iPhone ‘Super Cycle’ Pronounced Dead
The iPhone “super cycle” -- a wave of upgrades and new customers that was supposed to wash over Apple Inc. this year with the introduction of its model X -- was pronounced dead on arrival.
In Apple’s first earnings report since the launch of the pricey flagship smartphone, the company reported lower-than-expected handset sales from the holiday period. Chief Financial Officer Luca Maestri also forecast a decline in the average selling price of iPhones in the current quarter, suggesting the most-expensive models aren’t as popular.
The results are part of a broader malaise in the global smartphone industry. Shipments in the fourth quarter dropped 9 percent, year over year, the biggest decline in history, according to Strategy Analytics.
“The super cycle is dead,” Steven Milunovich, an analyst at UBS, wrote in a note to investors on Friday.
Apple shares fell as much as 4.1 percent Friday to $160.88, the biggest intraday decline in more than six months. The stock is down 4 percent so far this year.
“The verdict is in: relative to expectations, the cycle is weak, and total iPhones sold are likely to be flat for the third straight year,” Toni Sacconaghi, an analyst at Sanford C. Bernstein, wrote in a note to investors. He downgraded the shares to market-perform and cut his price target to $170 from $195.
Smartphone doldrums are hurting other companies, too. Verizon Communications Inc., the largest U.S. wireless carrier, has offered unlimited data plans to lure subscribers as a saturated and competitive market makes it more difficult to attract new customers.
Qualcomm Inc., the largest mobile chipmaker, has seen orders from big customers tail off and is diversifying into other types of processors. The company is also holding out for faster 5G wireless networks and new phone features it hopes will revive growth in the sector.
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