Improving iPhone 5 production expected to increase Apple’s profits

The picture appears brighter for Apple’s iPhone 5. Not only is the new smartphone easier to find in stores, it’s also the top searched for gadget in 2012 and looks to be off to a great start in China. Now, improving supplies is reducing cost and increasing profitability for Apple, one analyst said Tuesday. A smoother supply chain has meant shipping time cut in half to just two days, down from four. Additionally, the improvements come as Apple preps to offer its handset in more than 50 countries during December

According to Sterne Agee’s Shaw Wu (via AppleInsider), the increased availability of the iPhone 5 boosts Apple’s iPhone sales expectations.

The analyst told investors Tuesday he forecasts 47.3 million iPhones will be purchased during the quarter, a bit more than the Wall Street consensus of between 45 million and 46 million handsets. The well-known Apple watcher also boosted his expectations for Apple profits, believing the company will report a 38,5 percent profit margin, up from his earlier forecast of 38 percent.

Questions have swirled around the iPhone and Apple’s practice of offering discounted earlier versions of the handset alongside its newest model, a move that some folks believe hurts Apple’s astronomic profit margins.

For example, one research firm Monday announced the iPhone 5 accounted for just 68 percent of overall iPhone sales, down from the iPhone 4S, which comprised more than 90 percent of sales when it was released last year.

If things are looking up for the iPhone 5, not so for Apple’s other new products. According to Wu, stronger than expected demand for the iPad mini is depressing availability. Likewise, the very thin iMac apparently is causing headaches for suppliers.

The analyst foresees fewer-than-expected iMac sales during the December quarter, trimmed even more by what he terms “minor cannibalization” by the iPad mini and full-size iPad.

Are you seeing the iPhone 5 more often now that the supply kinks seem to be working out?

Is the “minor cannibalization” reported by the iPads a situation likely to become more common as consumers shift away from the PC to tablets and phones?