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Originally published September 24, 2012 at 7:39 PM | Page modified September 25, 2012 at 6:22 AM

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iPhone 5 sales top 5M but miss estimates

Apple said demand for the new handset continued to exceed the initial supply, an issue the company cited last week as the cause of delivery delays for some early online orders.

Bloomberg News

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Apple reported debut weekend sales for the iPhone 5 that fell short of some analysts’ estimates after supply constraints delayed shipments.

More than 5 million iPhone 5s were sold in the first three days, surpassing a record set last year by the previous model, Apple said Monday. It said demand for the new handset continued to exceed the initial supply, an issue the company cited last week as the cause of delivery delays for some early online orders.

Shares slipped amid concern that supply shortfalls may impede the company from harnessing the iPhone 5 to outpace rivals.

The iPhone, responsible for about two-thirds of profit, is crucial to fueling the growth that transformed Apple from a niche computer maker into the world’s most valuable company.

“The number is lower than what people had expected,”said Brian White, an analyst at Topeka Capital Markets. He had estimated debut weekend sales of 6 million to 6.5 million units, excluding Internet purchases that haven’t been shipped. “This seems to be driven more by availability than demand.”

The shares fell 1.3 percent to close at $690.79.

The shortfall between iPhones actually sold and the tally predicted by analysts may not be vast, since Apple doesn’t report orders that were received over the Internet until they are delivered, Brian Marshall, an analyst at ISI Group, wrote in a note to clients.

Apple’s figure includes sales from wireless carriers, retail outlets, Apple stores and online orders that customers have received, he said.

Trudy Muller, an Apple spokeswoman, declined to comment beyond the company’s statement and referred to regulatory filings for the revenue-recognition policy. Apple counts online sales to individuals once the product is received, filings show.

Gene Munster, an analyst at Piper Jaffray, had predicted Apple would sell 6 million to 10 million of the iPhone 5. That assumed Apple would count all orders, including undelivered online purchases, in the sales reported Monday, Munster wrote.

Component shortages, including parts needed for the iPhone’s new screen technology, caused the backlog, Shaw Wu, an analyst at Sterne Agee & Leach, wrote in a research report Monday. Apple could have sold as many as 2 million more handsets without those constraints, he said.

Given the supply challenges, many estimates were too high, Wu said.

“We find it unfortunate that some analysts continue to publish irresponsible estimates without taking into account realistic demand trends and potential supply constraints,” Wu said. “This is a classic case of near-term expectations getting out of touch with reality.”

Apple is “working hard to get an iPhone 5 into the hands of every customer who wants one as quickly as possible,” Chief Executive Tim Cook said in the statement. “While we have sold out of our initial supply, stores continue to receive iPhone 5 shipments regularly and customers can continue to order online and receive an estimated delivery date.”

Sales from the weekend will be included in Apple’s financial results for the fiscal fourth quarter, which ends Sunday. The company is expected to report profit of $8.35 billion on sales of $36.1 billion, according to the average of analysts’ estimates compiled by Bloomberg.

“The story now with Apple is less about the gorgeous technology and more about if it can really execute the global supply,” said James Kelleher, an analyst at Argus Research. “Can they get them to as many people as they want in the right amount of time?”

One of Apple’s major suppliers, Foxconn Technology, was to reopen a huge plant Tuesday in China that had been shut down for a day after a fight among employees escalated into a riot. It was not clear if the plant worked on iPhones.

Besides a larger screen and faster data speeds, the new iPhone 5 comes with a more powerful microprocessor and lightweight body design. Software changes include new mapping and navigation features, a change Apple made to replace Google’s maps application. Some users and technology gadget reviewers have criticized the new navigation features.

Apple’s mapping software for the iPhone is “short on options” and needs to mature before it can rival paid map applications, Consumer Reports said after testing the navigation feature.

The iPhone 5 went on sale Sept. 21 in the U.S., Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and the U.K. It will be in 22 more countries Friday.

Apple plans to have the iPhone in more than 100 countries by the end of the year, the fastest introduction in the company’s history.

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