Tim Cook warns that iPhone sales will likely decline in Q2



As part of today’s financial earnings conference call, Tim Cook mentioned that iPhone sales will likely decline in the March quarter.

If the predictions, which the company is making itself, turns out to be true, it would mark the first year-over-year decline since the smartphone’s release in June of 2007. This decline would be true if Apple ends up selling less than 61.2 million iPhones this upcoming quarter. As of right now, the company is forecasting that its total revenue in Q2 2016 will be roughly between $50 – $53 billion compared to the $58 billion that the company sold in the same quarter one year ago.

To make matters worse, Apple is facing large issues due to currency fluctuations. A stronger US dollar makes it increasingly difficult for Apple, which reports its earnings in US dollars, to perform when roughly 66% of the company’s business comes from overseas. As mentioned previously, for every $100 Apple used to earn in previous years, it now earns $85 given the change in currency value.

Many analysts continue to predict that the iPhone could face a decline in Q2 2016 with some reports claiming that the iPhone 6s and 6s Plus may not outsell last year’s iPhone 6 and iPhone 6 Plus. An issue raising more flags for some is the fact that iPhone growth was the slowest in Q1 2016 since the smartphone’s introduction in 2007. This past quarter, Apple only sold an additional 300,000 units, up from 74.5 million a year earlier.

Despite the several negative outlooks, Cook appears to remain optimistic about iPhone sales in 2016. A higher average selling price indicates that there is a larger demand for the iPhone 6s and iPhone 6s Plus than originally anticipated. He went on to mention that roughly 60% of customers who owned an iPhone prior to the iPhone 6 and iPhone 6 Plus haven’t upgraded, leaving a larger number of potential upgrades for the upcoming iPhone 7. On the flipside, even if Apple only sells a projected 45 to 50 million iPhones next quarter, that is still more revenue from one product than most companies earn in a single quarter overall.

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