Apple Profit Hurt By Slower Growth In iPhone Sales, Says Bloomberg

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.

Apple Profits

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.”

“Technology runs through my veins...” | Follow me: @DrUsmanQ usman@iPhoneinCanada.ca

  • K3

    this is pretty much as close as you can get to that second product syndrome that Steve mentioned years ago…patiently waiting this out to see the new wonders.

  • greg hannah

    I pre-ordered two – 32GB black iPhone 5’s the morning they went on sale (for me and my roommate) but the day it came out my name was too low on the list to get them as they only got a partial order. I phoned and stopped by regularly for weeks but no luck from the Bell store that I pre-ordered from. Finally after seven weeks I phoned every Bell store in downtown Toronto (where I live) and finally found one store in the Eaton Centre that had ONE 64GB white iPhone 5 so I asked them to hold it and said I’d be there in 20 minutes. I found a black 32GB three weeks later for my roommate by phoning around again. So if they can’t supply the product for the first two months of a product release (same with iPads & iPad mini’s) how can they NOT expect slow growth. Many people will simply find another good alternative, like Samsung’s line of phones – there’s only so much Apple loyalty out there and they better get a handle on that fact. My loyalty is at an end with Apple now as I had to replace the phone three times until I finally got one with WiFi that worked properly (a problem for hundreds of thousands of iPhone units either due to a hardware or firmware issue – or both) and I still don’t get WiFi speeds that are as good as my old 3GS iPhone.

  • Anthony W

    I have been using iPhone since day one but I am able to move to Samsung S4. If iPhone 5S or 6 is not “magical”, then Apple is pretty much done for me.