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Apple’s iPhone Launch Wasn’t as Good as It Seems

9 million is a lot of iPhones, but there's more to the story

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Investors have always been quick to react to Apple’s (AAPL) annual iPhone launch weekends.

As mobile devices have come to dominate the company’s bottom line, those launches have gained in popularity as a metric for gauging the likely success of the iPhone in the coming year. While the natural expectation might be that AAPL would see a boost after Apple announces those sales numbers for the three-day launch weekend, the actual trend has been for AAPL to slide in the week afterward as the launch (even if it’s good) inevitably fails to live up to heightened expectations and rumors that reach a crescendo before the big reveal.

So far the iPhone 5s and iPhone 5c launch hasn’t followed the same script. Numbers are up in a big way, but so is AAPL. What gives?

My guess is that expectations for the latest launch were set low after last year’s modest showing and lowered further by worries that the iPhone 5s –a look-alike to last year’s model that ignores consumer pressure for larger smartphones — would fail to ignite upgrade fever among users.

There were also concerns that the iPhone 5c is not the “cheap” iPhone needed to conquer the middle to low market and China. However, Apple blew the barn doors off with a launch weekend that saw a record 9 million new iPhones sold. And Apple stock has been up about 4% since the news.

However, those sales numbers may not be exactly what they sound like.

First, let’s look at iPhone launches over the past several years and the market response to each. In 2010, Apple sold 1.7 million units of the iPhone 4 during its launch weekend, representing what CEO Steve Jobs described as “the most successful product launch in Apple’s history.” In the week after, AAPL took a 7.5% slide, despite the positive numbers. Much of the negative reaction was pinned on reports of issues with the new iPhone’s antennae — a rare slip that became known as “Antennaegate.”

The follow-up iPhone 4S sold 4 million units during its 2011 launch weekend. You’d think those numbers — a 135% increase in launch weekend sales — would be enough to impress investors. But AAPL slipped nearly 7% in the week following the launch.

In 2012, the iPhone 5 sold 5 million. This was a modest yearly increase given the gains the company had reported over the past several releases, and the outcome was predictable — AAPL fell down 5%. Further, the slowing rate of iPhone sales growth was taken as a sign that the company’s glory days might be over and the iPhone 5 launch marked the start of AAPL’s big decline. Apple stock peaked at just over $700 a few days before the iPhone 5 launch and dropped by as much as 44% earlier this year before recovering somewhat as the panic wore off.

Which brings us to the most recent iPhone launch.

Article printed from InvestorPlace Media,

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