Did Apple Sell 55 Million iPhones Last Quarter?

Fifty-five million. That's the number of iPhones analysts believe, on average, that Apple (NASDAQ: AAPL  ) sold in its first quarter of 2014. That many iPhones sold would mark Apple's best quarterly smartphone sales ever.

Let's explore the implications: What would 55 million iPhones mean for Apple? And what's driving its robust iPhone sales?

Looking at the numbers
Estimating Apple's iPhone sales is easier than it used to be. After Apple adjusted the way it provides guidance to a much more realistic (and accurate) method, analysts' consensus estimates have been closer to actual results. So, assuming these estimates are, indeed, fairly close to what Apple will report when it provides first-quarter results on Monday, how will 55 million iPhones affect Apple's results?

Assuming the average selling price remains the same as last quarter, the iPhone segment could account for about $32 billion of Apple's revenue. Based on analyst estimates of $57.9 billion in total revenue for the quarter, therefore, the iPhone could account for about 55% of Apple's top line -- slightly below the 56% of revenue the segment accounted for in the year-ago quarter.

With iPhone sales equally as important to results and unit estimates for the quarter's sales 15% higher than the year-ago figure, the iPhone may contribute more to Apple's bottom line than ever before. No wonder analysts, on average, are estimating record EPS at $14.32. Though $14.32 in EPS is only 3.7% higher than the year-ago quarter, the gain on the bottom line will be Apple's first in four quarters.

Where is all this growth coming from?
Given all the negative Apple headlines highlighting its dwindling global market share, it would be easy to assume that the company isn't growing any more. But that's just not the case. So how is Apple still growing despite intensifying competition? The growth can be explained in two points.

1. Apple's gaining market share in the United States. In the U.S., Apple's largest market, Apple is doing extremely well. In fact, iPhone ownership in the U.S. is up seven percentage points in the fourth quarter of 2013 from the year-ago quarter, according to NPD. 

2. Apple is benefiting from overall smartphone market growth. Despite Apple's dwindling market share abroad as lower-cost Android devices make outsized gains in market share in many markets, Apple is still benefiting from the market's overall growth.

Is this the beginning of more growth for Apple?
With analysts predicting growth in Apple's earnings per share on the strength of record iPhone sales, can investors expect more growth from Apple in the future?

It's definitely possible. There's likely still plenty of growth ahead for Apple's iPhone and iPad segments. IDC pegs its estimates for annualized growth in smartphone and tablet shipments between 2013 and 2017 at about 15%. Indeed, the average analyst estimate on Yahoo! Finance for Apple's EPS growth next year is 10%. Looking out over the next five years, the outlook is even more bullish: Analysts expect EPS growth of about 15% per annum.

If Apple is selling record iPhones, reporting record revenue, and growing its bottom line, does a conservative valuation of 13.8 times earnings make sense?

What do you think? Will Apple sell 55 million iPhones in Q1?

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 25, 2014, at 10:07 AM, artlaz wrote:

    This is a tough one to predict. 55 million is a good middle of the road number, but several factors will effect it. The early release and sale of 9 million iPhones in the prior quarter will pull the number down, but NTT Docomo and the much higher iPhone penetration rate in Japan will pull the number up. The slightly disappointing Verizon 8.8 million smart phone sales number for the quarter was doubtless due to the early launch in the prior quarter, but the 7% point gain in overall US market share argues in the opposite direction. I think a 57.5 million number could be closer to the truth.

  • Report this Comment On January 25, 2014, at 11:28 AM, DanManners wrote:

    Unfortunately, Michael Blair feels differently. He is usually right as he has started 200 different Fortune 500 companies.

    But just incase, we need to analyze this further. I see you have a higher number as I read $ 14.09. That will make it harder to beat. I predict earnings will come in at under $14.00. Unless Apple can do some accounting magic with the warranties it will disappoint.

    Reasons for Apple to drop after earnings.

    1. I own the stock

    2. It just always goes down after earnings.

    3. Melissa Lee will have the usual report on how much Apple drops after earnings. So if you saw that what would you do? 7% drop? You sell. Thanks Melissa. She can;t wait to get a bigger iPhone. It will make her face look smaller.

    4. Michael Blair will be happy.

    5. Estimates are much too high.

    6. Michael Blair quoting a NY Times article saying lackluster China Mobile sales which means lackluster China sales overall. They say Apple is a dud in China.

    7. Michael Blair has a doll of Tim Cook which he puts pins into everynight causing Cook to mismanage Apple.

    8. Solar Flares.

  • Report this Comment On January 25, 2014, at 11:37 AM, Rod wrote:

    Production iPhone 5S: 0.5m for 60 days, plus 0.33 for 30 days for a total of 40m. C at 28% of S: 11m. 4S at 50% of C: 5.5m. Old iPhone 4 at 1m for a total of 57.7 millions

  • Report this Comment On January 25, 2014, at 12:01 PM, dwilh51183 wrote:

    NO! AAPL SOLD 71 MILLION IPHONES

    AND REVENUE OF 68-72 BILLION. BUY THE STOCK MONDAY. YOU WILL BE GLAD YOU DID ON TUESDAY AS AAPL TRADES UP TO $650 A SHARE

  • Report this Comment On January 25, 2014, at 12:26 PM, plange01 wrote:

    iphone upgrades through companies like att sell for 99 cents and often are free! as apple becomes more desperate to compete with faster growing samsung galaxy....

  • Report this Comment On January 25, 2014, at 1:08 PM, gskorich wrote:

    i'm a little confused. a couple of quarters ago the smartphone market was over saturated or at least this was the reason samsung didn't sell so many smartphones. now that apple has proved this market is not over saturated it is being writhed that there is actual smartphone market growth? hmmm why can't people just admit people want the iPhone.

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