Cantor Fitzgerald analyst Brian White took a close look Apple’s (NASDAQ:AAPL) supply chain and offered his thoughts on the Cupertino, California-based company’s expected product launches this fall in a note issued to investors on Monday. According to preliminary figures in the firm’s so-called “Apple Barometer,” sales during the month of June were “better than typical seasonality.” Cantor Fitzgerald’s Apple Barometer monitors the sales of various Taiwan-based suppliers that generate a majority of their sales revenue from Apple.
Although month-over-month sales growth in June was essentially flat with an increase of 1 percent or less, this was higher than the average decline of 3 percent that has been seen over the past nine years. Based on preliminary June sales numbers, White estimated that total second-quarter sales for the Apple Barometer likely saw quarter-over-quarter growth of 20 to 21 percent, approximately two times higher than the average increase of 10 percent seen over the past nine years.
White noted that the Apple Barometer demonstrated a “strong performance” during a quarter that has historically been a transition period for Apple. Cantor Fitzgerald is forecasting $37.8 billion in revenue for Apple’s June quarter, which is at the high end of Apple’s guidance for revenue between $36 billion and $38 billion.
However, White suggested that Apple’s upcoming product launches in the fall are far more important than the company’s earnings release on June 22. According to rumors reported by multiple media outlets, Apple’s iPhone 6 will be released sometime in September in two larger screen sizes of 4.7 inches and 5.5 inches. Apple is also widely expected to launch a wrist-worn wearable tech product that has been dubbed the “iWatch” in October.
White believes that the product launches will resolve two key criticisms that have been directed at Apple over the past 18 months: that it lacks a large-screen iPhone and that it lacks innovation. As noted by White, some industry watchers have criticized Apple for failing to introduce a large-screen iPhone amid the growing popularity of phablet-sized devices. According to data compiled by market research firm Canalys, devices with screens larger than 5 inches accounted for 34 percent of the total worldwide smartphone market in the first quarter of 2014.
Meanwhile, Apple’s current flagship iPhone has a screen size of only 4 inches. White noted that Apple’s momentum in China has “turned into a crawl” due to the lack of a large-screen iPhone. But according to his observations in China, rumors of a large-screen device have ignited a “’mega-sized’ appetite” for the iPhone 6. That observation is backed up by data from Canalys that show 39 percent of smartphones shipped in greater China in the first quarter had screens that were 5 inches or larger. White expects that China Mobile (NYSE:CHL) — the world’s largest carrier — will play a key role in helping drive iPhone 6 sales.
According to White, Apple’s iWatch will similarly resolve the criticism that the company has been lacking innovation. According to various insider sources, the iWatch is expected to be equipped with multiple health-monitoring and fitness-tracking sensors. Like the iPhone 6, it is rumored that the iWatch will also be released in multiple models with different screen sizes. Based on the expected success of these products, Cantor Fitzgerald is forecasting $60.6 billion revenue for Apple’s December quarter.
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