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Last quarter's stellar Apple sales demonstrate that the creation of a second halo using the iPhone is paying off and may be helped by a future ultraportable or new iPhones in the spring, according to a new report from UBS Investment Research.
"We continue to believe Apple is in the process of creating another version of the 'multiplier effect,' which we call 'Halo 2,'" Reitzes says. "Appleâs fiscal 4Q results show that the build up to the launch of the iPhone and its ongoing excitement is driving sales of accessories, boosting retail traffic, and helping drive sales of iPods and especially Macs. As a result, we believe shares can continue to move higher into Macworld [Expo] in January."
The researcher also observes that the slightly disappointing iPod sales of 10.2 million, which represent the chief downside to the past quarter, are likely to be only a momentary setback. Customers have been waiting for new iPods and had less than a month to buy into the new line this summer, he says. iPod touch sales have been particularly affected, as many stores could not stock the player at all until the very end of the period.
Full availability of these iPods is likely to provide a surge in sales during the last few months of calendar 2007, Reitzes adds, and should be helped by multiple factors already at work. The impending release of Mac OS X Leopard, the recently updated iMac, and European iPhone introductions should help Apple meet its relatively ambitious financial targets for the next quarter, even in the face of poorer non-OS software sales and steeper component pricing.
Reitzes also goes so far as to suggest that Apple's deck may be heavily stacked for the first few months of 2008 and should drive additional growth in the first calendar quarter, noting the possibility of new ultraportable devices, gaming initiatives, and iTunes video rental services. Significantly, the UBS analyst hints that the iPhone should see a major expansion in the next few months with a refresh due before springtime, potentially reinforcing the halo effect once more.
"We expect Apple to make an announcement on additional international iPhone carriers in the coming months," he says, "and our contacts in the supply chain point toward a new iPhone model to be released by March."
The expert does not elaborate on whether the upgrade is an entirely new class of iPhone or a change to existing models.