iPad Mini sales likely hurt by supply problems -- analyst

Sterne Agee analyst Shaw Wu says iPhone sales will likely be better than anticipated, but that iPad results may be light due to supply shortages affecting the iPad Mini and its possible cannibalization of larger iPad sales.

iPad Mini Sarah Tew/CNET
It's good to be in high demand, but not when there's not enough supply to go around. That's the case for Apple's iPad right now, Sterne Agee says.

The firm has joined the growing chorus of analysts worried about sales of Apple's popular gadgets. In Sterne Agee's case, the firm feels pretty bullish about iPhone sales but is more concerned about the iPad.

While the iPhone could surprise to the upside amid improving iPhone 5 supply, Sterne Agee analyst Shaw Wu said, iPad sales may prove to be a bit disappointing. That's because Apple is struggling with component shortages for the iPad Mini. And those people who can buy Minis are often doing so instead of picking up the larger version of the device.

As a result, Wu trimmed his estimate for iPad unit sales to 23.5 million from 25 million. The consensus among analysts is 23 million to 24 million. However, Wu boosted his view for iPhone sales slightly, to 47.5 million units from 47.3 million, still significantly above the consensus of 45 million to 46 million.

"We continue to pick up improving yields and availability of iPhone 5 and thus improving profitability. As we said before ..., this is due, in part, in preparation for a broader global launch in China, Brazil, Russia, Taiwan, and more than 50 other countries this Friday, December 14. iPad mini demand remains strong but shipments appear limited by supply constraints. On the other hand, build plans for iPad appear to have been reduced likely due to some cannibalization by iPad mini," Wu said.

For the past several months, Apple has faced increasingly sharp questions over whether it can maintain its remarkable growth. Its iPhone and iPad are both ceding market share to devices running on Google's Android operating system. At the same time, investors are fretting over the decline in Apple's profit margins, which executives insist is only a temporary hiccup spurred by the introduction of so many different products.

Jefferies earlier this week cut its stock-price target for Apple, citing slower iPhone sales in saturated markets. Analyst Peter Misek on Monday said that Apple's financial results this quarter and next quarter should be well above analysts' expectations, but decelerating unit sales, price declines, and gross margin pressure should limit the stock's climb.

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