Last week was supposed to be huge for Apple (AAPL -0.02%).
The biggest company on the S&P 500 (^GSPC 0.01%) said on Monday that it sold a staggering 9 million iPhones over the previous weekend. Going into the launch, at which the Cupertino, Calif.-based company revealed two new iPhone models, analysts had predicted that it would sell anywhere between 5 million and 8 million units.
Yet its stock went nowhere. Or, to be fair, it was up a mere 3.3%, which is hardly worth mentioning, given that it's still off by more than 26% over the past 12 months.
The lack of enthusiasm stems from three sources.
In the first case, there was widespread disappointment with the company's new "low-cost" model, the iPhone 5c. "The base 16GB iPhone 5c will sell for $549 sans contract in the U.S.; a day ago, the base 16GB iPhone 5 was listed for $649," Darren Murph of the popular tech blog Engadget said. "In other words, the iPhone 5c -- which is likely monumentally less expensive to assemble and uses dramatically less costly materials -- is priced just 16.6 percent less than the phone it replaces."
It's hard to deny that this is one of the reasons demand for the newest model paled in comparison with the upgraded iPhone 5s. As my colleague Daniel Sparks noted, 95% of the 416 potential iPhone customers interviewed by Piper Jaffray's Gene Munster said they intended to buy the 5s. And according to The Wall Street Journal, "Enthusiasm for the cheaper 5c, however, wasn't as apparent at stores from Beijing to London."
On top of this, there's reason to believe that the numbers weren't as impressive as they initially appeared. While 9 million iPhones is nothing to shake a stick at, it wasn't a sell-through figure, as an estimated 3.5 million units of the 5c model were purportedly shipped to retailers but not sold. Not to mention that last year's initial launch weekend didn't include sales from China, whereas this year's did.
Taken together, in turn, as the Fool's Rick Munarriz said, "This may still be a good showing by Apple, but it's certainly not the great showing that had skeptics eating crow and at least one analyst falling off his chair."
The final piece of disappointment stemmed from the absence of an agreement with China Mobile (CHL), that country's largest service provider. Analysts had predicted that a formal partnership was imminent given the "lower-cost" 5c model, a separate China launch, and rumors about recent meetings between the heads of the two companies. Yet it was conspicuously absent from either event.
The good news, at least on the latter front, is that there continue to be signs that a deal is in the works. Most recently, marketing material was leaked to the media that appears to show China Mobile preparing for an upcoming announcement. If genuine, this points to the possibility that a deal is inching closer by the day.
With that in mind, shareholders will just have to wait a while longer before the long-anticipated catalyst is upon them.