Apple expected to shrink for the first time since the iPhone era began
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Version 0 of 1. Apple warned investors in January that first quarter results may be a milestone for the company – and not in a good way. For the first time since 2003, the pre-iPhone era, Apple is expected to report that its quarterly sales declined 10 per cent compared to the same period last year to around $52 billion , according to the average of 33 analysts’ estimates compiled by Bloomberg. Tim Cook himself said the company is expected to report sales of between $50 billion and $53 billion, marking a drop on $58 billion in sales during the same period last year. That’s the first decline in the company’s 51 consecutive quarters of growth. iPhone sales, which make up 70 per cent of the company’s overall sales, are to blame. Apple's has lost more than $200 billion in value in six months as investors have grown increasingly worried that the company's growth has stalled. Many of these fears are focused on iPhone sales. Analysts expect the company to have sold around 50 million devices, compared with 61.2 million in the same period a year ago. Slowing growth in China and oversaturated market are behind the figures. Apple faces competition from brands including Samsung and Huawei. The tech giant is also victim of its own success. The iPhone 6 and its bigger version were the company’s bestselling items of all time, while 2015 was the strongest year for devices with Apple selling 61.2 million iPhones in the second quarter. These numbers are becoming increasingly difficult to replicate. The new IPhone SE unveiled in March, smaller and less expensive than the iPhone 5 or 6, and the next generation iPhone 7 are expected to help the company recover with iPhone sales expected to pick up later this year. The earnings report should also reveal information about Apple’s next big project, reportedly a car, and some numbers on Apple Watch first year sales. Piper Jaffray analyst Gene Munster said in a recent note to investors: “Beyond June, we believe the future of Apple remains bright with the shift to annual upgrade offerings, emergence of the Apple Watch, increased contribution from services, and the potential for the Apple Car.” The earnings announcement, scheduled for Monday April 25, moved to Tuesday so that employees could attend the service for Bill Campbell. The former Apple marketing executive and board member died a week ago at 75. |