Morgan Stanley Analyst Katy Huberty Predicts First-Ever Year-Over-Year Drop in iPhone Sales

Philip Elmer-DeWitt, writing for Fortune:

According to Huberty, rising international prices and smartphone market oversaturation outside China are weighing on Apple’s primary source of revenue (52% of fiscal 2015 sales).

The same surveys that showed iPhone sales rising 6.8% in fiscal 2016 now show them falling 5.7%. In the current quarter — the so-called “tough compare” because last year’s blow-out iPhone 6 unit sales will be hard to beat — what was going to be a 6.1% increase is now a 0.6% decline.

Has to happen eventually, but somehow I don’t think 2016 will be the year. Apple’s stock price took a dive on this “news”, of course.

On the conference call Huberty was joined by Jasmine Lu, who covers the Asian supply chain for Morgan Stanley. Lu’s iPhone component order estimates have been cut significantly: 10% in the December quarter and 20% in March. iPhone demand, she said, seems to be weaker than Apple had expected only two months earlier.

Trying to predict iPhone demand from Apple’s supply chain orders hasn’t worked out so well in the past. Here’s a January 2013 report from the WSJ:

Apple Inc. has cut its orders for components for the iPhone 5 due to weaker-than-expected demand, people familiar with the situation said Monday.

Apple’s orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order, two of the people said.

According to Apple’s actual results for that January-March quarter, iPhone sales were up modestly year over year, from 35.1 to 37.4 million iPhones. It’s possible that Apple had expected or at least hoped to sell more; it makes no sense that they expected or even hoped to sell double that amount.

Wednesday, 16 December 2015