From Gurman's "Apple Begins to Show Rare Vulnerability Ahead of Economic Slowdown" posted Sunday on the Bloomberg:
The [June quarter] results themselves are expected to show a major deceleration in sales growth. Analysts predict that revenue will climb by about 2% from a year earlier, the slowest pace since 2020. Compare that with the 36% jump that Apple saw in the third quarter of 2021.
Revenue is expected to come in around $82.7 billion. The iPhone will account for a little under half of that, analysts predict, with services generating nearly $20 billion.
Apple’s challenges go beyond the latest economic concerns:
- First, the company already said you can shave $4 billion to $8 billion off the top of last quarter because of supply problems stemming from Chinese lockdowns and the chip shortage.
- Second, it’s a tough comparison. The third quarter of 2021 included a lot of pandemic-induced spending by people outfitting their home offices. That led to a nice jump in Mac and iPad sales.
- Third, though the latest MacBook Air was announced during the third quarter, it wasn’t released until the fourth quarter. Many customers held off buying a MacBook Air—Apple’s most popular Mac—while they waited for the new model to arrive.
- And, yes, there’s the economy. Given all the uncertainty, more people are probably holding on to their cash right now instead of spending on new Apple products. If they do splurge on technology, they may wait for the latest iPhone, AirPods Pro, Apple Watch and iPad to arrive this fall.
If the economy does take a dive, it’s only going to get harder. These factors have already led Morgan Stanley, Wells Fargo and other banks to cut their stock price targets for Apple by about $10 a share.
My take: If the economy takes a dive, Apple will fare better than its competitors.