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Apple iPhone 7 Will Crush Sales Forecasts Thanks to Exploding Galaxy 7s

Apple stock

Apple Inc. could sell millions of iPhones as the company’s main competitor Samsung Electronics has been dealing with the Galaxy Note 7’s explosion problem. Samsung has stopped the production and sale its new Note 7 devices due to battery issues. This creates an opportunity for the iPhone maker to sell more iPhones, according to S&P analyst Angelo Zino. The analyst believes that the Note 7 issues could help drive some Android users over to iOS, thus increasing Apple’s share of the global smartphone market by 1%, according to a report in MarketWatch. In the second quarter, Samsung had a 22.4% share of the market, compared to Apple’s share of 11.8%, according to data from IDC.

Samsung Galaxy Note 7 Problem

On Monday, Samsung announced that any Galaxy Note 7 devices that have been sold should be turned off because the has been not resolved yet. The company’s exploding-phone saga have worsened after replacements suffered a similar overheating issue. The Note 7 was introduced in August. On reports of battery explosions, the company issued a global recall of the phone in early September.

Apple Inc NASDAQ:AAPL iPhone 7

Samsung has already halted the production the Note 7 smartphone. The company told MarketWatch that it was “temporarily adjusting the Galaxy Note 7 production schedule in order to take further steps to ensure quality and safety manners.”

Last month, the U.S. Federal Aviation Administration issued an advisory that passengers should not turn on or charge the Note 7 smartphones on board. The European Aviation Safety Agency also issued a similar guideline on September 9. After several reports of the Note 7’s problems, the U.S. Consumer Product Safety Commission last month issued a warning to stop using the phone.

Apple Could Sell More 10 Million iPhones

According to S&P analyst Zino, Apple Inc. could sell an additional 14 million to 15 million units during the September quarter, which would mean a 7% increase from the analyst’s previous sales forecast.

On average, analysts expect the company to sell 60 million units in the September-quarter, versus 64 million units sold a year ago, according to FactSet.

“The biggest U.S. carriers have also stopped selling Note 7 phones and will allow customers to replace with a different device,” Zino said in a note to clients on Monday. “We see a more favorable competitive landscape and higher Android switcher rates for Apple over the next 12-18 months.”

Moreover, the analyst expects that the Note 7 issues will affect Samsung’s future product launches.

According to the reports from Sprint and T-Mobile, pre-orders for Apple Inc. (NASDAQ:AAPL)’s latest smartphone are strong. Both the carriers claim that the pre-orders have gone up by roughly four times from last year, but they did not disclose the actual figures.

Last month, Zino said in his report that: “While (Apple) will not reveal initial iPhone 7 orders, we expect to see robust demand near-term, aided by an aging iPhone installed base and added features that will appeal to many consumers. We believe Samsung Note 7 issues are also contributing to the momentum for the iPhone 7 devices.”

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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