Why Apple iPhone maybe having big problems

Apple has a chance to broaden the iPhone's reach in emerging markets and improve the device's functionality, but the company's best-selling product faces near-term headwinds, UBS analyst Steven Milunovich said Tuesday.

"I think it's going to be a little bit rough here for next one to two quarters. We're looking for pretty flat to down in the March quarter shipments," he told CNBC's "Squawk Box."
Google search traffic for the iPhone is declining in the United States, and growth in searches has fallen sharply in China — from 80 percent growth to 15 percent, Milunovich said. He attributed the drop to tough comparisons with the first year on the market for iPhone 6.

Shares of Apple have been under pressure on concerns that the tech giant will sell fewer iPhones in fiscal year 2016 than previously expected. The stock is down about 10 percent for December.

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Milunovich maintained a buy rating but reduced UBS' price target from $150 to $130, joining a number of analysts who have recently taken a dimmer view on the stock.
Investors need to see iPhone sales growth, Milunovich said, but the company is also being buoyed by the perception that the competition is thin.
"There is a long-term disruption threat — there always is in tech — but I just don't see in the next couple years who's going to really hurt Apple," he said.
Smartphone competitor Samsung has suffered through a string of weak quarters, and Milunovich noted that Nokia and BlackBerry failed where Apple has succeeded, namely in creating a "sticky" operating system that encourages consumers to buy other products in the company's ecosystem.