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iPhone SE and iPhone 7 Should Drive Revenue for Apple in 2016

Adam Rogers

Why Apple's Stock Fell following Its Fiscal 2Q16 Results

(Continued from Prior Part)

Apple targets 4 million–5 million iPhone SE shipments in fiscal 3Q16

According to AppleInsider, Apple could ship 4 million–6 million iPhone SE units in fiscal 3Q16. However, it may not be able to compensate for the fall in iPhone 6s and iPhone 6s Plus sales. DigiTimes stated that Apple’s chip orders have been slow compared to the same period in previous years.

RBC Capital Markets analyst Amit Daryanani stated that shortages of the iPhone SE (AAPL) in stores and online platforms bode well for investors. Daryanani expects Apple to sell more than 40 million 4-inch iPhones in 2016, and it projects 15 million units of incremental sales for Apple this year.

The iPhone SE could drive revenue by $6.8 billion, or $0.23 per share, in 2016, with an ASP (average selling price) of $450. The majority of sales of the iPhone SE could come from emerging markets (EEM) such as India.

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Apple is unwilling to sacrifice profit margins to penetrate Indian markets

Apple launched the iPhone SE in India (INDA) on April 8, 2016. The iPhone commands a 36% price premium in India compared to the United States. After taxes, the 16GB iPhone SE costs 39,000 Indian rupees (or $586) compared to $430 in the United States.

The iPhone 6s is priced at 62,000 Indian rupees (or $930) compared to $700 in the United States, keeping it out of reach for most Indians.

Apple accounts for 2% of the Indian smartphone market, as almost 80% of the country’s smartphones are priced under $150. Apple is seeking approval to import and sell used iPhones in India, but other smartphone manufacturers such as Intex, Micromax, and Korea’s (EWY) Samsung (SSNLF) are opposing it.

According to the International Data Corporation, Samsung continues to lead the smartphone segment in India with a 24% market share. Samsung is followed by domestic players Micromax and Intex with market shares of 16.7% and 10.8%, respectively. China’s (FXI) Lenovo (LNVGY) has a market share of 9.5% in India.

The iPhone 7 will be launched in September 2016. It’s expected to be a massive hit among iPhone users, and it will drive revenue during the holiday season later this year.

Continue to Next Part

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