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Is Apple Slowing Down In Current Quarter A Glitch In Its Course?


Written by  Sorab Ghaswalla | 24 January 2013
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apple iphone5Apple's first quarter results were declared last evening, and as feared, it had nothing much to write home about. Wall Street reacted by pushing down Apple shares by around 10 per cent in afterhours trading.

The company reported positive earnings for Q1 2013 of about US $54.5 billion in revenues and a profit of US $13.1 billion. Both, on the profit side as well as the sales side, the results caught observers by surprise. Profit was a comparative flat, while overall sales were not as per the Street’s expectations. The revenue growth of 18 per cent, year on year, was far below the US $54.9bn forecast.

The Guardian headline on the Q1 report - Apple quarterly results reinforce fears that iPhone appeal is fading – said it all. Apple’s growth, say analysts, can no longer be labelled as “phenomenal” as it was some years ago. The iPhone 5 is not selling to expectations, even the total Mac sales reported was far less at 4.1 million units as compared to the 5.2 million sold in the corresponding period last year.

This has happened despite the fact that Apple had issued a refreshed iMac just before the close of the holiday season. To be fair to Apple, these late 2012 iMacs were subject to manufacturing constraints, thus preventing Apple from shipping units to all markets.

The once hip iPod sales, too, saw a decline. Sales were down by nearly 3 million in year-over-year sales at just 12.7 million units. Apple sold 47.8m iPhones over the Christmas quarter, missing a forecast average of around 50 million.

The US still remains Apple’s favourite market where revenues were up by 15 per cent at US $20 billion. Except that and China, Apple products were hit by competition, the largest from rival Samsung.

Sales in the booming Chinese market increased 67 per cent to $6.8bn and were up by a quarter in Japan despite the country's economic woes. It may be recalled that last week, as reported by Tools Journal, Apple is closely at entering the China market in a big way. CEO Tim Cook had told a China news Site, Sina, in an interview that he expected China to overtake the US as the iPhone’s biggest market.

Apple has almost always, except for some occasional hiccups, outperformed the expectations of analysts, so this Q1 results is quite a landmark. Analysts say Apple needs to quickly do a course correction to come back to its former state.

[Image Credits: Apple]

Sorab Ghaswalla

Sorab Ghaswalla

Sorab Ghaswalla is the Founder of India-based digital world consultancy firm, New Age Content Services LLP, an Internet Entrepreneur & Consultant, a journalist, and owner/Editor of 2 websites. In his free time, he contemplates the larger implications of digital life.

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