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Citi Analysts Suggest Apple Will Miss Its Own 2Q 2013 Revenue Forecast

Apple will miss the lower end of its own revenue guidance figures of $41-43 billion for the current quarter by more than half a billion dollars, claim Citigroup analysts cited by Business Insider.

CNET has more on the research note, which says that reduced orders in Apple's supply chain suggest softening demand for both iPhone and iPad, and claims that there is "limited evidence" of an imminent low-cost iPhone.
In conducting our regular field work with the hardware supply chain, we again find evidence of reduced demand to Apple's suppliers for iPhone 5 related components. While production does not directly translate to sales (for example, we estimate Apple finished 1Q13 (Dec) with [around] 10M iPhone units in inventory), we suspect this is an indication of softer demand for iPhone 5 and iPhone 4S.
Citi's Glen Yeung predicts total iPhone sales of 59 million units in the first half of 2013, while the general Wall Street expectation is for around 69 million. He has also slightly downgraded his forecast Q2 iPad sales by 0.6 million to 19 million.

Yeung's team also warns against expecting revenue to flow from the low-cost iPhone rumored to be coming in August or September.
Despite much speculation amongst investors and third-party research, we find limited evidence of a low-end iPhone at this stage … We continue to expect iPhone 5S to be launched (albeit in early C3Q13 vs. late C2Q13) and anticipate a large-screen iPhone in late 2013/early 2014. But clear indications of a low-end iPhone remain elusive.
But while Citi is pointing to supply chain reports as the basis for its claims, Apple CEO Tim Cook has previously cautioned against reading too much into supply-chain rumors:
Months of rumors about order cuts and so forth, so let me take a moment to comment on these. No comment on any particular rumor as I'd spend my life doing that. I suggest its good to question the accuracy of any kind of rumor about build plans. Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant to our business. The supply chain is very complex and we have multiple sources for things. Yields can vary, supplier performance can vary. There is an inordinate long list of things that can make any single data point not a great proxy for what is going on.
However, Citi has been among the more accurate analyst firms in following the recent slowing of Apple's growth, and its statements are in line with previous observations by other analysts and commentators.

Apple has fallen short of analyst expectations several times in recent quarters, but has always met its own guidance, although that guidance has long consisted of low-ball figures that Apple felt it could easily meet. Starting with this quarter, Apple is now issuing a range of guidance numbers that it believes it will fall within, significantly altering the landscape for analysts seeking to predict Apple's performance.

Top Rated Comments

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52 months ago
I'm getting to a point where I couldn't care less.
Rating: 12 Votes
52 months ago
We expected 41 billion but only made 39.5. It's a tragic day. Someone will get fired for this.
Rating: 11 Votes
52 months ago

It's the analysts again!!!!!! :eek:

My signature is my response to them.

You know that some of these guys actually know their stuff..
Rating: 11 Votes
52 months ago

Wouldn't be surprised if they miss their mark. Their stock has been performing awful lately.

What on earth does stock price have to do with units sold?
Rating: 9 Votes
52 months ago
And the stock will go tumbling down once again. I'm sure wall street will quickly pull out the headstones for this one.
Rating: 7 Votes
52 months ago

Wouldn't be surprised if they miss their mark. Their stock has been performing awful lately.

AAPL's stock performance literally has NOTHING to do with their day-to-day operations.

Rating: 6 Votes
52 months ago
So much denial around here

While I agree that most of these analysts need to shut their traps, it's also clear that Apple's growth is slowing, iPhone sales are slowing, and iPad Mini and iMac sales are disappointing due to limited supplies. Very little has come out of Apple in the last 18 months besides removal of Scott Forstall, utter failure with maps, removal of their retail chief, stale products that no longer excite, etc.

I don't see any leadership by Tim Cook, I just see a lot of apologies. Apple has basically gone on silent running for the last 6 months. In the absence of news and announcements from Apple, the analysts are going to try to fill the vacuum with their wild speculations. An iWatch? Seriously? Only an analyst could come up with such a dumb idea.

Apple has to decide if it wants to continue being Apple, doing things its own way right or wrong, or bend to the will of Wall Street. Given Apple's size and cash hoard, they could easily execute on three fronts: innovation, market share, and defining new market categories. Tim Cook, in his recent talk with analysts, made it sound like Apple doesn't want to compete on market share at the expense of innovation. My question is this: why can't you do both?

Something is going on at Apple given the silence and comments about not wanting to necessarily have the largest market share. It seems like too much bad news, not enough good news, very little innovation despite Apple's talking points, and the competitors are quickly passing them by.
Rating: 5 Votes
52 months ago
Only 40.5 BILLION this quarter?

How horrible! ;)
Rating: 4 Votes
52 months ago

You know that some of these guys actually know their stuff..

I am an economics student and actually a lot of it is just manipulation on the part of analysts. These guys are just smartasses.


Plan: Make a cheaper iPhone to counteract the Android impact. Apple is going to cut into it´s own products, yet again. Apple should offer older models for a lower price (just sell the iPhone 5 at the price of the new cheap plastic products that are in development), when the 5S is going to get introduced. That would make a lot more sense and their BOM on the iPhone 5 would still permit them to make a decent profit of it. But Apple wants even more money and build a plastic iPhone so that they don´t have to sacrifice their margins. Brilliant move. More money, but quality second.

Actually apple could just use the same plastic HTC uses, it feels solid and has a great look.
Rating: 4 Votes
52 months ago

Throw money at things? No, throw money at technology or people that have new ideas and integrate them. Piling up huge amounts of money without investing it somewhere is always a waste and very dumb from a business perspective. Especially in IT or the digital world that still is in it´s infancies.

To put what you´re saying in context:
Saving your private money for nothing, piling it up just for the sake of it, is a good idea? I hope you´re kidding. That is a ridiculous thing to say. You either spend it to make your living better and/or you save some of it to invest it somewhere. Letting your money on the bank and doing absolutely nothing with it is just silly. It doesn´t do anything for you. So why did you make money in the first place? See the analogy?

You typically create a business, a company, because you want to sell something. You make money off of your products. Your products are the reason why people buy from you. And while that earns you money, you have to invest that money somewhere to make even more money to grow or at least sustain it. Not all of the money, but most of it.

Especially if you are a technology-driven company, you need to invest A LOT of money into R&D. If you don´t do that, you won´t have any new products, technologies you can sell. Others are going to overtake you, not over night, but slowly. That´s what happens if you pile up endless amounts of money. You don´t have a business sense at all. And I don´t mean you in particular, but everyone that does it like you just wrote.

Apple has been increasing its R&D investments year over year significantly. But last year's R&D was still "only" $3.1 billion. And that is up a lot from the year before and nearly double what they spent two years earlier. So do you get it? You can't just pump the billions that come in every week into the R&D machine and get back innovation. You have to have a plan and projects to spend the money on. And good people that you have vetted and are smart and diligent to do the research. And labs and offices for them to do the work. Even if Apple increases its R&D by 30% this year, it will still be under $4 billion.

So even R&D is not really the solution for the cash pile. Which we both realize is not doing Apple or its shareholders any good just sitting there.


And this was funny, from today:

Sales of Apple's iPhone have moved further ahead of Samsung's offerings

FORTUNE -- Two new pieces of data for Wall Street to ignore as Apple's (AAPL) share price continues to fall.

According to a press release issued Wednesday by ComScore, Apple moved further ahead of Samsung and gained ground on Google's (GOOG) Android in the U.S. market during the three month period that ended in January.
Android is still the top smartphone platform with 52.3% U.S. share, but Apple's share increased 3.5 percentage points to 37.8% while Android lost 1.3%.

Meanwhile Apple's iPhone increased its lead against Samsung, gaining 3.5% to reach 37.8% while Samsung's share grew only 1.9%.

Rating: 3 Votes

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