Old iPhones could erase gloom from earnings report

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iPhone 6s
Oh dear.
Photo: Jim Merithew/Cult of Mac

Analysts with sobering certainty say Apple is set to report its first ever decline in iPhone sales. Reports of cutbacks in production and shipments, and chatter about the iPhone 6s and 6s Plus not offering enough new features to inspire a rush to upgrade all point to one bummer of an earnings report.

But they might be overlooking one indicator – sales of older iPhones.

Ben Bajarin, analysts for Creative Strategies, believes the Apple earnings report for the fiscal quarter ending in December could reveal better-than-expected figures because of an uptick in the sales of older phones.

“New phones are usually between 70 percent and 80 percent of sales,” Bajarin told The Street, a digital financial media service that published his observations over the weekend. “This quarter, it could be between 60 percent and 70 percent . . . This hasn’t happened before and could be a new wrinkle in people’s models.”

The iPhone has been a gravy train for Apple, its sales representing nearly 63 percent of its total revenue last year. But overall sales of smartphones are slowing, according to analysts. The functionality and speed on current smartphones means users can hang onto their handsets longer. In making its competitors raise their games, Apple is now up against companies, especially in China, offering high-quality devices at lower prices.

During a previous earnings call, Cook acknowledged a low number of iPhone users were upgrading to the S series.

In building new markets in densely populated India, Apple encountered a sluggish reception to the iPhone 6s and 6s Plus because of the steep price tag. Apple rebounded and actually hit record sales in India after it offered price cuts and buybacks.

Three price cuts in three months to the iPhone 5s also helped Apple end its year in India on a high note.

Bajarin also told The Street Apple didn’t do itself any favors with the advertising campaign for the 6s and 6s Plus with the line “Not much has changed.”

Regardless of what Apple reports on Tuesday, the news could be forgotten by year’s end because of excitement around an iPhone 7.

Source: The Street