Monday 24 October 2016

Apple set to report flatlining iPhone sales

James Titcomb

Published 26/01/2016 | 08:02

Apple’s unbroken run of growing iPhone sales could come to an end on Tuesday when it releases results for the final three months of 2015, a crucial period for the world’s biggest listed company after a substantial decline in its share price.

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While Apple is expected to post an $18.2bn (£12.8bn) profit – breaking its own record for the biggest quarterly profit in US history – investors fear that the incredible run the company has been on since it released the iPhone in 2007 could be coming to an end.

Market forecasts are for Apple to have sold around 76m iPhones in the quarter, just a slight increase on the 74.5m it sold in the same period a year ago. Some analysts are even predicting that Apple will record a decline, after gloomy announcements from some of the company’s suppliers.

Even if it does not report a fall in iPhone sales tonight, the company is widely expected to do so for the current year as a whole, due to a strong dollar and tepid consumer interest in upgrading from older models.

The same quarter last year received an enormous boost from the success of the newly-released iPhone 6 and 6 Plus, which featured a new design and larger screen sizes. The upgrades in the most recent 6s models, however, were less pronounced. “There has been concern that consumers are less enthusiastic about the feature and performance gains with the latest iPhone 6s/6s Plus models,” UBS analysts said last week.

An iPhone 7 is expected to be released in the second half of this year, featuring more significant changes that analysts believe will kickstart sales again.

Apple’s position as the world’s biggest listed company, which it has held for more than two years, is under threat: its shares have fallen by 23pc since its summer peak, and its market capitalisation is just 10pc higher than Alphabet, Google’s parent company.

Apple has launched a number of new products in the last year, including the Apple Watch, its music streaming service Apple Music, and a revamped Apple TV set-top box, but the dominance of the iPhone means that sales of the new products pale in comparison. The iPhone accounted for 63pc of revenues in Apple’s last quarter, against 56pc a year earlier and 52pc the year before that, with reliance on the popular smartphone rising as iPad sales fall.

 Growing smartphone screen sizes and an increasingly saturated market has meant sales of the tablet declining from a peak of 26m in the final three months of 2013 to an expected 18m for the last quarter of 2015. Sales may have received a boost from the release of the iPad Pro, its larger-screened tablet aimed at eating into laptop sales.

Rumours that Apple is developing an electric car are gathering pace, although the notoriously-secretive company has confirmed nothing despite hiring hundreds of engineers and executives from the car industry.

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