Apple’s quarterly profit, which is expected to fall for the first time in ten years, is likely hurt by slower growth in iPhone sales as well as newer products having lower profit margins, according to Bloomberg. The report notes that 14 analysts have reduced their estimates for Apple’s stock (AAPL) in the last one month, which has put CEO Tim Cook under pressure to introduce hit products and boost company’s sales.
With Apple set to release its earnings report tomorrow, Bloomberg believes that the world’s most valuable technology company’s 2nd quarter net income may decline by 18% to $9.53 billion, or $10.02 a share, while revenue may show a rise of 8% to $42.4 billion, the slowest growth rate since 2009. Morgan Stanley analyst Katy Huberty said that Apple may announce an increase in dividend or boost share buybacks with the earnings release, in order to please its investors.
Apple may raise its current quarterly dividend by 17 percent to about $3.10 a share, according to a Bloomberg estimate, based on payouts of other large technology companies, Apple’s projected earnings and the amount of cash it holds.
The company’s profit margins have been squeezed by higher component costs and the introduction of lower-priced products such as the iPad mini. Apple probably sold 35.4 million iPhones in the latest quarter, compared with 35.1 million a year earlier, according to estimates compiled by Bloomberg. Bernstein’s Sacconaghi predicts 25 million units will be sold in the current quarter.
Meanwhile, Apple’s biggest rival Samsung is getting ready to start selling its new Galaxy S4 smartphone later this week.
“Things have changed for Apple,” said Alex Gauna, an analyst at JMP Securities in San Francisco. “The competition is more intense.”