Excerpts from the notes I’ve seen. More as they come in.
Michael Olson, Piper Jaffray: Biggest iPhone Upgrade This Year = Choice. We believe a broader spectrum of choices for next gen form factor iPhones will drive unit upside vs. current consensus in FY19 (we are modeling 223M vs. consensus at 219M). Regarding iPhone ASP, based on the new lineup, unit mix assumptions drive our ASP estimate higher, resulting in upwardly revised overall revenue and EPS for Apple in FY19E & ’20E. The launch of a wider array of “X-gen” iPhones is providing an iPhone user base that is on an aging installed base of devices with more choices to upgrade to the new form factor. Based on this, we recommend owning AAPL for the “super-long” cycle involving an ongoing multi-year move to the “X- gen” iPhone lineup. Overweight, $250.
Gene Munster, Loup Ventures: Larger Screens Are Good for ASPs and Unit Growth. This is the largest increase in screen size since 2014 when the iPhone 6 display jumped 35% from the iPhone 5s. At the time (FY15), consumers responded to the larger display size, propelling a 37% increase in iPhone units (up from 13% in FY14). ASPs also moved higher, growing 12% y/y ($599 to $669). This increases our confidence in our FY19 iPhone unit growth of 3%, compared to the Street at 0%. Separately, we are now modeling for a 7% ASP increase in FY19 (to $791), compared to the Street at 2% ($756). If the iPhone units reach FY15 levels of 231M units, overall iPhone units would grow 6% in FY19. This comparison increases our confidence in our current 3% iPhone unit growth target.
Aaron Tilley, The Information: The iPhone gets bigger. With the iPhone XS Max, Apple has launched its largest phone ever with a 6.5-inch screen. That’s bigger than even Samsung’s famously large Galaxy Note phones at 6.4 inches. Previously, Apple’s biggest phones measured only 5.5 inches. There are good reasons for Apple to go bigger. When Apple moved to a larger-sized iPhone with the 6 Plus in 2015, the company experienced a massive spike in demand. People typically use more apps—such as watching videos or playing games— with larger phones. Increased app usage will help drive more App Store and online services revenue for Apple.