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For Apple, Surprise Hunger For Big Phones Leaves Money On Table

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Apple's new iPhone 7 Plus is displayed at the Apple Store at Tokyo's Omotesando shopping district, Japan, September 16, 2016.    REUTERS/Issei Kato/File Photo
Apple's new iPhone 7 Plus is displayed at the Apple Store at Tokyo's Omotesando shopping district, Japan, September 16, 2016. REUTERS/Issei Kato/File Photo

The following is an excerpt from Jeffrey Dastin | October 26, 2016 | reuters.com |

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 percent to 38.5 percent, versus expectations of nearly 39 percent, said Mariann Montagne, senior investment analyst and portfolio manager at Gradient Investments.

It was not immediately clear if the smartphone shortage caused the miss.

"You’re not able to get that product into the hands of the person who wants it right here, right now," said IDC analyst John Jackson. "Those are dollars not in your hands.”

For more visit: reuters.com

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