Morgan Stanley lowers 2017 iPhone 7 sales estimates ahead of next-gen 'supercycle'

Posted:
in AAPL Investors edited January 2017
Investment bank Morgan Stanley expects Apple to see decreased iPhone 7 demand in the coming months as buyers anticipate this year's "iPhone 8" revamp, one model of which is expected to feature a drastic redesign and exotic technologies like an OLED display.




Analyst Katy Huberty in a note to investors obtained by Business Insider is lowering fiscal 2017 iPhone revenue estimates by 3 percent due to "weak demand ahead of the 'supercycle.'"

An iPhone "supercycle," as it is referenced by Wall Street analysts, is the theoretical upwelling of demand after a year of revenue declines. Some blame the lack of interest on three years of minor improvements to what has become a staid smartphone lineup. While iPhone 7 is expected to stabilize the downturn in iPhone growth, the effects of last year's slump are ongoing.

Apple last January guided for, and subsequently realized, its first ever year-over-year iPhone sales contraction in the second fiscal quarter of 2016. Shipments were equally dismal in the following two quarters, culminating in three straight quarters of revenue declines for the company.

As for the coming "supercycle," Huberty and other analysts expect suppressed iPhone demand to explode as buyers who passed on iPhone 6s and iPhone 7 join regular upgraders in picking up this year's handset. Morgan Stanley predicts iPhone to post sales growth of 20 percent in 2018, a huge comeback from the preceding nine months.

Helping drive demand this year is Apple's rumored "iPhone 8," a handset featuring next-generation technology like an OLED display, wireless charging, full-face screen with invisible Touch ID home button and more. Recent rumblings out of Apple's East Asian supply chain suggest the device will ditch aluminum for forged stainless steel as part of a "glass sandwich" design reminiscent to the iPhone 4 series.

Due to technological hurdles and supply limitations, OLED panels being one of the most constrained, Apple is said to launch limited numbers of a completely redesigned iPhone model alongside the usual "s" cycle upgrades. Whether the high-end variant can be produced in quantities large enough to push the iPhone shipments needle is unknown.

Investors should get a better view of Apple's upcoming year when the company reports fiscal earnings for the first quarter of 2017 on Jan. 31. AppleInsider will be covering the ensuing investors conference call live starting at 2 p.m. Pacific, 5 p.m. Eastern.
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Comments

  • Reply 1 of 32
    eriamjheriamjh Posts: 1,113member
    But the rumors are for an iPhone 7S AND an iPhone8 at a super premium price.

    Or are they?

    brakken
  • Reply 2 of 32
    foggyhillfoggyhill Posts: 4,767member
    Same crap as the year before. Almost everything about those shit analysts is stock manipulation.
    lkruppStrangeDayswatto_cobrasaltyzip
  • Reply 3 of 32
    calicali Posts: 3,495member
    So Apple is doomed again?
    lkruppStrangeDayswatto_cobra
  • Reply 4 of 32
    NY1822NY1822 Posts: 593member
    wait...so there was weak demand for the 5S bc of the 6....and weak demand for the 6S bc of the 7 which turned out to be weak demand bc of the 8.....guess everyone owns the 4 still and is waiting on the 10

    Heres the next storyline "Apple to produce only 20 million iphone 8's in 2017-2018 due to OLED shortage, buyers will have to purchase 7s or wait for a refresh in Q4 2018...
    edited January 2017 watto_cobra
  • Reply 5 of 32
    What happened to the rumored iPhone 7s / 7s Plus?
    mr owatto_cobra
  • Reply 6 of 32
    eriamjh said:
    But the rumors are for an iPhone 7S AND an iPhone8 at a super premium price.

    That makes even less sense, from a product positioning point of view.
    cali
  • Reply 7 of 32
    LOL @ "exotic technologies like an OLED display".
    retrogusto[Deleted User]caliboredumbwatto_cobra
  • Reply 8 of 32
    foggyhill said:
    Same crap as the year before. Almost everything about those shit analysts is stock manipulation.
    Ofcourse Foggyhill.. They work for securities trading houses... their loyalty is not to you and me.... its first to themselves ,second to the house... you and i and alike are pawns to be manipulated.
  • Reply 9 of 32
    Is this going to be the new upgrade cycle?

    iPhone 7
    iPhone 8
    iPhone 8S
    iPhone 9
    iPhone 10
    iPhone 10S
    etc

    Are we skipping every other "S" upgrade?
    edited January 2017 brakken
  • Reply 10 of 32
    sirlance99sirlance99 Posts: 1,142member
    exotic technologies like an OLED display.
    Since when is OLED an "exotic" technology? You guys at AI are really pushing it. 
    revenantsingularitycalidamn_its_hot
  • Reply 11 of 32
    If Apple wants to grow in India, they will need to sort out a few things. - Manufacture locally, to get lower taxes, therefore lower prices. - Get a Dual SIM phone. It is simply incredible how many customers use a dual SIM phone in India, and Apple is missing out because of not having one in their line-up. - Beef up their offerings in iTunes for Indian music and movies. They have made a start, but still some way to go. - Launch Apple Pay in India like yesterday - Demonetization was the perfect opportunity missed by Apple! - Fix Maps in India - it is pathetic how Apple has dropped the ball on this totally. - lower prices of Mac Mini in India, and make Mac Mini user upgradeable. - Get cracking on Educational segment in India.
  • Reply 12 of 32
    Rayz2016Rayz2016 Posts: 4,556member
    exotic technologies like an OLED display.
    Since when is OLED an "exotic" technology? You guys at AI are really pushing it. 
    I think they're paid per adjective. 
    revenantsingularity
  • Reply 13 of 32
    Rayz2016Rayz2016 Posts: 4,556member
    So, before the release of a new model, folk stop buying the old model and wait to see what the new model is like. 

    "We at Morgan-Stanley would like to present our new CEO – Captain Obvious! We'll take questions after lunch…"

    beowulfschmidtmacxpresswatto_cobra
  • Reply 14 of 32
    "After thoroughly wetting our thumb and extensive sucking thereon, we conclude that Apple will sell 3% less iPhone 7s this year."
    Rayz2016watto_cobra
  • Reply 15 of 32
    eriamjheriamjh Posts: 1,113member
    pdbreske said:
    Is this going to be the new upgrade cycle?

    iPhone 7
    iPhone 8
    iPhone 8S
    iPhone 9
    iPhone 10
    iPhone 10S
    etc

    Are we skipping every other "S" upgrade?
    Apple does not base its design cycles around patterns or formulas.  It's based around tech and profit.  
  • Reply 16 of 32
    macxpressmacxpress Posts: 4,794member
    Rayz2016 said:
    So, before the release of a new model, folk stop buying the old model and wait to see what the new model is like. 

    "We at Morgan-Stanley would like to present our new CEO – Captain Obvious! We'll take questions after lunch…"

    Hey now, only experts have that kind of thinking...
    Rayz2016
  • Reply 17 of 32
    NatefromHoustonNatefromHouston Posts: 1unconfirmed, member
    Blatant attempt at stock manipulation.   How long is this going to sit at the top of Apple insider?  Very suspicious.  Don't listen to Katy Huberty and don't be fooled by this lousy journalism.  She changes her mind on units every few months and is consistently wrong, depending on what her company wants her to say.  It's all a scam and it's how Wall Street steals money from the everyday Joe.  AAPL will surprise to the upside and she'll revise back up (providing absolutely no value but still making headlines for some reason).  
    jcdinkinsRayz2016watto_cobra
  • Reply 18 of 32
    This was announced early yesterday and the stock still rose a buck in a down market.  Investors are ignoring this news.  Apple is very strong and broke out over 115.  This is in an uptrend and will continue on into the foreseeable future.
    caliwatto_cobra
  • Reply 19 of 32
    coolfactorcoolfactor Posts: 1,432member
    Honestly, with how mature and performant iPhones have become, there's less "need" to upgrade than ever before. It has nothing to do with how "interesting" the next model is, I think.
  • Reply 20 of 32
    MacProMacPro Posts: 18,155member
    foggyhill said:
    Same crap as the year before. Almost everything about those shit analysts is stock manipulation.
    Can you even begin to imagine what analysts would be writing in the headlines or what would have been or Wall Street's take had it been an iPhone 7 that was exploding instead of a Galaxy Note 7?  Yet all I see are headlines about a wonderful new model from Samsung!
    jcdinkinscaliRayz2016watto_cobra
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