Apple's Tim Cook Jumps on Slowing iPhone Bandwagon

Upside Down $AAPLReports that iPhone sales growth has slowed have been gathering steam for the last few months, and now even Apple CEO Tim Cook is jumping on the bandwagon. During Tuesday's quarterly conference call with analysts, Mr. Cook said he expects iPhone unit sales will decline during the March quarter. If so, it would be the first such decline in iPhone history.

"Toni, we do think that iPhone units will decline in the quarter," Mr. Cook said to Bernstein analyst Toni Socconaghi. "We don't think that they'll decline to the level that you're talking about; we aren't projecting beyond the quarter as [Apple CFO Luca Maestri] mentioned earlier, but at this point in time, we see that Q2 is the toughest compare."

Messrs. Cook and Maestri spent much of the call establishing the rough economic headwinds Apple faced during both the December quarter and the current March quarter. Slowing economies around the world, a strong dollar, and various currency fluctuations all made Apple's record quarter a difficult achievement, Mr. Cook said.

Mr. Cook cited "Brazil, Russia, Japan, Canada, southeast Asia, Australia, Turkey, and the Eurozone" as having slowing economies, and said, "Euro and British Pound are down double-digits, and major currencies such as the Canadian Dollar, Australian Dollar, Mexican Peso, and Turkish Lira have declined 20 percent or more."

That was the theme for Apple's broader struggles, but the iPhone-specific comments cited at the top of this piece honed in on what Wall Street calls a "tough compare." In essence, Apple's March quarter in 2015 saw the sale of some 61 million iPhones, a record-shattering amount for that quarter. Mr. Cook didn't say exactly how many iPhone he expects to sell this quarter, but it will apparently be less than 61 million units.

Apple achieved those sales numbers in part because the iPhone 6 and iPhone 6 plus had years of pent-up demand for large screen iOS devices pushing them. Some of what might have been sold in the December quarter of 2014 (Apple's first fiscal quarter) spilled over into the March quarter instead, and that's what Apple will be compared against.

The iPhone 6s and iPhone 6s Plus are both popular devices, but they don't have the same pent-up demand that could goose their sales throughout the year. To that end, Apple guided for revenue between $50 and $53 billion for the March quarter—while that's a lot of money, it's below the $58 billion Apple turned in during the March quarter of 2015.

If that's the way the quarter unfolds, it will be a rare non-record quarter. Don't cry too hard for Apple, though, as the company still prints money and the its devices are doing very well. Some in the echo chamber may make hay out of the impending decline, but investors are likely to understand that a tough compare is a tough compare.

The after hours market greeted Apple's earnings call with higher prices for shares of the company. As the call wore on and Apple spent more time talking down the economy, and then Mr. Cook let out his iPhone guidance, the stock retreated.

towards the end of the after-hours session, $AAPL was trading at $97.36, down $2.63 per share. That could be considered a muted reaction to Apple's guidance, but these expectations were already baked into $AAPL's price, which has been in decline for the last several weeks.

The regular trading session Wednesday morning will be the thing to watch.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.