Apple Declines, UBS Says 'People Are Looking For A Catalyst'

Apple Inc. AAPL's stock is down almost 12.5 percent since the company reported its third-quarter numbers on July 21. Steve Milunovich, UBS analyst, was on CNBC Tuesday to discuss the reasons for those declines and to share his outlook on iPhone sales.

Reasons For Decline

"Well, you had a tough quarter; expectations got a little bit ahead in terms of iPhone shipments," Milunovich said. "The market has obviously been down, and particularly the hardware and semiconductor segments of technology have been under pressure. You also have Apple Music, which hasn't been a big winner. Apple Watch. Apple TV has been delayed a little bit here. So, I think people are looking for a catalyst and top among those is: What are iPhone sales going to be in the next year?"

iPhone Sales Are Going To Be Up

Milunovich was asked for his projection for iPhone sales in fiscal year 2016 and why he thinks they are going to be a catalyst. He replied, "Well, we think they are going to be up. So, our analysis that we published yesterday suggests about 245 million phones, which is up 6 percent. So, we now have more confidence that there will be iPhone growth in fiscal '16, and we get there by dividing it into installed base and new users. The installed base is largely going to provide some growth.

"We think half of Apple sales in China are going to first-time Apple buyers. Frankly, China is the key to how Apple does next year, and we are still relatively optimistic about that," Milunovich concluded.