Scottish Daily Mail

Investors flee Apple over lack of big ideas

- by Emily Davies

ALMOST £140bn has been wiped off the value of Apple as investors fear the world’s biggest company many have run out of big ideas.

Sales of the iPhone have slumped by 10m this year, and yesterday the jitters of shareholde­rs were increased as Apple’s sole supplier of microchips for the iPhone 7 announced that it was cutting production.

This was a signal that Apple was being forced to lower its estimates on the number of gadgets it was expected to sell.

It was then announced that Apple had invested £700m in Chinese firm Didi Chuxing, an Uberstyle ride-hailing service.

But this did little to ease the nerves of investors, who saw it as another sign that Apple was choosing to invest in rival firms rather than build on its own reputation for developing new technology. It has no plans for a major launch this year.

The firm’s stock has tumbled 19.6pc in the past six months and major investors such as hedge fund boss Carl Icahn have dumped billions of pounds worth of shares. To cap it all, Apple is close to being ousted as the most valuable company on the planet by Google’s owner Alphabet.

Pacific Crest analyst Andy Hargreaves said: ‘The market is saturated and they have no massive growth drivers outside of the iPhone.’

Yesterday it was revealed Taiwan Semiconduc­tor Manufactur­ing Company was expected to ship 80pc fewer microchips between June and December compared to the same period last year, according to a report by the Nikkei Asia Review. It prompted speculatio­n that Apple had cut orders of its forthcomin­g iPhone 7, expected to be released in September.

Last week Dialog Semiconduc­tor, which sells chips used in iPhones and other smartphone­s, slashed its revenue outlook amid weakening demand in the market.

It follows a move by British chip designer ARM Holdings towards creating technology for the constructi­on industry in a bid to diversify away from the slowing smartphone markets.

Apple last month revealed its revenues fell for the first time since 2003, to £34.4bn from £39.7bn in 2015. Sales of iPhones dropped for the first time, falling 10m in the three months to March compared to the same period last year.

The company expects sales to have dropped again by the end of this quarter. Demand has been dampened by high costs – up to £789 for the 6S Plus model – because users tend to sign up to contract deals rather than buying the phones outright.

This ties consumers into keeping their phones for longer, leaving them less likely to upgrade when new models are released.

In a move to try to boost the iPhone among business users, Apple last week signed a deal with German software maker SAP. Only 20pc of workers use iPhones for business, Apple’s boss Tim Cook said.

Under the partnershi­p the companies will create more business apps compatible with Apple.

The firm has thus far struggled to find a foothold in China amid competitio­n from rival smartphone makers such as Xiaomi and Huawei. In the quarter to March its revenues in China fell 26pc.

In January, Cook had predicted the fall in iPhone sales, warning that the environmen­t had become ‘dramatical­ly different’.

It is thought the investment in Didi Chuxing could be a way for Apple to strengthen its Apple Pay service, which is up against fierce competitio­n from contactles­s payment rivals in China.

But the company still faces big hurdles in the country. Last month, authoritie­s shut down Apple’s movie and book services and it recently lost a court case over the use of its iPhone trademark. Cook is set to travel to Beijing later this month to lobby on behalf of the firm.

‘The market is saturated’

 ??  ?? Apple’s share price has fallen by 20pc in six months
iPhone sales have fallen by 10m this year – but it still sold 51m
Employees at Apple’s headquarte­rs earn an average £87,000
25 years ago the parts for a single iPhone would have cost you £2.4m...
Apple’s share price has fallen by 20pc in six months iPhone sales have fallen by 10m this year – but it still sold 51m Employees at Apple’s headquarte­rs earn an average £87,000 25 years ago the parts for a single iPhone would have cost you £2.4m...

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