On Monday Apple reported that it sold fewer iPhones during the holiday season than estimated and handed analysts a weaker revenue forecast for the next quarter as concerns mount about Apple’s growth prospects in a more competitive smartphone market.
During the first fiscal quarter of 2014, the Cupertino-based company sold 51 million iPhones, an all-time quarterly record, but still failed to reach the 55 million level from analysts’ estimates.
Apple’s iPhone accounts for 53 percent of Apple’s revenues followed by its popular iPad which generate 19 percent based on data from late 2013.
Strategy Analytics recently reported that Apple’s global share in smartphones fell to 17.6 percent in the fourth quarter of 2013 from 22 percent in the previous year due in large part to the emergence of China’s Huawei Technologies and the Lenovo Group that operate on Android software and are priced below Apple’s new low end iPhone 5 C which is only priced $100 lower than the high end I-Phone 5 S.
Apple announced in mid January 2014 that it plans to begin selling iPhones on China’s largest carrier, China Mobile, giving the company access to 700 million subscribers.
Tech analysts are expecting the China Mobile deal will account between 15 million and 30 million more iPhone sales in 2014.
Weaker iPhone Sales in North America
Apple CEO Tim Cook admitted during yesterdays conference call that sales of the iPhone in North America were weaker than expected in the first quarter of 2014.
“We did not do as well. Our business contracted year over year” CEO Cook said in the conference call.
Apple posted first quarter 2014 fiscal results that saw its revenue grow 6 percent to $57.6 billion on quarterly net profit of $13.1 billion compared to revenue of $54.5 billion and a matching net profit of $13.1 billion in the year ago period.
However, Apple offered weaker guidance for the 2nd quarter of 2014 which came in light and unimpressed investors who sent Apple’s stock price down 8 percent in afterhours trading on Monday.
Apple forecasts revenue sales in the range of 42-44 billion compared to the consensus estimate of 46.05 billion.
Bring Back The High Growth
Some high growth tech investors are questioning whether the days of hyper growth for Apple are over as the company has failed to release a brand new innovative product since 2010 and other companies are releasing innovative products that are proving to be popular.
Samsung already beat Apple in the new product category market last year with the unveiling of the Samsung Galaxy Gear Smartwatch.
Colin Gillis, an analyst from BGC Financial, downgraded Apple to hold yesterday and said on CNBC’s Fast Money that Apple needs a new product instead of just selling new iPhones and iPads to its customer base.
“It’s time for Apple to layer in new products into its customer base. That’s how you get acceleration in our view, not just buying back stock, not just selling the incremental iPhone or the iPad” Gillis explained.
Apple CEO Tim Cook reminded investors during Monday’s conference call that Apple remains committed to innovating.
“Innovation is deeply embedded in everybody here” CEO Cook said.