UBS analyst, Timothy Arcuri, has released a new note to investors, which examines Apple's performance in early March. In the note, obtained by Internal businessUBS explains why, according to him, the worst bad news regarding iPhone sales is over in China and more.
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According to UBS data, Apple is starting to clear its inventory in China, while the "tone" of the supply chain is also improving. "Even if the composition of the market in March is still bad, the tone of the supply chain begins to improve and the price reductions in China could start to clear the channel inventory," said Mr. Arcuri.
UBS has increased its estimates for the iPhone for the June quarter from 32.5 million to 34.5 million. However, this is not necessarily due to the growing success of iPhones 2019. According to Arcuri, interest in the iPhone 8 Plus and other older iPhones "offsets" a decline from to newer models.
Given the higher sales of older iPhones rather than more expensive models, UBS lowered the estimate of its revenue for AAPL to $ 56.5 billion for the March quarter. The firm had previously estimated $ 57.5 billion.
This is not just bad news for the 2019 iPhones, though. UBS says that estimates for purchases for the iPhone XR should actually increase from one quarter to the next. This is a rare event for an iPhone so late in its life cycle:
"Even though the market's makeup in March is still bad, the tone of the supply chain is starting to improve and price cuts in China may be starting to erase the channel inventory." Arcuri wrote. "Purchasing estimates for XR are currently on the rise in June, which is atypical for this end of the" new "model cycle (good for the short-term QRVO), but it reflects the inventory losses."
After the weak performance of the iPhone in China led Apple to revise its results for the first quarter of 2019, the company dropped the price of the iPhone in the country. In a recent interview, Tim Cook said that only time will tell how this strategy works for Apple in China.
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