Apple forecast to hit 41.6M iPhones as product becomes 'stable business'
In its upcoming results call, Apple will likely announce 41.6 million in June-quarter iPhone shipments, one analyst claimed on Thursday.
That number would be slightly below but "essentially in-line" with Wall Street consensus of 42 million units, said Loup Ventures' Gene Munster. The tally would represent 3 percent growth year-over-year.
The iPhone is "becoming a stable business, performing more like software than hardware," Munster suggested. Specifically that refers to the notion the product will see slow but predictable growth over the next several years, thanks to an install base in the hundreds of millions, a consistent replacement cycle, and retention rates believed to be over 90 percent.
Services revenue is meanwhile expected to grow 19 percent in the June quarter, one point higher than Street consensus. Apple has traditionally depended on hardware, but services like Apple Music, iCloud, and the App Store have given the company a chance to reap recurring fees.
Munster also predicted $25 billion in capital returns to investors, backing his idea of a three-year path to "net cash neutral" versus the Street's five or more. In the long term the company is thought to be looking at a "favorable" fiscal 2019, with iPhone shipments up 3 percent that year instead of the Street's forecast of a flat 220 million units.
Original video, augmented reality wearables, health technology, and self-driving vehicles may help boost Apple's share price in the next few years.
The company will announce Q3 2018 earnings after the close of New York stock trading on July 31.
That number would be slightly below but "essentially in-line" with Wall Street consensus of 42 million units, said Loup Ventures' Gene Munster. The tally would represent 3 percent growth year-over-year.
The iPhone is "becoming a stable business, performing more like software than hardware," Munster suggested. Specifically that refers to the notion the product will see slow but predictable growth over the next several years, thanks to an install base in the hundreds of millions, a consistent replacement cycle, and retention rates believed to be over 90 percent.
Services revenue is meanwhile expected to grow 19 percent in the June quarter, one point higher than Street consensus. Apple has traditionally depended on hardware, but services like Apple Music, iCloud, and the App Store have given the company a chance to reap recurring fees.
Munster also predicted $25 billion in capital returns to investors, backing his idea of a three-year path to "net cash neutral" versus the Street's five or more. In the long term the company is thought to be looking at a "favorable" fiscal 2019, with iPhone shipments up 3 percent that year instead of the Street's forecast of a flat 220 million units.
Original video, augmented reality wearables, health technology, and self-driving vehicles may help boost Apple's share price in the next few years.
The company will announce Q3 2018 earnings after the close of New York stock trading on July 31.
Comments
How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US.
I think the term was for want of a better one. The idea being that seeing as sales appear to have flattened out a little and the market is consolidating, there is now little room for growth once people have settled into their habits.
The idea is ok but completely fails to take into account the millions of first time buyers that enter the pool every year and mostly have limited budgets for things like phones (and services). There is plenty of room for drops in unit sales but Apple is more exposed than most in that sense because of share price sensitivity, so while one the one hand it is reasonable to view Apple's current (mobile based) business as 'stable', it could change at any moment.
I've said it before and will repeat it. Apple is likely viewing its business as 'post iPhone', hence the push into things like services, content creation and whatever their true car strategy is.
https://www.prnewswire.com/news-releases/all-4-stages-of-the-product-life-cycle-require-a-different-market-research-strategy-according-to-marketresearchcom-blog-270294311.html
Growth in China is huge in percentage points among "affluent customers", yet is still relatively weak in overall numbers. India is proving a tough nut to crack as Apple is having difficulty selling even four-year-old iPhone 6 devices. Maybe eventually economic conditions will improve in those countries to where the average person can afford to choose a $700+ phone, but right now average income is way too low.
The mounting evidence is supporting Apple's iPhone business turning into a mature, commodity market. That isn't necessarily a bad thing, but it does mean Apple is going to need to find something else to drive revenue growth which is what has driven the stock price in the past. They had a blow-out quarter in December due to ASP increases from the iPhone 8 and iPhone X, but that only goes so far. Apple can't continue to increase unit prices and maintain its customer base.
All countries have tariffs on some goods. These tariffs have been long-term and well-known. That allows predictions and trends to be stable. Negotiations can occur under these conditions. A trade war is not negotiations.