Can iPhone SE help Apple Inc. (NASDAQ:AAPL) Beat Expectations In June Quarter?

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The initial low interest in Apple Inc. (NASDAQ:AAPL)’s iPhone SE caused concerns among investors and analysts alike with some worrying whether the device would be a total failure. However, it turns out that the iPhone SE could actually help fuel overall iPhone sales leading to better than expected June quarter sales.

The iPhone SE is an opportunity for owners of older iPhones to upgrade their handsets at a more affordable cost. The base iPhone SE that comes with 16G of storage space goes for $400. In addition to providing upgrade opportunity for existing owners of iPhone 5S and older models, the iPhone SE is also expected to appeal to Android-to-iOS defectors.

In the recent quarters, Apple Inc. (NASDAQ:AAPL) has seen an increase in the number of Android-to-iOS switchers and the company has been looking for the opportunity to fuel the trend.

$450 million in fresh revenue

The average selling price of the iPhone SE is cited at $450. With that, a sale of 1 million units of iPhone SE would add $450 million in fresh revenue to Apple’s topline. Subsequently, revenue of $450 million is expected to have a $0.02 boost to the bottom-line.

If Apple Inc. (NASDAQ:AAPL) can sell 10 million units of iPhone SE, it would be talking about $4.5 billion in additional revenue and up to $0.17 boost to the EPS. Analysts believe that the iPhone SE could enable Apple to sidestep pressures in the smartphone market and post better-then-expected June quarter sales.

Signs of strong demand

Recently, a look at iPhone SE lead-times suggests improving demand for the device. Longer lead-times are a sign that Apple’s supply is not able to keep up with the demand.

Apple Inc. (NASDAQ:AAPL)’s supply chain leaks had earlier hinted that the company placed smaller order for components for June quarter production than it did in a similar period last year.  That sparked concerns of whether the problem of slow iPhone sales would spill into another quarter. Apple had earlier warned that iPhone sales in the March quarter would be weak citing a number of challenges.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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