The only positive is that iPhone weakness in the March quarter should be well and truly discounted. Apple Shares Drop After Report About Cuts in IPhone Orders
Amy Thomson, Bloomberg News - 4:29 am, Monday, January 14, 2013
Jan. 14 (Bloomberg) -- Apple Inc. shares declined after the Nikkei newswire reported that the company
scaled back production plans for the iPhone because sales have trailed expectations.
The stock fell as much as 4.5 percent to $497 in early U.S. trading. It dropped to $520.30 at the close in
New York on Jan. 11 and has lost 26 percent from a September record.
Apple, based in Cupertino, California, reduced its original target to order 65 million iPhone 5 displays
this quarter by about half, Nikkei said, citing an unidentified senior executive at a component maker it
didn’t name. IPhone sales are slowing because smartphones have saturated developed markets, where
Apple is strongest, said James Cordwell, an analyst at Atlantic Equities Service in London.
“We’re getting close to saturation,” said Cordwell, who rates Apple shares “overweight” and doesn’t own
any. “The real growth is going to come from emerging markets, and Apple’s share in emerging markets is
much lower than it is in other markets at the moment due to such high prices.”
Bethan Lloyd, a spokeswoman for Apple in the U.K., didn’t immediately return calls seeking comment.
Android Rivalry
The iPhone is facing increasing competition from manufacturers using Google Inc.’s Android software,
including Samsung Electronics Co. Android phones are gaining users in emerging markets because they
are cheaper than the iPhone.
In emerging markets, there is also more room for smartphone sales to increase because the devices are
gaining market share from more-basic handsets. In developed markets, about 75 percent of handsets sold
already are smartphones, Cordwell said.
First-quarter iPhone shipments may decline 25 percent from the previous period, Peter Yu, an
analyst at BNP Paribas, said today in a note. Analysts’ average second-quarter revenue estimate
for Apple may drop by about $4 billion to $5 billion and the earnings-per-share projection may
decline by $1 to $1.50, Abhey Lamba, an analyst at Mizuho Securities USA, said in a report.
--Editors: Ville Heiskanen, Robert Valpuesta
To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
o~~~ O |
