Apple IPhone 5 misses estimates as more than 5 million sold

Apple Inc. reported debut weekend sales for the iPhone 5 that fell short of some analysts’ estimates after supply constraints delayed shipments.

More than 5 million iPhone 5s were sold in the first three days, surpassing a record set last year by the previous model, Cupertino, Calif.-based Apple said today (Sept. 24) in a statement. Apple said demand for the new handset continued to exceed the initial supply, an issue the company cited last week as the cause of delivery delays for some early online orders.

Shares slipped amid concern that supply shortfalls may impede the company from harnessing the iPhone 5 to outpace rivals including Samsung Electronics Co. that make handsets using Google Inc.’s Android mobile software. The iPhone, responsible for about two-thirds of profit, is crucial to fueling the growth that transformed Apple from a niche computer maker into the world’s most valuable company.

“The number is lower than what people had expected,” Brian White, an analyst at Topeka Capital Markets, said in an interview. He had estimated debut weekend sales of 6 million to 6.5 million units, excluding Internet purchases that haven’t been shipped. “This seems to be driven more by availability than demand.”

The shortfall between iPhones actually sold and the tally predicted by analysts may not be vast, since Apple doesn’t report orders that were received over the Internet until they are delivered, said Brian Marshall, an analyst at ISI Group, in a note to clients today.

Apple’s figure includes sales from wireless carriers, retail outlets, Apple stores and online orders that customers have received, he said.

“Units in transit could be in the millions currently,” Marshall said.

He had anticipated sales of 6 million to 8 million units, based on his understanding of which orders Apple would count as sales.

Trudy Muller, an Apple spokeswoman, declined to comment beyond the company’s statement and referred to regulatory filings for the revenue-recognition policy. Apple counts online sales to individuals once the product is received, filings show.

Gene Munster, an analyst at Piper Jaffray Cos., had predicted Apple would sell 6 million to 10 million of the iPhone 5. That assumed Apple would count all orders, including undelivered online purchases, in the sales reported today, Munster said in a research report.

Early orders in Apple’s online store topped 2 million units in one day, Apple said on Sept. 17. The company said in the statement today that “while the majority of pre-orders have been shipped to customers, many are scheduled to be shipped in October.”

Component shortages, including parts needed for the iPhone’s new screen technology, caused the backlog, said Shaw Wu, an analyst at Sterne Agee & Leach Inc., in a research report today. Apple could have sold as many as 2 million more handsets without those constraints, he said.

Given the supply challenges, many estimates were too high, Wu said. He had projected sales of 4 million to 5 million handsets, based on an assumption that orders would count once they shipped from the factory.

“We find it unfortunate that some analysts continue to publish irresponsible estimates without taking into account realistic demand trends and potential supply constraints,” Wu said. “This is a classic case of near-term expectations getting out of touch with reality.”

Apple is “working hard to get an iPhone 5 into the hands of every customer who wants one as quickly as possible,” Apple CEO Tim Cook said in the statement. “While we have sold out of our initial supply, stores continue to receive iPhone 5 shipments regularly and customers can continue to order online and receive an estimated delivery date.”

Sales from the weekend will be included in Apple’s financial results for the fiscal fourth quarter, which ends Sept. 30. The company is expected to report profit of $8.35 billion on sales of $36.1 billion, according to the average of analysts’ estimates compiled by Bloomberg.

“The story now with Apple is less about the gorgeous technology and more about if it can really execute the global supply,” said James Kelleher, an analyst at Argus Research. “Can they get them to as many people as they want in the right amount of time?”

Besides a larger screen and faster data speeds, the iPhone 5 comes with a more powerful microprocessor and lightweight body design. Software changes include new mapping and navigation features, a change Apple made to replace Google’s maps application. Some users and technology gadget reviewers have criticized the new navigation features.

In addition to the iPhone release, Apple also introduced a new version of its mobile operating system, called iOS 6. The update was downloaded by more than 100 million customers, Apple said. That compares with more than 25 million for the prior update, iOS 5, introduced last year.

That number of downloads for the latest software, “suggests reports of dissatisfaction with Apple’s new Maps application will not be a deterrent to adoption,” Marshall said.

The iPhone 5 went on sale Sept. 21 in the U.S., Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and the U.K. It will be in 22 more countries on Sept. 28.

Apple plans to have the iPhone in more than 100 countries by the end of the year, the fastest introduction in the company’s history.