Can Apple Halt the iPhone’s Collapsing Market Share?

Besides reiterating his Outperform rating on shares of Apple (NASDAQ:AAPL) and a $600 price target, Bernstein Research analyst Toni Sacconaghi wrote in a research note on Monday that the iPhone’s share of the smartphone market will likely decline to 12 percent this quarter, which will be company’s lowest portion since the first quarter of 2009.

In the note, seen by Barron’s, Sacconaghi referenced first-quarter smartphone shipment figures released Thursday by research firm Strategy Analytics — which showed that Apple’s global market share fell from 22.8 percent in the year-ago quarter to 17.9 percent. Even more concerning, the smartphone market grew 36 percent, more than five times Apple’s reported 7 percent year-over-year iPhone sales growth based on the company’s first quarter earnings statement.

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Based on Apple’s forecast for third-quarter sales to be flat year-over-year, between $33.5 billion and $35.5 billion — a range below analysts’ expectations — Sacconaghi wrote that the company’s estimate implies that it will sell about 25 million iPhones during the current quarter. This represents a 4 percent year-over-year decline for the flagship device. If the smartphone market expands a further 30 percent this quarter, Apple’s share would drop 400 basis points to 12.3 percent, he said.

“Perhaps most startlingly, if Apple does not introduce a new iPhone or lower-priced phone in CQ3, it is quite possible that iPhone’s smartphone market share could drop into the single digits,” Sacconaghi added. But the analyst does believe there will be a new generation iPhone released at the beginning of September.