Morgan Stanley analyst sees Apple iPhone sales declining in 2016

Morgan Stanley analyst sees Apple iPhone sales declining in 2016
Morgan Stanley analyst Katy Huberty sent out a message to clients last night. The contents of the message are sure to have several institutional traders reaching for the phone to call their Morgan Stanley broker this morning. In her note, Huberty said that she sees Apple iPhone sales declining by 5.7% during Apple's 2016 fiscal year, which started in October. If Huberty is right, 2016 would be the first year that Apple's iconic smartphone shows a year-over-year drop in sales.

Before you start marching around with a sign that reads "The End Is Near," Huberty says that her call is not based on weak demand for the handset. Instead, her call is based on a 10% drop in orders placed by Apple for components used in the production of the phone. The problem, she notes, is that iPhone inventory is too high. She also mentioned higher prices in international markets (read China), and high smartphone penetration in developed markets as reasons for a decline in iPhone sales

Huberty admits that her figures are based on a "worse-case scenario." It was only a few weeks ago when the proprietary survey used by the Morgan Stanley Managing Director called for a 6.8% increase in 2016 iPhone sales. Her survey now calls for a drop in iPhone revenue during the current quarter, which is the fiscal first quarter of 2016 for Apple. Last year, Apple sold a record 74.5 million iPhone units during the three months from October through November, making it a hard quarter to top. Still, Huberty originally saw Apple posting year-over-year growth of 6.1% during the three months. That has been cut to a .6% decline.

For fiscal  2016, Huberty forecasts iPhone sales of 218 million, 5.7% lower than fiscal 2015's sales figure. For calendar 2016, she sees Apple selling 224 million iPhones, a decline of 2.9% year-over-year. Previously, the analyst told clients to expect Apple to ring up 247 million iPhones in fiscal 2016 and 252 million units for the calendar year.

Morgan Stanley has cut its price target on Apple's shares to $143 from $162. The stock is currently trading down 2.5% at $110.38.



source: Fortune via 9to5Mac

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66 Comments

1. Carl3000

Posts: 240; Member since: Oct 11, 2014

I don't believe anything Morgan Stanley has said since they claimed the housing bubble was fine and everyone was safe in 2007-2008 before the economy collapsed. I think Iphones will keep selling period because people like to keep up with others and have the most popular devices.

2. marorun

Posts: 5029; Member since: Mar 30, 2015

Eventually ppl will see iphone for what they are and sell will drop. Making ppl pay more and more year after year when competition offer more for less will eventually hit them back.

5. darkkjedii

Posts: 30968; Member since: Feb 05, 2011

Could be selling people what they feel works best for them, year after year. There's a reason iPhones sell like they do...people like them, and the huge awesome ecosystem they tie into.

7. TBomb

Posts: 1397; Member since: Dec 28, 2012

Fair point, but it seems less people are liking them if they went from 6.1% growth to .6% decline.

24. darkkjedii

Posts: 30968; Member since: Feb 05, 2011

Fair point also.

25. Well-Manicured-Man

Posts: 673; Member since: Jun 16, 2015

Lets not paint the devil on the walls.

47. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Well you also have to consider that many people have been using iOS devices from quite a while. If you started with the first device and stuck with it, then that means you have spent a lot of money on apps, accessories and more with Apple. With such a big investment, many are forced to always keep an Apple device, me being one of them. When I total all the hardware and media I have purchased with Apple, I have spent very close to $10,000 if I include 2 Mac purchases back in 2011. No one can afford to throw away money when you have spent that much, or like many fans; even more. WhaT I think is happening is this. Carriers don't want to subsidize phones anymore. They pawn off the cost onto a monthly payment plan. If you are with ATT and VZW, those costs are fairly high considering what the phone bill is, especially if you have more than one line. What is happening is people are holding on to phone longer. Some because they are unaware you can pay the phone early by making extra payments, or if you are with VZW; you can only pay off the device in full vs making extra monthly payments. Also todays phones are so good, unless they die there is really no need to buy a new phone for at least 3 years. Also a saturated phone market where Android is 80% and the other 20% is everyone else, in order to grow more sales, someone else has to get less sales. But I also think the iPhone just isn't the iconic phone to beat anymore. With so many OEM's having devices with better features for their costs, many could be starting to shy away because Apple rested to long on their laurels. Apple hasn't had any "gotcha" hardware for a while. Designs really haven't changed and nor are they going too.

42. marorun

Posts: 5029; Member since: Mar 30, 2015

There is only one reason. Marketing.

43. darkkjedii

Posts: 30968; Member since: Feb 05, 2011

Yeah, ok lol.

13. Unordinary unregistered

2007. 08 09 10 11 12 13 14 15. Nope. People still love the iPhone :D

22. Well-Manicured-Man

Posts: 673; Member since: Jun 16, 2015

The people still do but last year was special with a larger screen and a phablet. I don't think that a year of year decline in sales from 2015 to 2016 is a valid indicator for a downward trend. If it happens in two consecutive years however, we can speak of a downward trend.

29. sgodsell

Posts: 7212; Member since: Mar 16, 2013

The iPhone 6/6s is a joke with its low resolution display, yet Apple charges flagship prices for low end tech. Then you get idiots who think the iPhone graphics is fast, especially since it is only pushing 1 million pixels, verse's a Quad HD display is pushing 3.7 million pixels. There is better, brighter, and more vibrant displays, better cameras, higher base storage, and more tech offered in other devices. Apple is behind the tech curve, and has been behind for quite some time.

31. bucky

Posts: 3778; Member since: Sep 30, 2009

While there are phones with individual things better than the iphone, theres very few that have a complete package like the iphone.

33. VVayne

Posts: 103; Member since: Oct 01, 2015

Yes better in every aspect. Sadly, just on the paper. Quality of apps, even the Google ones is light years ahead on iOS. And for most new applications you need iPhone 5, or maybe 5S, even for 3D games. They still run fluidly. That's the selling point. Nobody really cares about specs on paper, just fanatics who think that more Antutu is more Android.

39. sgodsell

Posts: 7212; Member since: Mar 16, 2013

So wrong on the Google apps are light years ahead on iOS. Clearly you never used Android. So how well does Google Now work or Google on tap? Granted a lot of new apps come to iOS, but not all. As far as 3D apps, and VR or 360. Android is the platform to use and not iOS. This is 100% a fact. With iPhones poor resolution then VR headsets just suck with Apple. Clearly you never tried out VR. Because an iPhone 5/5s is a joke, even the 6/6s is really bad with its pixelated display resolution of 667x750 per eye. But please show the world how ignorant you really are.

63. VVayne

Posts: 103; Member since: Oct 01, 2015

Well, you named features/apps, that are not on iOS. Yet. Good for you, if you would compare existing apps, iOS would win. Good try, my friend, but think ahead next time.

44. marorun

Posts: 5029; Member since: Mar 30, 2015

My sonim XP7700 use a crappy SD400 run all games smoothly no lag in the UI as well. Most big 3d games exist on both platform and they dont look bad on my phone they look the same as iphone 5S. i also have an old LG optimus G its run all the latest 3d games ( and learn to search on google you see thats android has most high end game with as good graphic ) and its run them the same as an iphone very fluid ( its has a 720p screen ) So sure no one care for spec on paper but dont give me crap about app and game graphics this is just dumb lie on your part. The selling point for iphone? Marketing thats make you feel like a champ because you use the phone thats tech website (thats are paid to say it ) and TV say is the best. But its okay a good part of the populations like to listen to lie on tv and such and beleive in it.

34. jeroome86

Posts: 2314; Member since: Apr 12, 2012

1080p on 5.5 screen. Good design. I only have human eyes. Looks damn fine. Great battery and oh so smooth.

37. sgodsell

Posts: 7212; Member since: Mar 16, 2013

VR looks like crap with a 1080p display (960x1080 per eye). So you can imagine what a 1334x750 display will look like with VR. I guess that is why Apple hasn't been doing anything with VR.

38. Dee79

Posts: 307; Member since: Jun 19, 2014

Go and put the s6 edge or s6 edge plus screen against an iphone 6 or 6s, or plus and tell me you can't see the difference. .................. You must have poor "human" eyes if you can't see the difference.

64. VVayne

Posts: 103; Member since: Oct 01, 2015

I can see the difference even between 5.5 Quad HD / Full HD. Still, I'd use the iPhone 6 Plus / 6S Plus as daily driver over any Android, because there are other factors, that made me decide this way.

45. stanislav

Posts: 136; Member since: Sep 22, 2014

The graphics in iPhone 6s+ full hd display are faster than Z5 compact 720p display you little android fanatic

3. DirtyDan23

Posts: 280; Member since: Aug 12, 2014

Nifty

4. darkkjedii

Posts: 30968; Member since: Feb 05, 2011

TechieXP is gonna have an orgasm, when he reads this news.

35. jeroome86

Posts: 2314; Member since: Apr 12, 2012

Yeah he will. Wonder if he has a job sometimes? Post after post and they're all long.

40. darkkjedii

Posts: 30968; Member since: Feb 05, 2011

Maybe he works at 1-900-eye-trol

6. AlikMalix unregistered

I would love to see Apple in decline. A giant like that - wonder what they'll do... In comparison, look how Samsung reacted due to recent town turn - look at how much nicer their phones got, they even cleaned up touch wiz. Apple needs I a kick in the butt - my iPhone 6s does look dated, feels good, runs great, but looks - not so much.

9. janis

Posts: 397; Member since: Mar 10, 2014

well maybe they will start producing proper screens and proper body/screen ratio phones, with reasonable prices without that 16gb start model, which is unreal. i would get iphone 6s for max 350$, because for more i can get better phones, ecosystem, wtf? google rules, its everywhere. by the way i had iphone 5s and still have macbook pro, so ecosystem is nothing special, at least its not a deal breaker, since now i use Samsung s6 edge.

17. AlikMalix unregistered

You're overexaggerating. I don't care for higher resolution, I don't care for them upping base model to 32gb (I need minimum 64gb anyway). When you factor in that Apple makes and maintains its own ecosystem an iOS (while others dont have to and just install a freeware and offset the cost with bloatware) the little extra cost is justified especially when latest a iPhones surpass or at least meet competition benchmarks - so spec sheet is nothing. The one thing I'd agree with you - body to screen ratio needs improvement - and get rid of that damn camera hump. I wouldn't change a trying else - just keep the improvements coming. I was talking about the next product. Apple did it with iPod, then with iPhone, then with iPad. They need a kick in the butt to make another original iPhone type product that would change the way we do a certain thing in life.

21. Well-Manicured-Man

Posts: 673; Member since: Jun 16, 2015

Apple did bring Touch ID and Force Touch. Touch ID alone will change completely how you pay bills in the future. It might not be visible at the first sight right now, but Touch ID was a huge step forward. Force Touch has a lot of potential too but it is unclear to which extend it will be able to seize it.

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