Cramer's Charitable Trust: Apple iPhone Sales Continue to Shine

 | Sep 28, 2015 | 11:38 AM EDT
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The following commentary was originally sent to Action Alerts PLUS subscribers on Sept. 28, 2015, at 10:34 a.m. ET.

Earlier this morning, Apple (AAPL) announced that it sold more than 13 million new iPhone 6s/6s Plus models over the weekend, marking a new record for the company and beating analyst expectations for roughly 11 million units. The company also reported that the new phones will be made available in 40 additional countries (including Italy, Mexico, Taiwan and Spain) by Oct. 9 and in more than 130 countries by the end of the year.

Notably, Piper Jaffray released results from its annual iPhone launch day survey that revealed two key takeaways, both of which should help boost ASPs (average sale prices) over the coming year.

First, there is a continuing consumer shift toward purchases of higher capacity storage offerings since the 5s launch (remember, Apple increased its mid-tier storage offering to 64GB from 32GB starting with the iPhone 6 model). Piper noted that average device capacity (i.e., GB storage) increased 15% year over year to 81GB from 70GB at the iPhone 6 launch last year.

As mobile activity (email, mobile browsing, apps, mobile commerce, etc.) continues to dominate consumer lifestyle, higher capacity and faster processors will be in high demand. Apple is smartly capitalizing on this trend and should see a significant benefit from the higher prices consumers must pay for these devices.

Secondly, Piper noted that there seems to be a slower trend toward adopting the larger screen in the "Plus" phone models. Of those buyers who were upgrading from an iPhone 6 Plus phone, the overwhelming majority purchased the iPhone 6s Plus model as they enjoyed the larger screen. On the other hand, it seems users of the standard screen size will move more slowly toward the larger screen, as roughly half of these buyers upgraded to the Plus model. Either way, Apple's decision to manufacture two screen sizes has proven to be a success and it seems that the Plus model will become increasingly attractive for the evolving consumer, who uses the device for all aspects of life, as they get used to the idea of a larger screen.

We are very pleased, albeit not surprised, to see these encouraging results for the iPhone 6s and 6s Plus as it demonstrates Apple's uncanny ability to innovate -- both visually and technically -- in ways that resonate with the consumer.

Importantly, we expect momentum to continue heading into the fourth quarter. Apple has more selling days in the fourth quarter this year compared to the third quarter, which helps justify the initial softer guidance for 3Q (two days of new iPhone selling in 3Q this year vs. nine days last year), but will also help the company surpass sales expectations at the end of the year and reinvigorate investor interest. 

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