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iPhone Shipment Declines Signal Future Service Revenue Stalls
June 10, 2019

Recent reports from third-party estimates have shown a massive drop in unit shipments of iPhones. Canalys has estimated a drop of 23.2% in iPhone unit shipments in the last quarter. IDCestimated an even larger decline of 30.2% in iPhone unit shipments. It would be difficult for Apple to show good growth in the service segment if it does not have an expanding installed base. Despite good growth in other segments, the iPhone segment still contributed close to 55% of the total revenue base. Recent trade tariffs can lead to further erosion of unit shipments in the Greater China region. Goldman Sachs has estimated that a ban on Apple in China can lead to a 29% cut in the EPS. Even if we do not see a complete ban, Apple would need to give heavy discounts to support its unit shipments in China. A rapidly declining unit sales forces the company to offer higher discounts and ends up hurting the operating margin. From: Seeking Alpha