Exploding Apple iPhone Sales Could Be Huge for These Companies

NEW YORK (TheStreet) -- The frantic rush to purchase Apple's (AAPL) iPhone 6 and iPhone 6 plus could mean a financial windfall for electronics retailers, accessories and software publishers.

Call it the "Apple Effect" on key parts of the retail sector.

Apple announced Monday it sold over 10 million iPhone 6 and iPhone 6 Plus models, a fresh record, in a mere three days after the launch.

"In the past, the smartphone release tended to give a boost to retail sales in the month the phone was rolled out, this seemed particularly true for 2010, 2011, and 2012 roll-outs," said JP Morgan chief economist Michael Feroli in an email to TheStreet. Given the numbers that have been reported we would not be surprised to see another boost to retail spending in the September retail sales report."

U.S. retail sales at electronics stores, according to the Census Bureau, surged in September 2013 and September 2012 mostly due to fresh iPhones arriving to market. In September 2013, retail sales at electronic stores increased 0.7%, stronger than the excluding autos sales figure that improved 0.5%. Going back to 2012, the largest increase within the September retail sales report was electronics stores -- the category's sales rose 4.5%, trumping the 0.9% increase excluding sales of autos.

In each of the past three years, iPhone retailer Best Buy's (BBY) third-quarter computing and mobile phones segment was second only to appliances as the strongest in terms of same-store sales performance. in the third quarter of 2013, those numbers increased 6.7% when the iPhone 5c/5s was released. The third quarter of 2012 saw gains of 0.9%, when the iPhone 5 was released, with 8.8% gains in the third-quarter of 2011, corresponding to the release of the iPhone 4s.

The larger screen sizes on both of Apple's new smartphones may spur gamers to put down the Microsoft (MSFT) Xbox One controller and download a full version of Madden or Need for Speed in iTunes. The publisher of those video games, Electronic Arts (EA)  saw $120 million in revenue from mobile in the recently completed quarter, up 18% over the prior year. Smartphones and tablets continued to represent a majority of the Electronic Arts' mobile revenue, accounting for $109 million, or 90% of total mobile revenue.

Electronic Arts benefits from smartphone gaming in multiple ways, including digital content, full-game downloads and in-game advertising. In the latest quarter, $105 million or 87% of the company's mobile revenue was comprised of digital extra content and advertising revenue.

"We continue to view mobile as a business with tremendous opportunity as the market is experiencing significant global growth in smartphones and tablets," CFO Blake Jorgensen said on the company's fiscal first quarter earnings call on July 22. "And as this market base expands, we continue to release new content in our live service games and execute against our launch roadmap."

In total, Electronic Arts delivered a staggering $1.83 billion in digital revenue in its fiscal year 2014 period, a substantial portion a result of sales of new iPhones.

Then there are the accessories makers that do business within a Best Buy, such as screen protector manufacturer Zagg (ZAGG) and peripheral seller Logitech (LOGI) .

"We've received large initial orders for the invisibleSHIELD in anticipation of key device launches this fall," said Zagg's President and CEO Randall Hales on the company's second-quarter earnings call Aug. 5. "It may become more important than ever to protect valuable devices as overall cost of ownership and screen replacement increases." 

Zagg is presently in the market with its invisibleSHIELD-Glass product for the new iPhones, which sells for $44.99, a premium to the $39.99 for the comparable version used to outfit Apple's iPhone 5s, 5c, and 5.

Logitech stands to benefit from sales of iPhone cases, mobile speakers and, interestingly, a new connected home remote control.

The company's mobile speaker sales more than doubled for the fifth consecutive quarter in the most recent period -- the iPhone 6 and iPhone 6 plus is likely to keep the momentum going. Logitech also just introduced a new line of Harmony branded connected home products. The Harmony Home Hub allows users to automate their home by simply using a smartphone or tablet, powering home-related electronic staples like televisions, set-top boxes, speakers, lighting, thermostats, door locks, and window shades.

Given the enhanced set of features of the iOS 8 operating system, and larger screen sizes, consumers may be more compelled to invest in connected home products, like those offered by Logictech.

The "Apple Effect" may be so powerful that other companies are harmed. 

"The other question to ask is if the sales might cannibalize sales of other consumer goods", noted Armen Karakashian, vice president and credit analyst for PIMCO's telecommunications and technology industries.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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