Apple: October iPhone Report Seems Questionable

Aug. 4.14 | About: Apple Inc. (AAPL)


MacRumors believes the iPhone 6 launch will be delayed.

Could the iPhone 6 launch in October instead of September?

Apple would be completely reversing course here.

A fiscal Q4 "warning" would need to come if this rumor is true.

Last week, an interesting Apple (NASDAQ:AAPL) rumor slipped out. MacRumors reported that the iPhone 6 launch date may have been pushed out to October. This newest rumor makes it seem that Apple could announce the phone in September, but release it on October 14th. Previously, most expectations were for the phone to be released with a week or so left in Apple's quarter, as has been the case in recent years. Additionally, Apple is expected to launch two larger-screen models, so that angle adds even more confusion to this issue. Today, I'm going to examine this rumor in more detail, because it seems questionable, to say the least.

The first reason why October seems a bit odd is because it might make the month too busy for Apple. Most expectations are that a new iPad will be announced and perhaps even launched during that month, and some even think that a new product like the iWatch will come as well. Apple usually likes to separate its product launches and announcements out a bit. So to cram them all into one month, especially one where the company reports earnings, just seems a little outside of reality.

The second reason why I find this rumor questionable is that it doesn't gel with Apple's quarterly guidance, unless you believe either the iPad or something else will launch in September. In its latest quarterly report, Apple guided to fiscal Q4 (September-ending quarter) revenues of $37 billion to $40 billion. A large portion of that range is above the $37.43 billion figure Apple reported for its June-ending fiscal Q3. Since iPhone and iPad sales slow down as we get closer to the launch of newer versions, why would Apple guide to a sequential rise in quarterly revenues if the iPhone 6 was not coming until October?

We're not even two weeks removed from Apple's earnings report, so if this rumor about an October launch is true, it would mean Apple has essentially done a 360 in a short period of time. Additionally, if Apple was planning on an October launch, with no new product launches in the fiscal Q4 period, you would figure that the company would essentially have to "warn" for the quarter, even though the Beats deal has closed. It seems highly unlikely that Apple could make that revenue guidance number without some kind of major launch, preferably a new iPhone. Apple would need to revise its guidance in a major way for Q4, detailing how the iPhone launch was being delayed for a month. The Apple bear camp would see that as a major warning, while the bull camp would just say sales are being pushed back a little. Something like this would really shoot December-ending fiscal Q1 estimates to the moon. If Apple were to delay a launch by a month, I do think the stock would be hit a little, because some phone sales would be lost. How much is a key question, and that's something that not many would be able to answer.

In conclusion, investors should be somewhat skeptical about the October launch rumor for the iPhone 6. If true, Apple would be completely reversing course, and the company would essentially need to guide down for fiscal Q4. I continue to believe Apple is a good buy on pullbacks, like the recent one we have seen. Short interest in Apple hit a 2014 low at the most recent update, which tells you that the bears are starting to run away. If the market can hold up in the next couple of weeks, I do believe Apple will be able to cross the $100 mark. Investors should stay positive on the name.

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