Apple's 'Doom and Gloom' Sentiment Reaches 'Extreme Levels,' but iPhone Sales Should Hit Bottom This Quarter

Apple analyst Brian White of Wall Street brokerage firm Drexel Hamilton has issued a research note to investors in which he estimates that Apple will reach a bottom in iPhone sales, and overall revenue and profit, in the third quarter of the 2016 fiscal year, a three-month period that ends in late June.

White claimed that all of Apple's supply chain partners that his firm tracks reported May sales that were "softer than historical averages" due to the slowdown, but he forecasted that the much-rumored iPhone 7 series will help Apple's smartphone business return to growth by the second quarter of fiscal 2017.

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Until then, the bleeding isn't over. The firm estimated Apple will sell 38.5 million iPhones in the June quarter, down from 47.5 million in the year-ago quarter, followed by an estimated 41 million and 72.3 million sales in the September and December quarters respectively, both of which would also mark year-over-year declines.

White predicted that iPhone sales will then rebound to an estimated 56 million, 45.4 million, and 47.3 million in the subsequent three quarters, signaling a return to modest year-over-year growth throughout 2017. iPhone sales are estimated to reach 76.3 million by the first quarter of fiscal 2018, which would be a record breaker.

It was initially reported that Apple suppliers projected weak demand for the iPhone 7 series due to a "lack of innovation," with other market conditions to blame, but a subsequent report said Apple has asked suppliers prepare for the highest iPhone production target in "about two years."

Apple also reportedly increased iPhone SE orders last month due to strong sales, and the lower-priced 4-inch smartphone should help boost overall iPhone sales.

Mac sales are also expected to bottom out, but not until the second quarter of the 2017 fiscal year, when sales drop to an estimated 3.7 million compared to 4 million in the year-ago quarter. Mac sales are then estimated to reach 3.9 million, 4.4 million, and 4.44 million in the subsequent three quarters.

Given the current "gloom and doom" sentiment surrounding Apple reaching "extreme levels" this year, Drexel Hamilton believes the company's stock represents an "exceptional value." AAPL is currently trading in around the $98 to $100 range, while the firm has set a "buy" status with a price target of $185.

In April, Apple reported its first year-over-year decline in iPhone sales and quarterly revenue since 2003, and its third quarter guidance of between $41 billion and $43 billion in revenue, which would be up to 18 percent lower than the year-ago quarter, suggests that trend will continue through the first half of 2016.

Brian White is a longtime but somewhat infamous Apple analyst that currently serves as Global Head of Technology Hardware and Software at institutional brokerage firm Drexel Hamilton. He previously worked at investment bank Cantor Fitzgerald, where he held the same title, and Topeka Capital Markets.

Related Roundup: iPhone 6s
Tags: earnings, Brian White, AAPL
Buyer's Guide: iPhone (Neutral)


Top Rated Comments

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8 months ago

You don't? Lol. I look at eyes, smile, shoes, phone, and clothes in that order. If a pretty girl has at least three of those qualities up, it's time to move to stage 2 - Personality.

Saw this girl the other day that was gorgeous. We started flirting and everything was going great. Then she pulled out her Galaxy S7 and I just walked off and laughed to myself. Man did I show her!!;)
Rating: 24 Votes
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8 months ago
Just because someone buys a Samsung device means they don't have "taste"?

Lol...

It's the price. The devices are too expensive. Price lower and go for greater volume.

And people are buying Samsung meanwhile because they have zero taste. What's new.

Looking forward to WWDC to hear what is new and upcoming in Apple's world.

Rating: 22 Votes
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8 months ago

Really. Samsung devices aesthetically are tasteless. Bling and flash in the pan designs.

You judge someone based on the phone they have?

Wow.
Rating: 19 Votes
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8 months ago

When there is the option of two designs and the lesser design is selected, just have to wonder why. Moving humanity forward, we should be going for the best things if it's possible. It's a judgement on the choice, not the person.


You take all of this stuff way too seriously.
Rating: 16 Votes
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8 months ago

I think Monday will be make-it-or-break-it for them.

God knows what the reaction would be on here if they ever had a quarter when they made a loss. :rolleyes:
Rating: 14 Votes
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8 months ago

Saw this girl the other day that was gorgeous. We started flirting and everything was going great. Then she pulled out her Galaxy S7 and I just walked off and laughed to myself. Man did I show her!!;)


Pshhhh.

One time, I was making love to this stunning Brazilian model. Just before little Vesuvius erupts, her phone rings downstairs. A sense of dread unfolds as I recognize the Windows Phone default ringtone. Immediately grabbed keys and iPhone and jumped out the window.

Forgot my pants.
Rating: 11 Votes
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8 months ago
I think Monday will be make-it-or-break-it for them.
Rating: 11 Votes
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8 months ago
Just concerned Apple is spreading themselves too thin. Too many fronts. Sony made that mistake in the past. Apple should focus more on iOS/iDevices/Mac/services and less on watches, rumored car and Music.
Rating: 9 Votes
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8 months ago

When there is the option of two designs and the lesser design is selected, just have to wonder why. Moving humanity forward, we should be going for the best things if it's possible. It's a judgement on the choice, not the person.

You think moving humanity forward hinges on their phone choice? That is sad...
Rating: 9 Votes
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8 months ago
The SE has everything I need and do not plan to replace it until it's dead.
Rating: 8 Votes
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