Facing 'sluggish sales,' Apple said to continue reduced iPhone production through June quarter

AppleInsider

Apple has apparently signaled to its suppliers that it plans to maintain reduced output of the flagship iPhone 6s and iPhone 6s Plus through the end of the June quarter, suggesting that year-over-year declines could continue, according to a new report.

Citing commentary from parts suppliers, Japanese newspaper Nikkei reported on Friday that Apple continues to see "sluggish sales" for the iPhone 6s series. And while the new 4-inch iPhone SE is expected to stimulate growth on the low end, it won't move enough units to offset the iPhone 6s performance, the report said.

The newspaper also floated the possibility of Apple potentially launching its next-generation "iPhone 7" sooner than the usual September timeframe. It said if Apple chose to do so, suppliers could see their bottom lines improved as soon as May.

Rumblings from the supply chain in late 2015 were the first indication that the iPhone 6s was not sustaining the same level of growth as its predecessors. Those rumors proved to be accurate, as Apple signaled in January that the iPhone will see its first-ever year-over-year decline in shipments in the just-concluded March quarter.

Still, investors and market watchers had hoped that more favorable comparisons in the June and September quarters might see the iPhone 6s, along with the iPhone SE, push sales back into the growth column. But Friday's report suggests that the iPhone 6s will continue to struggle against last year's strong iPhone 6 performance, leading to further declines before the launch of the "iPhone 7."

Apple doesn't provide guidance beyond the next immediate quarter, so it's unknown what the company officially thinks about the June period. A better picture will be provided when Apple reports the results of its March quarter on April 25.

Though sales have since cooled, the iPhone 6s got off to a record breaking start last fall, helping to push Apple to its biggest quarter ever. The strong iPhone 6s launch helped result in $75.9 billion in revenue for the holiday period.

Apple's quarterly conference call for the first fiscal quarter of 2016 is scheduled for Monday, April 25 at 2 p.m. Pacific, 5 p.m. Eastern. Along with Apple's stream, AppleInsider will be covering the event live.

fallenjt

What's new? Stock drops...sell , sell...please! Supply chains are very complicated. Did Cook say that? 

radarthekat

A look at the $110 call strike will tell you everything you need to know about while this 'news' came out this afternoon.  That's a huge wall of calls sitting there at the $110, a juicy target for those who would benefit if they were to expire worthless.  The stock has run too far since those calls were sold short.  So here we are, close enough to earnings that Apple won't, or can't respond, and so they come and whack the stock on the big monthly option expiration.

cnocbui

And SOG will be along in about 5 to discredit any such notion, citing all those supply chain rumours that were wrong about declining sales before Apple announced its results.  Whoops, those rumours were actually correct, looks like I accidentally made an error.

supadav03

Don't worry, an AMOLED screen will fix all of this!

baconstang

"And while the new 4-inch iPhone SE is expected to stimulate growth on the low end, it won't move enough units to offset the iPhone 6s performance, the report said."

Well, there's still a 2-3 week wait for SE shipping....Hmmm.

blastdoor

It looks like the easy growth days are done. Apple needs to work a lot harder from here on out to achieve profit growth. It can no longer be about one or two products. 

Apple has a lot of growth opportunities, but each one is small compared to what the iPhone was 5 years ago. They can't just pick one opportunity and shun the rest -- they now need to now pursue them all. 

That means they need to stop letting products like the Mac Pro and Cinema display languish without updates. Those are just two examples, but the principle applies to the entire product lineup. For every product and service that Apple sells, they need to knuckle down and make those products and services the very best they can be. They need to bolster their position in existing markets, and then expand into adjacent markets. 

In 2007 it was fine to put Leopard on hold to finish the iPhone. Today, nothing can be put on hold. Everything needs to be full speed ahead. 

rayz2016

AppleInsider said:

The newspaper also floated the possibility of Apple potentially launching its next-generation "iPhone 7" sooner than the usual September timeframe. It said if Apple chose to do so, suppliers could see their bottom lines improved as soon as May.

Since Apple has already said that they're expecting a troublesome quarter then I'd be really surprised if they made a panicked move like this. 

bdkennedy1002

It's boring and people are over it. It wasn't exciting to begin with.

horvatic

More crap rumors that don't mean anything and yet the market reacts as usual with there stupidity!

rogifan_new

radarthekat said:

A look at the $110 call strike will tell you everything you need to know about while this 'news' came out this afternoon.  That's a huge wall of calls sitting there at the $110, a juicy target for those who would benefit if they were to expire worthless.  The stock has run too far since those calls were sold short.  So here we are, close enough to earnings that Apple won't, or can't respond, and so they come and whack the stock on the big monthly option expiration.

Yep. The timing of this along with the stock price drop isn't accidental. Of course now CNBC and others will run with this all the way up to earnings release so I wouldn't be surprised if the stock fell back below $100 in the next week or so. Only news we'll get from Apple before earnings is probably WWDC dates.

red oak

Apple stock price is tied to quarterly unit shipments.  That is why it is sitting with a PE of 11, vs. Microsoft which has 35+.   It is ridiculous 

It's a failure of the senior management team not to have defined a better narrative

icoco3

radarthekat said:

A look at the $110 call strike will tell you everything you need to know about while this 'news' came out this afternoon.  That's a huge wall of calls sitting there at the $110, a juicy target for those who would benefit if they were to expire worthless.  The stock has run too far since those calls were sold short.  So here we are, close enough to earnings that Apple won't, or can't respond, and so they come and whack the stock on the big monthly option expiration.

Break it down for those of us whose head spins when trying to figure out calls, shorts, etc and how it applies in this case.

rogifan_new

blastdoor said:

It looks like the easy growth days are done. Apple needs to work a lot harder from here on out to achieve profit growth. It can no longer be about one or two products. 

Apple has a lot of growth opportunities, but each one is small compared to what the iPhone was 5 years ago. They can't just pick one opportunity and shun the rest -- they now need to now pursue them all. 

That means they need to stop letting products like the Mac Pro and Cinema display languish without updates. Those are just two examples, but the principle applies to the entire product lineup. For every product and service that Apple sells, they need to knuckle down and make those products and services the very best they can be. They need to bolster their position in existing markets, and then expand into adjacent markets. 

In 2007 it was fine to put Leopard on hold to finish the iPhone. Today, nothing can be put on hold. Everything needs to be full speed ahead. 

The Mac Pro and Cinema Display are a drop in the bucket revenue wise and certainly not anything Wall Street cares about. The timing of this rumor is not an accident. And something we've been hearing for years now. I don't think a quarter goes by that we don't get some iPhone sales are slowing rumors.

koolidge54

The high price of an Apple  iPhone is a major factor in a lot of people upgrading to Apple hardware.

sdw2001

blastdoor said:

It looks like the easy growth days are done. Apple needs to work a lot harder from here on out to achieve profit growth. It can no longer be about one or two products. 

Apple has a lot of growth opportunities, but each one is small compared to what the iPhone was 5 years ago. They can't just pick one opportunity and shun the rest -- they now need to now pursue them all. 

That means they need to stop letting products like the Mac Pro and Cinema display languish without updates. Those are just two examples, but the principle applies to the entire product lineup. For every product and service that Apple sells, they need to knuckle down and make those products and services the very best they can be. They need to bolster their position in existing markets, and then expand into adjacent markets. 

In 2007 it was fine to put Leopard on hold to finish the iPhone. Today, nothing can be put on hold. Everything needs to be full speed ahead. 

I agree with some of that, but not all.  The problem is that Apple has hitched its wagon to explosive growth instead of excellent performance.  Or, perhaps its Wall Street that has always looked at Apple this way.  It's understandable (or was), because Jobs ran the company with everyone always anticipating the Next Big Thing.  But Apple isn't about that anymore.  It's more about creating great products that sell very well.  It's about incremental or moderately fast feature additions, never getting ahead of overall design and usability.  

Explosive growth cannot go on forever, no matter how many great products they have.  The smart phone market in North America is completely saturated.  In some ways, Apple is a victim of its own success.  In 2007, the iPhone was five steps beyond every other phone.   Others caught up to a degree but apple out branded, designed and marketed them.  Now, ALL phones are "smart phones."  You have to specifically look for one that isn't if you want it.  There is no way Apple can expect to sell tens of millions more phones each year than it did the year before.  It simply took 9 years to hit Peak iPhone.  

Of course, I expect growth will continue with iPhone 7.  It will be a significant upgrade and new form factor.  They won't be able to make them fast enough.  

I do agree with you about stopping the languishing of products like the Mac Pro and displays.  The Pro hasn't been updated since 2013!  Their display offerings are pathetic. Perhaps they are waiting to launch the long rumored, actual TV set.  I'm also annoyed about the Macbook Pro.  The processor architecture is two generations behind in the 15", and one generation behind in the 13".  I expect that to be remedied soon, but the point remains.  

pmz

What most company's wouldn't give to have Apple's "sluggish" sales...

jason98

koolidge54 said:

The high price of an Apple  iPhone is a major factor in a lot of people upgrading to Apple hardware.

High price could be justified by real innovation (not by gimmicky 3d touch)

wizard69

baconstang said:

"And while the new 4-inch iPhone SE is expected to stimulate growth on the low end, it won't move enough units to offset the iPhone 6s performance, the report said."

Well, there's still a 2-3 week wait for SE shipping....Hmmm.

Demand for small high performance never left, APPLE left the market instead I suspect the SE will sell better than Apple expected.

cintos

Not only can Apple not comment, they also can't buy stock until 24 hours after the earning announcement. The exception, I understand, is if they had put a purchase order in ahead of time and Paid For It already.

blastdoor

rogifan_new said:

The Mac Pro and Cinema Display are a drop in the bucket revenue wise and certainly not anything Wall Street cares about. The timing of this rumor is not an accident. And something we've been hearing for years now. I don't think a quarter goes by that we don't get some iPhone sales are slowing rumors.

Everything is a drop in the bucket compared to the iPhone. But add up all the drops, and you've got a bucket. Apple now needs to pursue everything. The AppleTV (also a drop in the bucket compared to iPhone) update last year was frankly an embarrassment compared to what it could have and should have been. The Mac App store is an embarrassment. The list of neglected drops is actually pretty long. Add them all up, and they start to be something significant.