iPhone sales may be slowing, suggesting that – shock, horror! – the tech giant isn’t as invulnerable as once believed.
The company’s shares have taken a beating, falling 11 per cent since the last earnings report in October on concerns that iPhone sales may have suddenly dropped off, Bloomberg reports. Corporate results expected tomorrow will show whether that drop was merited or whether it’s a signal that that the stock is going to rally.
Let’s get one thing clear. Apple is expected to beat its own record for the most profitable quarter in US corporate history when it reports earnings tomorrow, and although net income, its shares will likely fall still further. Income of $18.2 billion is only 1 per cent above the record it set a year ago, the Financial Times reports. The company boosted sales 28 per cent to $233.7 billion ($66.85 billion) in its latest fiscal year.
Those numbers might make sense given the drop in global equity prices, against falling oil prices and a weakening Chinese economy, there are some factors fuelling Apple angst.
As per Bloomberg, Apple is becoming more reliant on the iPhone for growth, even though the line-up was expanded last year to include the Apple Watch, a new Apple TV and Apple Music.
Yet the iPhone is still by far the company’s most important product and biggest moneymaker. The smartphone accounted for 66 per cent of Apple’s revenue last year, up from 50 per cent three years ago.
There have been some signs suggesting that iPhone sales may be slowing. According to several analysts, Apple has cut orders to its suppliers for phone components, indicating the Cupertino, California-based company may not sell as many handsets in early 2016 as originally anticipated.
Meanwhile, researcher IDC predicted in December that 2016 smartphone growth will dip below 10 per cent — the first time ever below that threshold. By 2019, shipments are projected to decelerate further, with sales seen rising just 4.7 per cent in 2019. IPhone sales will also slow, according to IDC.
And you were wondering why the iPhone 7 is so crucial to the Silicon Valley giant’s future? Now you know.
Anyway, hang on to your seats. Either way it’s set to be a bumpy ride.