Homeless in Vancouver: With few facts, Apple Watchers can only guess

Steven Milunovich, an analyst with the Swiss global financial services company UBS, has publicly lowered his estimates for Apple Watch sales in fiscal year 2016 from 41 million down to only 31 million, thus pouring a bit of cold water on the overheated, and largely unfounded, speculation around the sales of Apple’s new smartwatch.

The online financial press has fairly leapt all over Milunovich’s educated guess, which appeared May 1 on the Business Insider website under the headline: “There’s ‘lackluster interest’ in Apple Watch, says UBS”.

Signs, portents, and digital entrails

In the absence of hard facts on the success or failure of the Apple Watch, the global press, wanting to cover what is after all a major story, has been making do with anecdotes, word of mouth, and inferred estimates of the presale numbers for the U.S. market—speculation basically.

Obviously the judgement of an experienced market analyst trumps all that guessing, right?

In fact, Milunovich is quoted by Business Insider as explaining that he based his decision on nothing more substantial than “global search activity”.

“Our latest Apple Watch Monitor continues to find lackluster interest as measured by global search activity. Watch supply has been limited, but our change is based on demand.”

Sounds like he made up his mind after consulting something like the search term tracker Google Trends.

Whatever Milunovich based his prognostications on, he had three points to tell investors:

• He expects Apple to ship (sell) 11 million Apple Watches in 2015.
• He is downgrading his estimate for 2016 sales of the smartwatch from 41 million to 31 million.
• He’s lowered his estimate of Apple’s 2016 earnings per share (EPS) ratio from USD$10.52 to $10.26
• And he predicts the Watch will provide 40 percent of Apple’s EPS growth in 2016.

EPS divides a company’s available shares by its annual earnings (known or projected) in order to show a company’s potential value as an investment.

Tepid by the standards of the world’s most valued company

Milunovich is quoted as describing interest in the Apple Watch as “tepid” yet he predicts that the Cupertino computer company will sell 11 million of its pricey new baubles this year alone.

That “tepid” interest means that by Milunovich’s own prediction, Apple would set an industry-scorching pace for the sale of smartwatches.

In a post on the Apple Watch back in April, when I cited the Slice Intelligence estimate of Apple Watch presales in the U.S. market—in effect, gazing into the same cup of tea leaves as everyone else—I also mentioned that 89 companies sold an estimated worldwide total of only 6.8 million smartwatches in all of 2014, with the top 10 companies (led by Samsung) accounting for over 70 percent of sales, or 4.8 million units.

If Apple sells only 11 million Apple Watches in 2015 it will still have sold 61.7 percent more units of its smartwatch than all other companies offering smartwatches, put together, sold in 2014!