Jimmy Buffett used to sing a tune called "If the Phone Doesn't Ring, It's Me."
The song, from the 1985 album "Last Mango in Paris," talks about "good days and bad days and going-half-mad days."
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In the current smartphone market landscape, if the phone doesn't ring, there could be some very bad days.
Apple's (AAPL) iPhone sales contribute about half the tech giant's overall revenue. iPhone revenue for the March quarter was $46 billion, down 10% year-over-year.
Sales in the company’s Greater China region, which includes Hong Kong and Taiwan, declined 8% in the period to $16.4 billion.
CEO Tim Cook told analysts during the company's earnings call that Apple "still saw growth on iPhone in some markets, including Mainland China, and according to [marketing data and analytics provider] Kantar, during the quarter the two best-selling smartphones in Urban China were the iPhone 15 and iPhone 15 Pro Max."
Apple CEO has 'very positive viewpoint' of China
Apple topped Wall Street’s quarterly earnings estimates and announced an expanded stock buyback program.
"I was in China recently where I had the chance to meet with developers and creators who are doing remarkable things with iPhone," Cook said.
The top executive maintained that he had a great view of China for the long term.
"I don’t know how each and every quarter goes and each and every week," Cook added. "But over the long haul, I have a very positive viewpoint."
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Several Wall Street analysts recently issued research reports that discussed the iPhone.
UBS noted that in May Apple's iPhone sell-through remained soft, declining 2% year-over-year, the fifth consecutive monthly decline from a year earlier.
The sell-through rate is the percentage of inventory sold to customers. It's an important retail-sales metric, enabling companies to monitor the efficiency of their supply chains.
The firm estimated that iPhone sell-through in China was largely flat year-over-year during May in an overall market that grew 11% year-over-year.
Apple bulls may note that the data are backward-looking and are not likely indicative of Apple's AI smartphone opportunity next year. But UBS said the iPhone's market-share loss to handset maker Huawei and other Chinese producers acts as a material governor on iPhone unit growth.
During the most recent iPhone cycle, driven by the 5G enabled iPhone 12, Huawei smartphone units in China declined roughly 60% as technology restrictions handicapped the company while Apple units grew 36% over the same period.
Given Huawei's refreshed product lineup, this tailwind for Apple is unlikely to continue forward, the firm argues.
UBS has a neutral rating on the shares with a price target of $190.
Jefferies raises price target on Apple
Jefferies analysts said Apple’s new iPhone discounts have helped the company turn around its underperformance in the Chinese smartphone market, and its iPhone sales outperformed Google and Huawei devices during China's annual 618 shopping festival, Quartz reported
Named after the June 18 founding date of e-commerce provider JD.com (JD) , 618 is China's second-biggest annual sales event after “Singles Day” in November, according to Reuters.
The festival is seen as a key indicator of household consumption. And while e-commerce sales declined for the first time, Jefferies, which raised its price target to $215 from $200, said that Apple rang up some impressive numbers during 618.
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“[If] iPhone discounts continue to stay aggressive, its market share will likely have limited downside,” they wrote in a June 30 research note. “Between now and the launch of iPhone 16 (end of September), ... iPhone discounts will remain heavier than those of Android (GOOGL) flagship as Apple will likely need to defend [its] market share.”
JP Morgan and Oppenheimer assess Apple
Meanwhile, JP Morgan said the latest data for May continue to show an improving trajectory for iPhone shipments in China, helped to some extent by the recovery in the broader China smartphone market.
The investment firm said that according to latest data from the China Academy of Information and Communications Technology for May, iPhone shipments rose 40% year-over-year and 44% month-over-month, tracking modestly softer relative to normal seasonality of a 55% month-over-month increase.
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JP Morgan recently raised its price target on Apple share to $245 from $225, pegging the stock at overweight.
The investment firm said that the May monthly data put the year-to-date decline for iPhone units in China at 8% year-over-year versus a 17% decline in April. This suggested continued improvement in the year-over-year trends. The firm affirmed an overweight rating on Apple.
On June 28, Oppenheimer analyst Martin Yang raised the firm's price target on Apple to $250 from $200 and reiterated an outperform rating on the shares.
Yang said Apple's introduction of Apple Intelligence, the company's artificial-intelligence platform, "will position the company as the leader in the consumer AI experience."
He added that Apple was setting a "new standard for hardware and software experience for a technology implementation that can appear confusing, intimidating and jarring for an average consumer."
The analyst said Apple's approach of bringing AI to consumers, coupled with its "unique ecosystem advantage," can result in "faster than expected acceleration of revenue and EPS growth."
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