Here’s how much Apple could benefit from the explosion of the Samsung phone disaster
Apple Inc. shares hit their highest price of 2016 on Tuesday as the saga of Samsung Electronics Co. Ltd.’s explosive phones hit. has worsened and an analyst said Apple could sell millions of iPhones because of it.
announced Monday afternoon that all Galaxy Note 7 devices that were sold should be turned off, and said it was halting sales of the smartphone after the replacements suffered an overheating issue similar to the original devices . Samsung had already decided to stop production of its Note 7 smartphone after several other phones caught fire over the weekend, telling MarketWatch that it was “temporarily adjusting the production schedule for the Galaxy Note 7 in order to take new measures to guarantee quality and safety “. He took another step on Tuesday morning, announcing that he had decided to stop production completely “for the benefit of consumer safety.”
The company launched a global recall of the phone in early September, around a month after its introduction, due to a number of incidents in which the phone unexpectedly exploded. Samsung replaced the first batch of phones with new ones, but the issue has apparently persisted even in replacement models, including last week when one of the new phones caught fire on a Southwest Airlines plane.
See also: Samsung suspends production of the Galaxy Note 7
The saga could be a boon for iPhone sales in an otherwise slower than normal year for Apple AAPL,
In a note to customers on Monday before Samsung completely halted sales, CFRA Research analyst Angelo Zino said he expects the Note 7 issues to help some Android users switch to iOS, which he says could help increase Apple’s share of the global smartphone market by 1%. Samsung had a 22.4% market share in the second quarter, double Apple’s share of 11.8%, according to industry tracker IDC.
Zino said a 1% share gain would help Apple sell an additional 14-15 million units in the September quarter, which would mean a 7% increase from the analyst’s previous sales forecast. . Analysts are forecasting iPhone sales of 45 million on average for the September quarter, up from 48 million a year ago, according to FactSet. Apple’s iPhone revenue is expected to reach around $ 27.6 billion, up from $ 32.2 billion a year earlier. However, this could be higher if Zino’s prediction comes true regarding the increasing rate of changers and share gains.
“The largest US carriers have also stopped selling Note 7 phones and will allow customers to replace them with another device,” he said. “We see a more favorable competitive landscape and higher Android switch rates for Apple over the next 12-18 months.”
Zino also expects the Note 7 to hold back future Samsung product launches.
Read also: Water resistance is the main feature of the iPhone 7 that is worth upgrading
Customers switching to iOS from Alphabet Inc.’s GOOGL,
The Android operating system represents an opportunity for Apple to generate top-notch revenue despite the iPhone’s saturation in developed markets, which has driven sales of Apple’s smartphones down for the past two consecutive quarters. Analysts are anticipating Apple’s first-ever annual decline in iPhone sales this year, with the current FactSet consensus calling for 211 million iPhones sold, down from 231 million last year.
However, switches represented the highest percentage of quarterly iPhone sales in the company’s history in the last quarter, Apple said, helping it narrowly exceed quarterly revenue expectations for the June quarter. The company’s next earnings report, which will include September iPhone sales, will be released on October 25.
Read also: Soaring Apple Stocks Helps Technology to Stand Out in Q3
“Switches and early smartphone buyers accounted for the lion’s share of our iPhone sales in the quarter,” Apple CEO Tim Cook said on a call with analysts in July.
Apple shares rose 1.7% to close on Monday at a 10-month high of $ 116.05, pushing them up 20% in the past three months. They significantly outperformed the Dow Jones Industrial Average DJIA,
which includes Apple, as the blue chip index rose by less than 1% during this period.