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No Imminent Rebound in Apple's iPhone Sales, Say Analysts

No Imminent Rebound in Apple's iPhone Sales, Say Analysts

By Julie Verhage, Bloomberg | Updated: 18 May 2016 18:41 IST

Berkshire Hathaway's new stake in Apple is a bright spot in an otherwise dismal few months for the tech giant. Analysts at Canaccord Genuity Inc. are telling clients that iPhone sales, which have been struggling, aren't going to get a boost this quarter.

"Based on our survey work, we believe consumers continue to delay purchases of new iPhones ahead of the iPhone 7 launch likely in September," the team, led by T. Michael Walkley, said in their note. "In fact, we believe iPhone sales in the US market will fall below 50 percent of total smartphone sales during the June quarter for the first time since the larger screen iPhone 6 products launched."

The team does expect sales to ultimately pickup with the launch of the next iPhone, also noting that they "believe the iPhone 6 and iPhone 6s products have enabled Apple to materially increase its share and installed base of the premium tier smartphone market with Android users switching to the iPhone." Apple's sales are typically centered around new product launches, but the firm certainly doesn't want to lose market share to competitors at any point in the year, especially when that product makes up more than 60 percent of revenue.

Other firms on Wall Street have also been cautious about the Apple's sales outlook. Barclays PLC sent out a note prior to the firm's latest earnings, calling this year a make or break one. The team at Barclays was even skeptical that the iPhone 7 could turn things around. "Our research indicates [iPhone 7] prototypes do not suggest any must-have form factor changes," the analysts, led by Mark Moskowitz, said at the time. "In such a case, IP7 could be more of a replacement cycle versus a mega cycle (i.e., [iPhone 6])."

Apple's most recent quarter failed to alleviate many analysts' worries. "Our concerns about slowing smartphone market growth and elongating refresh cycles were reinforced by iPhone units [sales], which declined 16 percent year-over-year in the quarter," analysts at Deutsche Bank AG said after the report. Barclays' Moskowitz also voiced his concerns after Apple's earnings. "We expect shares of Apple to be under pressure near term. We had been concerned the stock's recent 'hope rally' overlooked the potential of more air pockets in the model, due to tenuous smartphone demand. Reality set in on Tuesday," Moskowitz said.

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