'They get one shot': Why Apple probably won't launch its 5G iPhone on time

According to Wedbush analyst Dan Ives, there’s just a 10% to 15% chance Apple will launch its phone in September. Yahoo FInance’s Dan Howley joins Seana Smith to discuss.

Video Transcript

SEANA SMITH: Welcome back to Yahoo Finance. And Apple could be hit pretty hard by the coronavirus potentially. So we had that report out last week by Nikkei, warning that Apple could be delaying its next lineup of smartphones.

Now Dan Ives is out of Wedbush. He's out with a new note this week. He's basically saying that there's only a 10% to 15% chance that Apple's next iPhone is going to launch on time. So we have Dan Howley tracking these recent developments for us.

And Dan, when we talk about the impact that this could have on Apple, the potential implications of this, what are they? Because we debate time and time again how reliant Apple is on the success of the iPhone, but it still makes up a good chunk of the company's revenue quarter after quarter.

DAN HOWLEY: Yeah, it's still, I mean, the kind of, I would say, beast of burden, almost, for Apple. It's the bread winner for the company. And you know, they're increasingly seeing better sales of services, accessories, things along those lines. But yes, the iPhone is still the leader as far as their revenue goes quarter to quarter.

If they have to delay this phone, which Ives says, again, is a 10% to 15% chance that it will actually launch on time, so we're looking at a 90% to 85% chance that it doesn't launch on time, it could be detrimental to them for the Q3 period, but not necessarily going forward.

Now basically, the idea here is this is going to be a 5G iPhone. That's what all the reports are saying. And what we would expect normally is a sliver of those sales to go into Q3. That's because Q3 ends shortly after those phones launch. Then Q4 kicks off and we really see the bulk of the sales for the year in that Q4. That's when you get the most sales over any quarter because naturally, that's the holiday period.

Ives is saying here that the phone could launch in the holiday period, just in time for people to manage to get it into their homes, or under the tree or whatever, before the holidays. And that could still save Apple a good amount of sales.

What happens with these cycles is you go from big blast off of sales as soon as it's available and then the holidays, still pretty good sales in Q2. And then as Q3 comes around, you start to see it kind of fade away because people naturally are expecting the next phone to come along in September.

So we could see a larger chunk of sales in that Q4 time period, Q1 time period, as more people see that the ability to get outside again, and then able to purchase phones, period, as they start to get back to work.