Apple caught off guard by demand for iPhone 7 Plus

San Francisco, October 25

Apple Inc said it was caught off guard by how many people want to buy its biggest smartphone, the iPhone 7 Plus, and the miscalculation may hit profits this holiday season.

The technology leader is not sure it can make as many units of the iPhone 7 Plus as consumers want in time for the Christmas shopping rush, Apple’s Chief Executive Tim Cook told analysts on Tuesday. It will manage to make enough of the smaller iPhone 7s, though, he said.

Demand was strong “particularly on the iPhone 7 Plus versus our forecast going into the product launch,” Cook said.

The bigger phones bring bigger profits, and Apple’s forecast for thinner-than-expected margins concerned investors after it reported quarterly earnings on Tuesday.

Apple issued a conservative outlook on margins for the holiday quarter, 38% to 38.5%, versus expectations of nearly 39%, said Mariann Montagne, senior investment analyst and portfolio manager at Gradient Investments. Reuters