Rumors that inevitably swirl ahead of each new iPhone launch. Among them, there are always rumblings of supply shortages at launch, and some reports inevitably state that the new iPhone’s release may even be delayed due to manufacturing difficulties. Such is the case with the upcoming new “iPhone 8,” which will be Apple’s first completely redesigned iPhone since it released the iPhone 6 and iPhone 6 Plus back in 2014. The company has been reusing the same phone design each year since then, but that comes to an end in 2017 with a ground-up redesign for the iPhone 8, and new glass housings for the “iPhone 7s” and “iPhone 7s Plus.”
This line of rumors ahead of the iPhone 8 launch is shaping up to be a bit different from years past, however, because in the case of this new iPhone, the rumors are likely true. Based on everything we’ve read and everything we’ve heard from our own sources, the iPhone 8 will be delayed. That “delay” may end up being a severe supply shortage at launch as production ramps up, or Apple might go as far as to push the phone’s release back to October.
There’s an above-average amount of doomsday prepping surrounding reports of the iPhone 8 delay, but try to keep in mind while you read it that it’s all just nonsense. As the late Chester Bennington belted so famously, in the end it doesn’t even matter.
For a period of time two decades ago, every year was Apple’s last year in business. Now, every year is Apple’s last year at the top. Keeping up with all the naysayers predicting the Applepocalypse is a fool’s errand indeed… but it’s still fun to point and laugh.
The crisis du jour right now is potential iPhone 8 launch delays, which appear more and more likely with each passing day. Apple’s new iPhone 8 stuffed to the gills with cutting-edge tech, and as a result it’s difficult to mass produce. Apple bears and even a few silly bloggers have determined that this means the end is nigh for Apple. That, obviously, is ridiculous.
Here’s an excerpt from a levelheaded note sent to clients earlier this week by Guggenheim analyst Robert Cihra:
We believe Apple has some valid long-term issues that ultimately matter for the stock (e.g., size, elongating smartphone replacement cycles, China, Services) but do NOT think any short-lived delay launching its new high-end iPhone 8 SKU qualifies as one of them.
Rather, we believe its UNIQUE iOS means loyal users will WAIT, so any units pushed out of CY17 would just be pushed into CY18. Given the stock trades on forward numbers, that could even end up a boost, similar to how we see limited supply of OLED screens turning this iPhone into a 2-3 year upgrade cycle; helping push macro hurdles out to 2019-20E.
Apple reports Jun-qtr earnings on Aug 1 and we remain 3c ahead of consensus. We cut our Sep-qtr/FY17E EPS by 18c for a further delayed launch of iPhone 8 but just push that into FY18E, which pushes our EPS to >$11, now 50c ahead of consensus.
This is by far the most sensible take on the situation. Apple definitely has some serious hurdles to overcome in the future, but an iPhone 8 delay is not one of them. Apple has the most loyal customers in the world among consumer electronics companies. Perhaps among all companies. iPhone sales may indeed dip in the September quarter, but those sales aren’t disappearing, they’re shifting into the first and even second quarters of fiscal 2018.
If you’re an investor, potential iPhone 8 supply shortages or a release delay obviously matter because the market will react in the short term. The market reacts to everything. But if you think Apple will ultimately lose any meaningful portion of sales, you’re crazy. iPhone supply is always short at launch, and we’ve yet to see a mass exodus as a result. With Apple’s first completely redesigned iPhone since 2014 about to launch, don’t expect to see a mass exodus in 2017 either.
