5 was very strong during the December quarter,” Walkley wrote in a research note on Friday. “However, based on our analysis and monthly store surveys, we believe demand for the iPhone 4 remains very strong with the iPhone 4 more in short supply than the iPhone 5.”

Apple is seemingly well aware of the trend, and it is already working to address demand for a less expensive iPhone, according to Walkley.

“We believe the strong iPhone 4 demand supports our longer-term expectations Apple will more aggressively pursue lower-priced iPhone models to expand global growth during 2013,” the analyst noted. “In fact, we believe Apple could launch a higher-end iPhone model during the June quarter versus its more typical September/October timing. We also believe Apple could potentially launch a lower-end iPhone focused on more price-sensitive pre-paid markets, as we believe consumers in markets such as China, Latin America and Eastern Europe would have strong demand for a more affordable iPhone.”

Walkley lowered his fiscal 2013 EPS estimate to $50.25 from $51.95 but maintained his Buy rating and $750 price target on Apple shares.

An earlier report suggested a cheaper iPhone will launch later this year along with an “iPhone 5S” that will be available in a number of new colors.[bgr-post-bug]

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content. Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment.

His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.