With Apple Inc.’s stock suffering, investors are hoping for relief from the expected launch of a new iPhone in September.
Don’t count on it.
The initial impact of Apple’s AAPL, -3.58% expected September launch of an iPhone 6s and a 6s Plus may be the first step toward Apple’s first year-over-year decline in iPhone unit sales. And since the tech giant counts on the smartphone to drive the majority of its profit and revenue, any disappointment is bound to hurt its stock and fuel questions about whether the iPhone has peaked.
Apple will report its fiscal fourth quarter results in October, and the consensus on Wall Street, according to FactSet Research, is that the tech giant will report sales of 48 million iPhones in the final three months of its fiscal year. After selling 183.2 million smartphones to start the year, an annual total of 231 million iPhones sold would reflect a huge gain of 36.6% from the 169 million sold in the 2014 fiscal year; in 2014, iPhone sales gained less than 13%.
Hargreaves wrote that he expects iPhone sales to decline about 8% in fiscal 2016, mostly due to a tough comparison with those big sales gains in 2015, which were fueled in large part by China. Hargreaves is more pessimistic than the consensus analyst estimate, but big gains are not expected: FactSet reports that 31 analysts expect an average of 235 million iPhone unit sales in the 2016 fiscal year, which would be less than 2% growth from this year’s expected sales.
Reports suggest Apple’s next iPhone will launch sometime in September, with a Sept. 9 launch event date now bandied about, based on some leaked memos from carriers which appear to be planning on a Sept. 14 in-store sale date. Apple does not comment on unannounced products and it has not yet confirmed an event next month, but in the last three years, Apple has unveiled new iPhones during the first two weeks in September. It held an October launch event in 2011 for the iPhone 4s.
The expected iPhone 6s so far sounds mostly like an incremental update, which could lead fewer users to upgrade. Jordan Edelson, founder and chief executive of Appetizer Mobile, believes that the new iPhones will have the same chassis as the current iPhone 6 models, with more memory, a better 12-megapixel camera and battery life improvements.
“They are not changing the chassis/form factor that much,” he said.
He is also expecting Apple to add its Force Touch technology now in the Apple Watch, which lets users press more firmly on the screen to bring up additional controls. He is not expecting a tougher, scratch-resistant sapphire screen, nor the patented technology that makes the phone right itself when it is dropped.
“I think they will still do well, I just don’t think it will be strong as last year,” said Edelson, whose New York-based company is a mobile app development company. “I think some people will just wait and see and see if they can hold out until next year,” when Apple is expected to launch an iPhone 7.
Edelson believes iPhone sales “will be strong regardless, it will not be a flop by any means.”
A true flop isn’t necessary to freak out Apple investors, though. They are already in a nervous state, with the failure to disclose Apple Watch sales data leading many to believe it is underperforming Wall Street’s initial expectations. In addition, the iPad has not recovered from a decline in sales growth as customers upgrade less frequently than with iPhones, leading Apple to launce partnerships seeking corporate customers for the tablet as a way to fuel growth.
Piling on are some scary predictions from technical analysts, who analyze stocks based on trends and repeated patterns in trading charts.This week, some technical analysts noticed a bearish chart and predicted a pattern of a so-called “death cross” in Apple’s stock.
Wall Street has been enamored with Apple for years, and much of that love in recent years has come from the hot-selling iPhone, which grew at a compounded annual rate of nearly 100% in the full seven years since it was launched. It has been a huge cash generator that has added to Apple’s enormous cash pile and is fueling its hefty $200 billion cash return program this year to investors. In its fiscal third quarter, iPhone revenue of $31.4 billion was about 63% of its total revenue of $49.6 billion.
FactSet indicates revenue from the iPhone in fiscal 2016 is currently expected to be slightly lower compared with 2015, with expectations of $153.3 billion in iPhone revenue for next year, versus $153.8 billion expected for fiscal 2015. Apple’s total annual sales in fiscal 2016 are forecast to rise about 5% to $247.6 billion from estimates of $235.7 billion for 2015.
Whether or not those estimates ends up being too conservative, on target, or not conservative enough will depend a lot on how the iPhone fares. But the odds of Apple hitting double-digit growth in a potential off-year for the iPhone right now appear to be pretty low.
View the entire article at: http://www.marketwatch.com/story/dont-expect-iphone-6s-to-save-apple-2015-08-21