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Fortune: Investors are bracing for the iPhone’s first down quarter

Apple CEO Tim Cook with IBM CEO Ginni Rometty

Apple is set to release its FY16 Q1 report tomorrow, and today Fortune has released their results of an analyst survey conducted ahead of Apple’s upcoming announcements. Fortune indicates that Apple may actually report the “most profitable quarter in the history of capitalism”, but investors are more concerned with the iPhone’s trajectory numbers as to indicate what may happen in the coming quarter.

Although Apple has already announced their biggest ever holiday season for App Store sales, Wall Street is still eagerly waiting to hear what revenue Apple expects to collect in this coming quarter. Although Apple doesn’t normally share iPhone sales targets, Fortune’s survey showed that averaging various analysts estimates, they have been able to closely identify the iPhone unit sales.

It appears that from Fortune’s survey (shown below), professional analysts predict Apple will announce a revenue of $55.75 billion, while the amateur class predicts $60.35 billion. Both these estimates appear to be right around last year’s results, $58.01 billion, yet both groups estimate iPhone unit sales will be lower as well.

A table listing out Fortune's Estimates for AAPL FY16 Q1

As March is expected to be a busy month for Apple, with new Apple Watch bands and a new 4-inch iPhone resembling current recent designs, tomorrow’s report could give potential ideas on where Apple believes their strongest sales will be.

Fortune’s also included a video in the article that further explains some of investor’s concerns with the iPhone’s unit sales. Apple has seemingly reached maximum saturation with their iPhone sales as customers aren’t looking to upgrade year after year to the latest devices. This fact, amongst many others, is what could help explain the 20% drop in stock as of the last six months.

Table: FortuneFor a further breakdown of all 40 analyst’s estimates, visit Fortune’s site.

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  1. Sales will be up. Stock will go down. Wash. Rinse. Repeat.

  2. Doug Aalseth - 7 years ago

    At some point the market will approach saturation. The last couple of SmartPhone holdouts I knew have given in. I can’t imagine there’s that many more left. With the quality of the iPhone, getting years out of it is not unreasonable. I have a 5C that’s going strong. Our lead programmer has a 4 (not a 4S) that’s solid still. At some point sales will slump. It doesn’t mean the iPhone is bad. It doesn’t mean Apple has lost its way. It just is what it is. Unfortunately many investors will shift from “It’s going great, things will never be bad” glee to “dump it all and hang yourself” despair in the blink of an eye. So the iPhone didn’t sell quite as many millions of units as it did last year. Really in the bigger picture it’s not that big of a deal.

    • Jon C (@JonCBK) - 7 years ago

      Come on Doug, you can’t get a take on global demand by just looking around at your friends and neighbors. There is a whole big world out there. Some day there will be saturation. But it is not going to be driven by saturation in the U.S. Saturation is going to be reached when the two big countries (China and India) are saturated. And we have no reason to think we are even close to hitting that point yet.

      • Doug Aalseth - 7 years ago

        Very true, but my point is that someday there will be saturation. And even before then there will be up and down quarters. The trouble is that many investors, and even more analysts seem to think sales and profits can increase in a linear, or even exponential fashion forever. That just isn’t realistic. As the market fills up there will be ups and downs.

    • bellevueboy - 7 years ago

      you are so right. Except for my iPhone and iPhone 3g rest are all still going strong(changed batteries) and circulating in the family. And my original ipad too is working well although now I feel I need to refresh. I think apple is focusing on the right markets for growth and this new 2 new iphones a year might help.

  3. yojimbo007 - 7 years ago

    Coming quarter is a none issue.. What happenes in the next few years is key.

  4. yojimbo007 - 7 years ago

    ‘Apple has seemingly reached maximum saturation with their iPhone sales as customers aren’t looking to upgrade year after year to the latest devices. This FACT, amongst many others, is what could help…….”
    this fact?….. Can i know where the source and proof of this fact comes from? Or is this yet another example wild-west journalism ….rumor spread irresponsibly as a fact.

    • Jon C (@JonCBK) - 7 years ago

      Right. Has Apple reached “maximum saturation” in China? How about in India? Or look to Europe, like in Spain where Apple has only a small market share. Android phones may become preferred or “good enough”, but to say we are anywhere close to global smartphone saturation is ridiculous. And how much has year over year upgrading of iPhones ever driven their sales numbers? I think I have one close friend who upgraded his iPhone yearly. Everyone else seemed to go a solid a two years. So I’ve never seen year over year iPhone improvements as driving meaningful number of purchases. And for the folks who did upgrade yearly, the one guy I know did it again for the 6S. But my anecdotes aren’t that important since growth is coming from China and I have only one friend in China. He (and many of his friends) used to laugh at the thought of buying an iPhone as antiquated (back during the 4 and 4s time), but he eventually switched from Android to iPhone.

  5. Apple should ignore the stock market and just do whatever makes sense for the business, and their core values. Of the stock does ‘crash’ they can buy themselves off the market and stop this ‘Apple is doomed’ nonsense.

    I remember back in 2012 when the concern was ‘apples growth is down’. Not their profits/revenue – growth. This insanely wealthy company was taking in more and more money every year, but growing too slowly. 🙄

    I don’t know if we have reached smartphone saturation, but it doesn’t matter if we have. People will buy new phones every year because they love iPhone. Others will buy every two years when their contracts need to be renewed. Most people’s smartphones are their main computer, they’re not going to neglect them.

    Apple is making enough money to pay staff, run the business and fund R&D for future products – any private company would be laughing.

    • Jon C (@JonCBK) - 7 years ago

      Apple cannot ignore the stock market because Apple employees are to a very large extent at the mid to senior level paid in stock options. An Apple engineer is paid in cash and stock options. If Apple’s stock is largely going down, that employee may look to go elsewhere where the stock options they are granted can be worth more. In SV when the Apple engineer and the Microsoft engineer and the Google engineer all meet at the bar, PTA meeting, or (more directly) are all bidding on a home to buy for their family to live in, it makes a difference and they all know it whose stock has moved up in the last few years.

      But this doesn’t mean that Apple should manage toward a stock price. They need to stay true to their vision. But they also can’t ignore the stock price. Note that Apple internally probably finds the speculations of the analysts funny. Everyone guessing at how many iPhones Apple has sold while Apple executives probably can pull up the exact number at any moment.

      And no Apple cannot take itself private. The stock is way to expensive for anyone or group to pull together the money it would take to buyout all the shareholders.

      But I totally agree that even if we have reached iPhone smartphone saturation, as long as Apple makes a great smartphone at a reasonable price, people will eventually buy their next iPhone. There may be a few people using 4 and 4s (and by a few, I mean 10s of millions), but eventually those folks will buy something new.

  6. RedHotFuzz (@RedHotFuzz) - 7 years ago

    AAPL is, as always, in a no-win situation. If iPhone sales are indeed down, the stock will drop. If iPhone sales are not down, everyone will worry that next quarter/year/century they *will* be, and the stock will drop. Meanwhile, Microsoft decides to give its core product (Windows) away FOR FREE and the stock rises. There is no sense to be made here.

    Owning AAPL is a baffling experience to be sure.