It had already been a fairly ho-hum year for Apple (NASDAQ:AAPL) shareholders heading into December when a noted analyst dropped a bombshell: Fiscal 2016 will see the first-ever decline in iPhone sales. As iFans are well aware, Apple's fortunes lie with its iPhone lineup. Last quarter, over 60% of Apple's $51.5 billion in revenue in fiscal 2015's Q4 came from iPhone sales.

That so much is riding on smartphone sales has long been a thorn on Apple's side. Which raises the question: What would happen if iPhone sales leveled off, let alone dropped? Based on its 7% decline in share price since the Apple analyst suggested the unthinkable, even iFans are concerned by the possibility.

Just the facts
The expected drop in iPhone sales this year can be traced back to a few factors, none of which are new. The Morgan Stanley analyst that shared the iPhone sales news noted what many Apple fans have long known: Developed countries are becoming saturated with high-end smartphones, which in and of itself has stemmed the rapid year-over-year jump in mobile phone sales.

Another ongoing theme is the iPhones price point, particularly in fast-growing emerging markets, where low-cost device manufacturers are making a killing. Again, nothing new here in that Apple decided long ago -- even before CEO Tim Cook took the reins -- that it has no interest in "dumbing" down its smartphone to become more appealing to emerging markets.

Finally, this past year's jump in iPhone sales was in large part due to the unveiling of Apple's iPhone 6 and iPhone 6s. Any new product from Apple garners a lot of attention, and a new smartphone is nearly guaranteed to be a hot item. Last quarter alone, Apple sold a whopping 48 million smartphones, up from the prior year's 39.3 million.

When it's all said and done, Morgan Stanley expects sales of iPhones to decline about 6% this year, to 218 million, and dropped its stock price target by 12% as a result.

What it all means
The analyst has since amended her initial statement, at least somewhat, showing her bullish colors by saying the expected drop in iPhone sales this fiscal year is a "worst case scenario," and it's likely Apple will be able to make up at least part of the revenue decline from the sales of its Watch and new TV.

By most accounts, however, the Apple Watch isn't flying off the shelves as some pundits had expected. Cook decided to not disclose specific Watch sales figures, explaining it was "not a matter of not being transparent, it was a matter of not giving our competition insight [on] a product that we worked hard on." If Cook says so, but it seems unlikely Apple would opt for secrecy if Watch sales were booming.

Even as Apple discounted its Watch with the holidays fast approaching, the leading wearable on the market once again belongs to Fitbit (NYSE:FIT), not Apple, and that's without a drop in price. Granted, Fitbit's wearable lineup is already borderline cheap compared to the Watch, but it is telling that its sales are "exploding" this holiday season without the need for discounts.

As for Apple TV, it's hard to say just yet what, if any, impact the new offering will make on total revenue, but the real question is: Can it, along with Watch sales, make up for the nearly 6% drop in iPhone revenue? Not likely.

So where to from here?
It seems almost unfathomable that Apple stock is trading at just 11.6 times trailing earnings, and an even cheaper 9.95 times future earnings, but it is. iPhone sales concerns have certainly played a major role in Apple's anemic stock price of late, but there's another reason, too. Apple is a victim of its own success. Double-digit sales and earnings growth simply aren't enough. The market has come to expect more than just "OK."

If the analyst's prediction for Apple's iPhone sales prove correct, investors can count on more share-price easing thanks to sky-high expectations. That's the bad news. The good news is that for risk-tolerant, long-term investors, Apple and its 2% dividend yield is an absolute steal at these levels.