Analyst: iPhone sales could be struggling

Apple shares tumbled on Tuesday after an unsettling report from Wall Street analyst Credit Suisse that suggested sales of the Cupertino tech giant’s iPhone 6 devices may be struggling.

“Apple has lowered its component orders by as much as 10 percent, according to our teams in Asia,” a team led by Credit Suisse analyst Kulbinder Garcha wrote in a research note on Tuesday. “The cuts seem to be driven by weak demand for the new iPhone 6s.”

Overall builds for the iPhone 6 are now estimated to be below 80 million units for the three months that will end in December and between 45 million to 50 million units for the quarter that will end in March 2016.

In addition, the analysts lowered their projections for calendar 2016 unit builds for the iPhone 6 to 222 million units, down from the prior estimate of 242 million units. That would be 8.3 percent below the original estimate for 2016.

Credit Suisse also estimated that 2017 will bring iPhone build to 235 million units, which would be 6 percent higher than the new 2016 prediction.

“In our view, the continued weak supply chain news could weigh on Apple shares for the next few weeks or quarters,” Credit Suisse stated in the note.

For all of calendar 2016, Apple should earn about $9.81 a share, which is about 6 percent below the prior estimate of $10.40, the analysts predicted.

The investment firm maintained an out-perform rating on Apple, despite the concerns raised by the potential slowdown in iPhone sales.

Among the reasons for future growth: Credit Suisse believes the installed base for the iPhone will swell to 615 million over time, driven by its recent expansion, which currently is growing by 24 percent a year. Plus, recently launched installment plans to pay for the iPhone will drive unit sales long term, the analysts stated.

“It is tempting to argue that this is now the beginning of the end of the iPhone business’ growth phase run. Indeed, with revenues now at around $155 billion, it has clearly been a successful run. Despite this, we believe there is more to come,” Credit Suisse wrote in the note.

 

 

Photo caption: Apple CEO Tim Cook holds an iPhone during an event at DeAnza College in Cupertino

 

 

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  • Barth Trader

    This same exact thing happened 2 years ago.

    “Even if a particular data point were factual it would be impossible to accurately interpret the data point as to what it meant for our overall business because the supply chain is very complex and we obviously have multiple sources for things, yields might vary, supply performance can vary. The beginning inventory positions can vary, I mean there is just an inordinate long list of things that would make any single data point not a great proxy for what’s going on.” – Apple CEO Tim Cook, January 23, 2013

    Analysts who keep trying to analyze Apple using single data points are doomed to failure.

  • jim kelly

    Agree with the previous post. But it certainly is amazing how quickly the shorts can drag this stock down over rumors. Forget Apple’s guidance, forget the record sales upon release, forget how many qtr’s Apple has exceeded the streets estimates.None of that matters- unidentifiable sources of completely non specific information are what matters to the market. Regardless of how consistently they turn out to be completely wrong. Didn’t we just watch this movie with Pacific Crest saying the same thing from similar unnamed sources about the initial launch being “meaningfully” lower or that the qtr was going to reflect much lower sales and that the guidance Would disappoint. How hilarious!
    This stock is the most shorted of a successful company I have ever seen. It seems that no matter how many times Apple succeeds that the shorts are able to use rumors as a way to drive it down.

  • Don Smith

    Below 80M units….you mean, what Tim Cook forecasted when he said he would be around 74-75M units….HOW is this news?

    • mech986

      Absolutely correct. But again, the “whisper” production numbers want the increase over the 74 million from 1Q2015 to be over 80 million, despite everyone’s previous pronouncements that Apple couldn’t possibly beat the 74M number and be a really tough compare.

  • anonymous23

    Thing is – we know how much bologna all these negative reports are, but nobody seems to have any cash to buy AAPL shares at this discount. That’s becoming the interesting story. The negativity is just amazing. All these “journalists” are getting black marks on their record for being so incredibly wrong. How wrong can these guys be and still get published?

  • Adult Supervisor

    This Credit Suisse analyst has an awful reputation for trying to manipulate Apple’s stock price. He’s come out with a similar story in the past which didn’t hang true.

    At times, the stock market behaves like a nervous head of cattle. Just one shout is all it takes to start a headlong stampede.

  • Nancy Disengers

    With so many iPhones out there, it seems to me they ought to concentrate on making money from app sales.

    • mech986

      They already do well with the App Store, but that business is dependent on the app authors and iPhone owners’ needs. Still, the revenue from there will increase because of the increased number of new iPhone owners and the total installed base of iPhone users.

  • LonnieL

    Apple is making money hand over fist. This is the most ridiculous research report I’ve seen in many a moons!

  • StilllHere

    The law of large numbers will catch up with them at some point.

  • InconvenientTruthsYouHate

    If they’re struggling to sell them it’s not from lack of interest; I’ve been waiting for my carrier to procure two phones for me for over 3 weeks now, and still nothing. It’s a supply problem, from my perspective.

  • iyikotu

    I agree, been hearing this a lot these days, Apple needs to innovate again, they definitely need to fix this situation since big part of their profits come from iPhone sales. I am curious to see what their next move will be…
    Sincerely,
    Zack
    https://www.kogimobile.com/

 
 
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