Ap­ple set for slow­est ever iPhone sales

The Pak Banker - - BUSINESS -

Ap­ple Inc (AAPL.O) is ex­pected to re­port iPhone sales in­creased slightly more than 1 per­cent in the hol­i­day quar­ter when it an­nounces earn­ings on Tues­day, its slow­est growth ever and far from the dou­ble-digit growth in­vestors have come to ex­pect.

The iPhone 6S and 6S Plus, which boasted record week­end sales when they launched in Septem­ber, are now fac­ing weak de­mand, ac­cord­ing to an­a­lysts, be­cause they have fewer dis­tin­guish­ing fea­tures than their pop­u­lar pre­de­ces­sors. The new iPhones also face tough com­par­isons with the strong sales of their older sib­lings.

Ap­ple tapped into a cru­cial mar­ket when it un­veiled its big­ger-screen 6 and 6 Plus phones in 2014, grab­bing the at­ten­tion of Asian cus­tomers, who had pre­vi­ously lapped up ph­ablets from play­ers such as Sam­sung Elec­tron­ics (005930.KS).

"Ap­ple has be­come a vic­tim of their own suc­cess as the block­buster iPhone 6 prod­uct cy­cle was hard to repli­cate as many cus­tomers are ei­ther buy­ing an older, cheaper iPhone 6 or wait­ing for the iPhone 7," FBR Cap­i­tal Mar­kets an­a­lyst Daniel Ives said.

China, the com­pany's fastest-grow­ing mar­ket, may also have weighed on first-quar­ter re­sults, as a slow­down in the coun­try's econ­omy forced con­sumers to tighten their purse strings.

An­a­lysts es­ti­mate Ap­ple sold 75.5 mil­lion iPhones in the Oc­to­berDe­cem­ber quar­ter, a 1.3 per­cent in­crease from a year ear­lier, ac­cord­ing to re­search firm Fac­tSet StreetAc­count.

This com­pares with a nearly 46 per­cent year-over-year jump in iPhone sales in the first quar­ter of 2015. The slow­est growth in quar­terly iPhone sales so far has been 6.8 per­cent, in the se­cond quar­ter of fis­cal 2013, ac­cord­ing to data from Statista.

To make mat­ters worse, Ap­ple is ex­pected to fore­cast a drop in iPhone sales for the March quar­ter - the first time that sales will fall since the iPhone was launched in 2007. This was fore­shad­owed by dis­ap­point­ing Marchquar­ter fore­casts from the com­pany's Asian sup­pli­ers such as Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co (2330.TW) and Lar­gan Pre­ci­sion Co Ltd (3008.TW).

Ap­ple is ex­pected to sell 54.6 mil­lion iPhones in the March 2016 quar­ter, ac­cord­ing to Fac­tSet. The com­pany sold 61.2 mil­lion iPhones be­tween Jan­uary and March, 2015 - a 40 per­cent year-over-year in­crease. An­a­lysts said the com­pany will have to wait un­til the launch of the iPhone 7, ex­pected later this year, to re­turn to growth, as buy­ers upgrade to the lat­est ver­sion.

An­a­lysts, tech­nol­ogy blogs and com­pany watch­ers say the iPhone 7 could in­clude wa­ter­proof­ing, wire­less head­phones and use its new force touch tech­nol­ogy to kill off the home but­ton. Ap­ple shares closed down 1.98 per­cent at $99.41 on Mon­day. They have fallen nearly 10 per­cent since the start of Oc­to­ber, steeper than a 2.2 per­cent de­cline in the S&P 500 in­dex . SPX. Out of the 50 bro­ker­ages that cover Ap­ple, 43 have a "buy" or higher rat­ing on the stock. Their me­dian 12-month price tar­get is $141.50.

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