“In our conversations with management…” — Analyst Timothy Arcuri
From a note to clients that landed on my desktop Friday morning:
China iPhones are not recovering in January: Analysis of monthly government smartphone sell-through data from China suggests Apple is not seeing a rebound in the month of January after a very weak December month. Sequential decline of 18% in Jan. is similar to year ago 20% while the market is slightly, better declining 4% month-over-month versus 10% M/M last January. January non-Android shipments are down ~70% YoY, which is similar to the decline seen in the month of December. The data would suggest that Apple’s price adjustments to offset the currency impact are not yet having much positive impact on iPhone units…
New services could offset some revenue pressures: We expect Apple to introduce at least two new subscription services this year – video streaming and News, with a gaming service also possible… In our conversations with management, Apple consistently indicates that its strategy will be to have compelling and targeted content on the video side, and believes multiple streaming services can co-exist because consumers are willing to subscribe to more than one video service.
Maintains Buy rating and $185 price target.
My take: Swimming against the tide this morning.