Apple's iPhone sales set to continue falling, top analyst says

Apple may see iPhone sales continue to fall

Apple's iPhone sales could continue to fall, a closely followed analyst predicted, despite CEO Tim Cook's assurances that the company was returning to growth.

The iPhone 7 line may be pressured by weak demand in China, slower sales of the smaller version of the iPhone 7 and the lack of a new 4-inch, less expensive iPhone SE, according to KGI Securities analyst Ming-Chi Kuo, cited by 9to5Mac. Apple did not immediately respond to a request for comment.

KGI expects 40 million to 50 million iPhones to ship in the first calendar quarter of 2017, down from 51.2 million in the year-ago period (Apple's fiscal second quarter), 9to5Mac reported. Without a new iPhone SE model in the spring, that quarter could see shipments of 35 million to 40 million units, KGI estimates, below the 40.4 million posted in July 2016.

The estimates come despite Cook's recent comments that Apple would return to growth after posting the first annual decline in revenue since the dot-com bubble. Cook highlighted LTE data adoption in China as a sign that the situation there would improve in the next two fiscal quarters.

"Looking forward, the response to the iPhone 7 and 7 Plus has been very positive," Cook told investors in a conference late last month. "It's very hard to gauge demand, as you know, when you're selling everything you're making. So we'll find out more through the quarter, but we're confident enough to give you guys guidance that we're returning to growth this quarter, which obviously feels very good for us."

With 45.5 million units, the company reported more iPhone sales than expected during the most recent quarter. Apple was expected to report it shipped 44.8 million iPhones. Still, iPhone shipments fell 5 percent, down from 48.04 million a year ago, according to analysts surveyed by StreetAccount.

Cook highlighted the lower-priced iPhone SE in Apple's July earnings, saying phone is popular in developed and emerging markets, in line with independent research from IDC in the second quarter. But in key markets like India, the iPhone SE has "failed to make any significant impact in the premium segment," IDC estimates.

Meanwhile, Chinese competitors like Huawei have gotten traction beyond Asia, growing its year-over-year smart phone shipments by 70 percent in the third calendar quarter in Europe, the Middle East and Africa, Canalyst estimated on Monday.