Mixed messages from analyst Samik Chatterjee in his latest Apple Monthly Slice.
From a note to clients that landed on my desktop Monday:
iPhone Supplier Tracker: Supplier revenue declines for the third consecutive month on a year-over-year basis; however, grew modestly for the full-year. Aggregate revenues for the suppliers in our tracker declined -6% y/y in December, following declines of -2% in November and -5% in October; however, for the full-year of 2019 aggregate revenues increased +1% y/y (vs. +11% and +9% for 2018 and 2017, respectively). Aggregate revenue trends were softer on a sequential basis as well, with a decline of -9% m/m in December, which compares to a decline of -5% m/m the suppliers have seen historically going from the month of November to December over the last 4 years…
App Store spending rose double-digit in 2019, led by gaming apps; momentum of Services business continues to build. While demand trends for iPhones are likely to be continuously monitored, the growth in Services is likely to be now seen as more sustainable and secular, given the recent track record of growth. As per Sensor Tower’s publicly available data, user spending on the App Store rose +16% y/y to $54 bn in 2019 from $47 bn in 2018, including growth of +11% y/y for gaming apps, which accounted for the largest portion of spending on the App Store at $37 bn, and +19% y/y for entertainment apps, which accounted for the second largest portion of spending on the App Store at $3.9 bn.
Maintains Outperform rating and (soggy) $296 rating.
My take: Still counting iPhones, but now with one eye on Services.