Apple’s Tim Cook Jumps on Slowing iPhone Bandwagon

| Analysis

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.

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Lee Dronick

The hack tech writers and talking head news anchors will jump on this and use it for clickbait without repeating all of what Tim said.

Lee Dronick

Blog trolls as well.


How many CEO/CFO/COO would sell their souls, their family’s souls and and their first born children for numbers like what Apple has done in terms of units/profits ?


There are two responses to this news that come readily to mind. One is that everyone expected this plateau in iPhone sales to come at some point. Thus it is not a real big deal and things will turn right back around. The second is that, yes this day was due to show up but Apple has frittered the fat years away without coming up with a follow on hit product.

There is some basis for the second view. The Apple Watch is not going to be anything more than a complimentary product. Ditto for Apple TV. Apple also isn’t going to turn into a services profit driven company. Apple has reportedly invested time and talent in a TV subscription service, a Television product, a car among other things. All appear to be in varying states of stalled or abandoned progress. Is there a crack in Apple’s armor?

We can expect the “I told you so” articles to start rolling off the digital presses. Those who go to the Apple is doomed extreme can be ignored. But those who call into question Apple’s direction now have some reasonable basis for doing so. Apple has guided downward. They really need to hit that guidance or better yet beat it. They are in the unusual position of facing two negative outlooks. Missing that guidance would set off alarms. Worse would be guiding down for a second quarter in a row.

Lee Dronick

  How many CEO/CFO/COO would sell their souls, their family’s souls and and their first born children for numbers like what Apple has done in terms of units/profits?

See today’s Joy of Tech comic


Thanks Lee Dronick


He who lives by the Phone- dies by the phone. (Yeah, I wish I was dying at those sales figures) Saturation, competition, and a world full of absolutely fine used iPhones that the clones turn in after one year…. T’was nice Kool-Aid while it lasted.  It will be interesting to see what NEW Apple product will- if ever, come out. There are a lot of new tech ideas out there from paper 3D printers to VR, to VR + Drones to wearables - REAL wearables (not dumb shrunk down iPhones on your wrist); electric vehicles (bikes not cars), quantum dot displays, smart IOT devices on and on. Apple has never been known to innovate as opposed to buying up other companies ideas and letting Ive’s sprinkle eye candy on them; it will be very interesting to see how Wall St treats Apple since their stock is already down I expect the stock to fall this year. I sold (a chunk) at $119 and made a profit; will get back in MAYBE if it tanks but only if I hear about ANY reasonable new tech coming from them, otherwise if you take the iPhone as a commodity - it is going to be down for a while; not to say I won’t have fun placing “puts” on APPL as one can make money either way. Between the hubris of the ugly “campus” and the electric car fiasco (Elon must be snickering) coupled with a disappointing Watch failure, I don’t think Wall St. will be kind. I wonder what Jobs would’ve been doing in the last year? Buying Tesla? Buying Disney? I feel he would’ve bee so past the iPhone thing by now.

Lee Dronick

Lee, that’s hilarious -but kind of cool. I remember the day in Century City John had a prototype DeLorean between the twin towers to help raise funds for the Co. before he tried the Peruvian Marching Powder tact.
I wish it would have a Tesla drive train but stupid ICE drivetrain is so much cheaper. I wish I could buy a brand new ‘58 Plymouth Belvedere or Fury and maybe some entrepreneur will make that happen someday - maybe 3D printed retro body panels that mount to a modern template/chassis preferably electric driven. How cool would that be to see ‘57 Buicks and ‘61 Chrysler 300Fs again? I think the kids would go for it.

Lee Dronick

I would love to see retro designs with modern engines and such, kind of like the PT Cruiser, but I would rather a Stutz Bearcat. A few years ago I saw a 1937 Chevrolet pickup, I chatted with the owner and he said that he put in a new Ford engine and transmission because.

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