iPhone Super Cycle Pronounced Dead as Handset Market Tumbles

The iPhone “super cycle“, a wave of upgrades and new customers that was supposed to wash over Apple this year with the introduction of its model X, was pronounced dead on arrival, according to Bloomberg.

In Apple’s first earnings report since the launch of the pricey flagship smartphone, the company reported lower-than-expected handset sales from the holiday period. CFO Luca Maestri also forecast a decline in the average selling price of iPhones in the current quarter, suggesting the most-expensive models aren’t as popular.

The results are part of a broader malaise in the global smartphone industry. Shipments in the fourth quarter dropped 9 percent, year over year, the biggest decline in history, according to Strategy Analytics.

“The super cycle is dead,“ Steven Milunovich, an analyst at UBS, wrote in a note to investors. Apple shares fell as much as 4.1 percent Friday to $160.88, the biggest intraday decline in more than six months. The stock is down 4 percent so far this year.

“The verdict is in: relative to expectations, the cycle is weak, and total iPhones sold are likely to be flat for the third straight year,“ Toni Sacconaghi, an analyst at Sanford C. Bernstein, wrote in a note to investors. He downgraded the shares to market-perform and cut his price target to $170 from $195.

Smartphone doldrums are hurting other companies, too. Over longer periods, the smartphone market still looks weak. Global smartphone shipments slipped 0.1 percent in 2017, with iPhone shipments up 0.2 percent, according to research firm IDC.