Apple expected to announce first profits fall in a decade

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Earnings tipped to decline by as much as 20 per cent amid speculation of weakening iPhone demand

Apple’s profits are expected to fall by as much as 20 per cent from a year ago when it announces its Q2 financial results later today, according to analysts.

The decline in earnings would be the technology giant’s first since it opened its iTunes Store in 2003. This comes amid speculation that sales of the iPhone have slowed.

Circus Logic, which provides sound components for the iPhone and iPad, has claimed that sales of a particular chip are also slowing down.

Last week, Apple’s share price fell below the $400 mark for the first time since December 2011. The figure currently stands at $398.67 – a fall of 40 per cent over the past year from $560.28 on April 24, 2012.

Apple’s next iPhone was initially expected to be released in June. However, speculation is mounting that it may not be released until September.

Charles Russell LLP technology and media specialist Vanessa Barnett said its acceptable to say Apple is in decline due to increased competition but said it will recover based on less patent disputes and the launch of new products.

It’s interesting times in technology right now. For a number of years Apple really did ‘kick ass’ in terms of the quality of its products, the design, the usability – and the hype.  But in the last couple of years we have seen the rise of both Android as a phone OS and Samsung as a ‘cool’ consumer technology company. So it’s fashionable right now to say Apple’s on the slide.

“But at the end of the day, they have good people, good ideas and there’s still a big bit of Steve Jobs in the company’s DNA.  I’d call this a blip not the beginning of the end. The patent wars will settle down, new products will be launched and the rise of Apple will begin again. It may not be as overpowering as at the time of Steve Job’s but anyone who’s thinking about writing them off is probably engaging in wishful thinking.”

Magister Advisors managing director Victor Basta said Apple needs to be more innovate with its devices and focus on developing its software and serving its large base of credit card-enabled customers through micropayments.

“If, as some are forecasting, Apple’s device sales are disappointing, the very worst thing the company could do is double down on device innovation. One definition of madness is to repeat what you have done historically and hope for a different result.”

“Apple in our view is a business going through a necessary transition from hardware as the dominant revenue stream. The right thing for Apple to do is to broaden themselves out, serve their huge community of credit card enabled customers, and focus on micropayments and software.”

“The world now is awash with device innovation. Devices are of course a fundamental part of Apple’s offer and will remain so. The point is that the device market is now hugely competitive and Apple should focus on simply being competitive – or good enough in other words.  What is needed is a balanced approach in the business.”

“If you see Apple as an ecosystem of credit card-enabled customers making micropayments, they only have one really significant competitor, Amazon, a business that begins to look more and more like Apple every day. We will hear more from Amazon later in the week and that will give us a much clearer picture of shifting industry dynamics.”

1 COMMENT

  1. What a load of tosh….

    Amazon is a competitor? Last I checked they were some sort of non-profit.

    Apple should stop innovating in hardware and become what, a payment processor? You mean maybe launch a virtual wallet that’s baked into the OS? Oh, wait, that happened already.

    Apple has nearly 70% of the sector profits despite not joining the playing field until 2007, arguably 2008. Yeah, they’re struggling alright.

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