‘Worst is Soon Over’ for iPhone Sales Decline Says Apple Analyst Ming-Chi Kuo

Well-respected Apple analyst Ming-Chi Kuo has issued an investor note addressing the recent slowdown in iPhone shipments.

The current level of iPhone sales is far from the one originally anticipated by Apple, and the company admitted in early January that it indeed expects demand to go down in the first quarter of the year.

But top-rated Apple analyst Ming-Chi Kuo of TF Securities says Apple’s crisis is likely to come to an end soon, explaining that while poor demand would continue to be experienced, some signs of recovery would be recorded.

In a new research note from the analyst obtained by MacRumors, Kuo said that “share prices of Apple and most iPhone suppliers are generally priced in the negative:”

Our report published on December 14, 2018, was the first to cut the estimation of 2019 iPhone shipments to 190mn units or less; the current market consensus on 2019 iPhone shipments (160–180mn units) is much lower than our estimation and we believe the share prices of Apple and most iPhone suppliers are generally priced in the negative. 

We maintain our forecast of 188–192mn units for 2019 iPhone shipments. We believe the downside risks of share prices for the Apple and iPhone supply chain are limited in the near term given that 2Q19 iPhone shipments will likely be better than the market consensus.

Kuo said that the March-quarter iPhone sales are likely to drop 29 percent year-over-year to 36-38 million, and the June quarter could see a 15 percent decline to 34-37 million units. The sales are expected to at least flatten out in the second half and help beat Wall Street consensus

The analyst adds that the “demand for new models in China and emerging markets is lower than expected,” but also factors like “foreign exchange headwinds,” fewer carrier subsidies, and “economic weakness in some emerging markets” have affected iPhone sales. However, Kuo quickly points out that this decline will begin to ease from the start of the second quarter.

“If Apple continues the trade-in programs and the US-China trade war does not worsen further, we expect 2H19 iPhone shipments will be generally flat YoY thanks to replacement demand, trade-in programs and market share gain in European markets,” Kuo said.

Apple and its stock have been plagued by reports of reduced supplier orders and weak sales. Earlier this month, CEO Tim Cook issued a rare revenue warning for the company’s fiscal first-quarter results, which it reports Tuesday.

In related news, the Chinese phone market cratered in the final quarter of 2018, but iPhone sales in the country did even worse, says new data from Strategy Analytics.