Apple Experiences a Slowdown?
For more than 10 years, Apple has posted amazing financial results, impressing Wall Street and pushing Apple’s stock higher. But this all changed on Tuesday when the company released financial reports for the latest quarter (October to December 2015), where revenues were up by 2% and so were their profits. Although sales on iPhones had slightly increased, those of iPads and Macs were down.
Many people on Wall Street and the media were disappointed by the reports. The stock price of Apple decreased by about 2% in the after-hours trading on Tuesday, while the stock was down by 12% over the last quarter — which is a bigger decline compared to the general stock market. Yet notably, the latest financial reports released by Apple were a disappointment compared to the high bar they’ve set in terms of their growth.
There were already signs of slowdown. Recently, Apple reported $75.9 billion quarterly revenue, which missed their expectations, which inched up 1.7% from the same period a year ago. This was the lowest revenue growth for Apple since June of 2013, according to S&P Capital IQ.
Investors may need to readjust their expectations on what used to be the “hottest” stock for years. Apple said that their projected revenue for the current quarter would be $50 to $53 billion, which falls short of the $55.3 billion expected.
Thus, when the revenue of Apple is only $50 billion in the 1st quarter, this would be about 14% drop from the $58 billion which was reported in the same quarter last year. And that would be their first quarterly drop in revenue since last September of 2009 when they saw a 5.4% decrease.
This is unusual for Apple that not long ago looked like it had the license to make money. It’s just another sign that there’s a growing saturation of the market for smartphones that cost $650.