Apple is done growing? iPhone sales seen hitting 100 million per quarter

iPhone Sales Estimates

Wall Street is crushing Apple (AAPL). The company’s stock has lost 20% of its market value — or $130 billion — over the past few weeks. Apple shares have taken big hits and recovered in the past, but a number of analysts are now arguing that Apple has likely peaked. Some are actually pretty convincing. Not everyone thinks Apple is falling off a cliff though, and Ironfire Capital founder Eric Jackson recently took to Forbes to explain why Apple bears have it wrong.

Apple’s recent decline is attributed to a variety of investor concerns and performance that fails to meet the Street’s expectations could be a big one.

The company’s record-breaking 5 million iPhone 5 handsets sold during the phone’s first three days of availability was unprecedented, but it fell short of the astronomical numbers some analysts were calling for. Apple posted record revenue and $8.2 billion in profit last quarter, but investors still wanted more. More than three million iPad mini and fourth-generation iPad tablets found their way into consumers’ hands during their debut weekend, but it still wasn’t enough.

Beyond Apple’s record performance still somehow falling short in analysts’ eyes, Jackson believes the real fear is that Apple cannot maintain the record growth we’ve seen over the past few years. While the possibility is certainly real, the hedge fund manager disagrees that it will be the case.

“I still see enormous runway ahead of Apple,” Jackson wrote in a recent column.

According to Jackson, sharp drops in Apple shares hardly signal the end. He recalls eight similar pullbacks over the past eight years in fact, the most recent of which saw the stock dip 15% from $425 to $360 last year before exploding and rising past $700 in September 2012. Jackson notes that bears predicted the stock’s continued decline at that point in time just like they are now, and they cited many of the same arguments they are using now.

“If you boil the arguments of the Apple shorts down to their core, it’s this: Apple’s growth is about to massively slow down compared to historical trends and, in fact, may even go flat,” Jackson wrote. “Therefore, the stock will contract.”

While the hedge fund manager agrees that such a scenario would play out as many are predicting, he disagrees that Apple’s days of record growth are entirely behind it.

“Yes, iPhone is the foundation of Apple’s valuation because it’s the most important and profitable product,” Jackson said. “But Apple’s not going to stay selling 25 million iPhones a quarter. A couple of years from now, I expect it to be selling more like 100 million phones a quarter.”

He continued, “Samsung is already selling that many smart phones and more limited feature phones a quarter. It’s not pie-in-the-sky to think Apple could get to that level, especially given how half of mobile phone users are still using feature phones. Apple’s global market share of mobile phones is still ‘only’ 15%. And, by the way, iPhone margins have held their ground in the last few years.”

Jackson goes on to discuss Apple’s global growth potential and says there’s likely still innovation to come. “I don’t know when this current funk that the stock is in will turn. Maybe it will get worse because of the ‘fiscal cliff’ and investors using a large liquid stock like Apple as an ATM for cash, before it gets better. But I think we’re probably close to the bottom for this current pull back,” he wrote.

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