Why You Don't Have to Worry About Apple Delaying the Next iPhone

Apple (AAPL 0.31%) reported fantastic earnings this quarter. One of the biggest questions facing shareholders now is whether or not Apple might delay its release of the new iPhone, which would hurt quarterly earnings significantly.

In this segment from Industry Focus: Tech, analyst Dylan Lewis is joined by senior tech specialist Evan Niu to explain why long-term investors shouldn't worry about that, based on Apple's long-term performance over the last several years, management's comments on the earnings call, and more.

A full transcript follows the video.

This video was recorded on Aug. 4, 2017.

Dylan Lewis: Evan, the big question looking at Apple and digging through a lot of the financial media about the company lately, has been the concerns with the potential delays in the iPhone. And when I think we look at what management provided for commentary, I think some of those fears are alleviated a little bit. Some of those concerns we can dial back, because it seems like looking forward, we're going to be more or less on schedule with what the standard iPhone schedule release is.

Evan Niu: Right. I think that was a big question mark going into this release. What's guidance going to look like because of all these expected delays and reports of manufacturing yields being low or trouble making the OLED displays or what have you. So, their guidance calls for revenue of $49 [billion] to $52 billion next quarter. At the high end, that $52 billion, would represent a new record for the September quarter. So, I think that exudes a lot of confidence. For example, last year, the iPhone 7 launched mid-September, so they had about two weeks in the quarter where they had that launch effect. That's an important comparison point for this quarter. If they're forecasting that this quarter will be even bigger, it downplays all those fears that there's delays related to the launch, because there have been so many reports that this thing might be delayed. The flip side is, it's possible that, if they're going to price this thing really expensive, they can maybe drive a lot of revenue growth on a relatively small number of units. So, that could be the missing piece of, maybe there are delays, and maybe there are low yields, but maybe they're going to charge enough for what they do have that they can put up this overall top-line number. But, overall, it's a pretty strong guide, I think, to the fiscal fourth quarter.

Lewis: As a shareholder, it's been an interesting two years or so with Apple. You had a lot of people a year ago or so fearing that we'd hit the saturation point, we wouldn't see these supercycles coming in anymore, that people were going to be holding onto their phones for longer. And it's been pretty awesome to see the company blow it out of the water over the last year in the face of some of those concerns. I've been someone that's been like, yes, I'm holding onto my shares, I'm not doing anything with them, this company is humming along, they're doing so much to return capital to shareholders, they're in such a strong position on their balance sheet with all the cash that they have. I think it's about $250 billion at this point right now. There are so many great things with this business that, even if there are little hiccups or delays with the iPhone, this is what we would expect to be a weak quarter for them, and they still put up incredible growth. I'm just sitting tight and watching because it's been a great run so far, and I certainly wouldn't want to cut it short.

Niu: Yeah. I've also just been sitting on my shares. I was pretty happy when they jumped to all-time highs. I wasn't really expecting that. But, yeah, there's so many parts of this business that are so strong. There are definitely some weak spots, Greater China being probably the biggest one. And there's a lot going on there, so it's hard to pinpoint. But, this is so strong. With all this delay stuff, Tim Cook is acknowledging it, this might be hurting in the short term, but it's still good for the long term, and it bodes well for the future, I think it was what he said on the call. And yeah, these sales are not lost. Apple has such good loyalty that, if people have to wait a couple months for their new iPhone, they will do that. Very few people are going to go out and buy an Android phone. It's really just a matter of timing, shifting a sale from one quarter to the next, which is ultimately pretty short-term concern. The bigger picture remains very much intact.