Apple Starts To Tank, iPhone Sales Tipped To Be Down 17%
The success of the Samsung Galaxy S9 and the perception that traditional Apple owners, are dumping their iPhones for an Android device, is having a profound impact on Apple share with the stock slumping 7% during the past two days, sales of iPhones are tipped to fall 17%.
Waning demand for an Apple iPhone saw $60billion wiped off the value of Apple delivering for investors their worst day since the company reported an unexpected drop in iPhone unit sales in early February.
Thousands of iPhone owners and problems in the Chinese market, has led to the fall, especially when iPhone owners are shown the difference between images shot on the new S9+ and the top end iPhone X.
Value for money has also become an issue with iPhone owners now complaining that Apple now longer has the technological edge over Samsung who make many of the components found in an iPhone.
The 4.1% fall on Saturday followed a 2.8% fall the day prior.
Key suppliers to Apple are now warning that the US Company is cutting back on orders for components.
Taiwan Semiconductor Manufacturing said in an earnings update that it expected its second-quarter revenues to be hit by “weak demand from the mobile sector”.
Wall Street analysts compounded those fears.
In an investment note on Apple on Friday, Morgan Stanley made deep cuts to its forecasts for the three months ending in June.
The broker now expects iPhone shipments to fall 17 per cent year on year to 34m and warned that Wall Street’s consensus expectations of 43m units were too high going into Apple’s results on May 1.
“As was the case in the last two June quarters, we expect Apple revenue guidance to come in below current consensus estimates,” Morgan Stanley wrote.
According to the Financial Times, analysts at Mizuho on Friday, suggested that Apple had cut iPhone X procurement by as much as 30 per cent on “tepid” near-term demand, based on their inquiries with suppliers.
“Checks continue to suggest iPhone X softness,” Mizuho wrote.
Smartphone sales in China, the world’s biggest market, fell last year for the first time since 2009 while global sales fell in the fourth quarter of the year for the first time since 2004.
Close watchers of Apple claim that future growth will come from its services business and that these revenues will be a source of more stable recurring revenues. This will also see them competing up against Google and Amazon as well as Netflix and Spotify.
Apple is also likely to set out its plan for returning cash to shareholders after repatriating much of its offshore earnings, setting the stage for what could amount to tens of billions of dollars’ worth of dividends and share buybacks in the coming years.
“The iPhone mega upgrade cycle of 2018 that so many were calling for is not going to happen,” Apple analyst Neil Cybart wrote at his site Above Avalon this week, before the stock began falling.
“Apple has become a capital allocation story.”
Walt Piecyk, analyst at BTIG Research, on Friday decried the “hand-wringing” over near-term iPhone sales.
“We are 20 days into the June quarter and supply-driven data points have already sparked concerns about Apple’s guidance,” he said in a note. “There is certainly evidence to suggest that upgrade rates remain low and operator promotions continue to evaporate, which will provide a headwind to the June quarter. However, it’s unclear if it will be as dramatic as forecast.”