Apple forecast to hit 41.6M iPhones as product becomes 'stable business'

Posted:
in AAPL Investors
In its upcoming results call, Apple will likely announce 41.6 million in June-quarter iPhone shipments, one analyst claimed on Thursday.

iPhone X and Apple store


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.
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Comments

  • Reply 1 of 24
    eriamjheriamjh Posts: 1,148member
    Wall Street Consensus: the average of a bunch of incorrect guesses.  Even if it is right, it means that everyone likely guessed wrong.  
    SpamSandwichmuthuk_vanalingam
  • Reply 2 of 24
    nunzynunzy Posts: 662member
    This guy is an analyst. That means he doesn't know what he's talking about and just pulls numbers out from where the sun don't shine.
    SpamSandwich
  • Reply 3 of 24
    larryjwlarryjw Posts: 426member
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 

    How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US. 
  • Reply 4 of 24
    MacProMacPro Posts: 18,462member
    Tim and board of Apple and all Apple investors must me thrilled to know at last the iPhone is a product worthy of being called a stable business.  All these years they never had a clue. /s
    bb-15Rayz2016RonnnieOgeorgie01melodyof1974cornchippscooter63muthuk_vanalingam
  • Reply 5 of 24
    demitoddemitod Posts: 10member
    “Haters are going to hate.”
    edited July 2018
  • Reply 6 of 24
    anton zuykovanton zuykov Posts: 1,040member
    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 
    How was it any different comparing to "before the war" time? 
    Rayz2016
  • Reply 7 of 24
    anton zuykovanton zuykov Posts: 1,040member
    The iPhone is "becoming a stable business, performing more like software than hardware," 
    So it is only now is becoming a stable business? Okay.... So, it was unstable before with all those huge and stable profits? I see...
    Rayz2016cornchip
  • Reply 8 of 24
    SpamSandwichSpamSandwich Posts: 31,513member
    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 

    How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US. 
    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 

    How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US. 
    There’s no trade war. There are only ongoing negotiations.
  • Reply 9 of 24
    bala1234bala1234 Posts: 24member
    The iPhone is "becoming a stable business, performing more like software than hardware," 
    So it is only now is becoming a stable business? Okay.... So, it was unstable before with all those huge and stable profits? I see...
    I guess is stable vs growth...
    gatorguymuthuk_vanalingam
  • Reply 10 of 24
    Can Someone explain, how is this going to be the report of Q3? Shouldn't it be the second quarter report? I'm confused.
  • Reply 11 of 24
    avon b7avon b7 Posts: 4,305member
    Can Someone explain, how is this going to be the report of Q3? Shouldn't it be the second quarter report? I'm confused.
    This is Apple's fiscal quarter (Its fiscal year begins on 1st of October) but not a calendar quarter (which would begin on 1st January).
  • Reply 12 of 24
    avon b7avon b7 Posts: 4,305member
    The iPhone is "becoming a stable business, performing more like software than hardware," 
    So it is only now is becoming a stable business? Okay.... So, it was unstable before with all those huge and stable profits? I see...
    I don't believe in 'stable' consumer business because consumers don't generally take long term decisions with technology, and are highly influenced by all kinds of unpredictable variables.

    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.
    muthuk_vanalingam
  • Reply 13 of 24
    macxpressmacxpress Posts: 5,001member
    Can Someone explain, how is this going to be the report of Q3? Shouldn't it be the second quarter report? I'm confused.
    Businesses don't all run from Jan to Dec. Some start earlier in the previous year. 
  • Reply 14 of 24
    macxpressmacxpress Posts: 5,001member
    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 

    How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US. 
    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 

    How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US. 
    There’s no trade war. There are only ongoing negotiations.
    So when one country raises tariffs on goods and then that country retaliates with higher tariffs that's not a trade war? Hmmm...I think you better look up the definition of what that is, then get back to us. 
    StrangeDays
  • Reply 15 of 24
    asciiascii Posts: 5,941member
    Computers are stable, mobile phones are stable. What will be the next big thing?
  • Reply 16 of 24
    MacPro said:
    Tim and board of Apple and all Apple investors must me thrilled to know at last the iPhone is a product worthy of being called a stable business.  All these years they never had a clue. /s
    I took it to mean that the product has entered the maturity stage of the traditional product life cycle

    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
    muthuk_vanalingam
  • Reply 17 of 24
    78Bandit78Bandit Posts: 235member
    The iPhone is "becoming a stable business, performing more like software than hardware," 
    So it is only now is becoming a stable business? Okay.... So, it was unstable before with all those huge and stable profits? I see...
    No, it just means the momentous growth seen between 2007 and 2015 is not expected to continue. iPhone sales peaked with the iPhone 6 and growth has stagnated since. The expectations of a "supercycle" year driven by massive pent-up demand for what would ultimately become the iPhone X that was even given as a reason by Tim Cook himself for the sales decline in Q2 2017 never materialized.

    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.
    edited July 2018 avon b7muthuk_vanalingam
  • Reply 18 of 24
    larryjwlarryjw Posts: 426member
    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 
    How was it any different comparing to "before the war" time? 
    It's different because tit-for-tat tariffs cannot be predicted. Tariffs have immediate impact, and are meant to do so, and they're meant to immediately damage. No company, including Apple, can predict with any confidence what the next quarter will be -- there are no trends. 
    muthuk_vanalingam
  • Reply 19 of 24
    larryjwlarryjw Posts: 426member

    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 

    How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US. 
    larryjw said:
    Trump's trade war with the world means nobody's financial forecasts can be taken seriously, including Apple's. 

    How will Apple handle stock buybacks is another big question. Apple might be kicking themselves now for bringing overseas funds back into the US. 
    There’s no trade war. There are only ongoing negotiations.
    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. 
  • Reply 20 of 24
    "Trump's trade war?" The Pres. of the European Commission and Trump met and announced a few days ago that they agree to work toward zero tariffs, zero barriers, etc. between the US and the EU/Europe, which will give true free and fair trade to the benefit of both places. And re China, the goal is to eliminate ripping off US intellectual property (haven't we all read articles about the fake Apple stores in China?) So what seemed risky will likely benefit us all. Not wars, simply leveling the playing field between the cheaters and the US. As far as stable predictions, I remember all the false predictions that Apple would be going out of business, no one would buy Apple products/services, so better stable than that. So far so good. Apple just needs to keep innovating with some new product/service lines.
    cornchip
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