More Evidence Emerges of Soft iPhone Sales

Posted on November 12, 2018 by Paul Thurrott in iOS with 44 Comments

Another iPhone component supplier has warned of softer than expected demand for Apple’s latest handsets. Lumentum, which supplies FaceID components for the iPhone XS, XS Max, and XR, has reduced its profit and revenue forecasts thanks to reduced orders from Apple.

The news has sent Apple’s stock price tumbling again, this time by 4 percent, which has erased $40 billion from its market value.

This isn’t the first sign of bad news for the latest iPhones. As I wrote last week, a Nikkei report called demand for the iPhone XR “disappointing” and noted that Apple’s suppliers have canceled plans to ramp up production of the device.

But this Lumentum news is particularly damning because the firm had issued its original financial forecasts just two weeks ago. This means that Apple reduced its component orders since then, and that the situation is worse than previously understood.

And Lumentum isn’t alone. As Reuters reports today, many of Apple’s suppliers “have lowered numbers because of their unnamed ‘largest customer,’ which is Apple.”

Apple, of course, saw this coming. If you look at iPhone sales over time, you’ll see that “peak iPhone” happened in the first quarter of 2017. Since then, quarterly iPhone sales have dropped year-over-year. And this led Apple to announce 10 days ago that it will no longer report unit sales. And it is apparently about to get worse.

The question here is what kind of a shortfall to expect. Since Apple will no longer report unit sales, we’ll never know. But three analysts polled by Reuters said they expect an iPhone sales reduction of 18 million to 20 million units compared to original estimates.

Don’t feel bad for the Cupertino consumer electronics giant. It has raised prices across the board and is aggressively pursuing its services businesses in order to make more money from each of its existing customers. I call this new strategy Apple Jacked. And if successful, Apple could actually continue growing financially for many quarters to come.

 

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