Apple Shares Tumble by 5% on Lower Sales Projection

The Apple iPhone X. Photographer: Michael Short
  • Apple Shares Tumble by 5% on Lower Sales Projection

Apple Inc shares tumbled on Monday after suppliers and analysts lowered sales projection for 2019.

The series of reports showed iPhone unit sales will start falling from the first quarter of 2019.

This was after Apple announced it would stop reporting iPhone sales, further adding to speculations that the once fast-selling iPhone might actually be struggling with sales.

Lumentum, a key supplier of Apple’s facial recognition, lowered its 2019 forecast, saying a large customer cut orders by 30 percent – without mentioning Apple – however, Apple is its largest customer.

Also, JPMorgan analysts said in a note distributed to clients on Monday, “We now forecast modest year-on-year declines in iPhone shipments for both calendar 2018 and 2019 on account of a weaker macro backdrop in emerging market.”

Another company, TF International Securities on Monday released a statement through its analyst Ming-Chi Kuo, saying the company has reduced iPhone XR estimation.

“We have reduced our iPhone XR shipment estimation from 100mn units to 70mn during the new product lifecycle,” Kuo wrote. This he attributed to the drop in consumer confidence in China due to the trade war, high prices and competition from Huawei.

He, however, said Apple’s less-expensive older phones may experience a sales boost.

“The legacy iPhone models forecast is likely to increase significantly thanks to more affordable prices; the total iPhone shipments in first of 2019 are likely to see a Year-on-Year decline,” Kuo continued, citing Career and Nissha Printing as two suppliers that might be affected by Apple’s cuts.

Still, analysts suspect Apple knows that iPhone unit sales are going to drop in near-term, hence, the reason it decided to stop reporting sales.

JPMorgan analysts said, “these challenges are largely cyclical and investors should pay greater attention to the transformation to services, where Apple was able to report quarterly record revenue of $10 bn in [the most recent quarter] despite a regulatory challenge in China.”

Tim Cook, the Apple CEO, was recently asked if he doesn’t think not disclosing iPhone sales as usual will scared investors.

Apple CEO responded by saying “Our installed base is growing at double-digit, and that’s probably a much more significant metric for us from an ecosystem point of view and customer loyalty, et cetera. The second thing is this is a little bit like if you go to the market and you push your cart up to the cashier and she says, or he says how many units you have in there? It doesn’t matter a lot how many units there are in there in terms of the overall value of what’s in the cart.”

The uncertainty surrounding global growth, rising wage growth in the US and the higher exchange rate will normally impact Apple profits even without a drop in sales. However, with the projected drop in sales of Apple’s best selling product to date, company’s profitability maybe reasonable impacted.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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