Apple's iPhone Sales Machine to Make a Comeback

SAN FRANCISCO — Apple is expected to ring in the new year with a holiday of iPhone 7 riches, breaking a nearly year-long funk.
After three straight quarters of declining iPhone shipments, which contributed to its first fiscal-year sales drop in more than a decade, Apple sales are expected to edge up 1.8% to $77.3 billion from $75.9 billion a year ago, according to S&P Global Market Intelligence. Some analysts, such as UBS' Steven Milunovich, forecast Apple sales near the high end of its own guidance of $76 billion to $78 billion. Earnings per share are expected to drop to $3.22 from $3.28.
Somewhere in Silicon Valley, Apple executives may be able to exhale.


The Cupertino, Calif.-based company reports results for its fiscal first quarter, its strongest seasonally, on Tuesday after the market closes. Sales of iPhone, Apple's top-selling product, as usual will be closely watched. Factset estimates Apple sold 78 million, up from 74.8 million in the same quarter a year ago.
A bang-up quarter would be a welcome respite against a backdrop of flagging iPhone and desktop sales last year. But it could be short-lived amid saturated smartphone and PC markets worldwide.


Barclays analyst Mark Moskowitz doesn't expect   Apple shares to rise much this year because more consumers are "mixing down" for iPhone 6s in lieu of iPhone 7. He's also concerned about a potential trade war with China, and Apple's business prospects in India.
Shipments for Apple's iMacs and MacBooks last year plunged 9.8% from 2015, the largest drop among the top five PC makers and the first decline by Apple since 2012, according to market researcher IDC.


Apple shares have risen 9% since the election, contributing to the Dow Jones industrial average's rise over 20,000, and they're up 25% in the past year. That compares to a 12-month rise of 21% for the Nasdaq Composite.
Earlier this month, Apple CEO Tim Cook and other Apple executives took 2016 pay cuts after the company was tripped up by lower revenue because of weaker iPhone sales.
Apple has acknowledged the shortfall and focused revenue growth on its high-margin Apple Services business, App Store and Apple Music to shoulder the financial burden.
Apple Services revenue soared 24% to a record $6.3 billion in its last reported quarter. The App Store generated more than $20 billion in sales for developers last year, up 40% from 2015. Apple Music has topped 20 million paid members.


All encouraging stuff. But about those iPhones, the clear bread-winner of Apple's product portfolio?
Things could look up later this year, with the unveiling of the 10th-anniversary version of iPhone.