With Apple saying its revenue could drop this fiscal year, analysts increasingly believe the tech giant must shake up its product lineup to boost growth.
By Chris O’Brien
January 28, 2014, 6:27 p.m.
Apple iTV? The iWatch? Bigger iPhones and iPads?
Rumormongering about such mythical products is a regular spectator sport for many Apple watchers.
But after the company said it could post a year-over-year decline in revenue this fiscal year for the first time since 2002, such conjecturing is turning into high-octane pressure for the company to do something, anything, to reboot growth.
“Apple needs to have more products it can sell into its high-priced customer base,” said Colin Gillis, an analyst at BGC Partners. “You should have a degree of urgency here.”
Concerns about the weak outlook for iPhone growth sent Apple’s stock plunging Tuesday — it fell $44, or 8%, to $506.50 — a day after the company reported disappointing fiscal first-quarter earnings. Apple sold 51 million iPhones over the holiday quarter, a record, but also less than the 55 million units analysts had predicted.
More ominous for many investors, though, was a lower-than-expected projection for revenue in the current quarter. Though Apple said there were technical reasons behind its guidance, such as changes in inventory and accounting for revenue, analysts had still assumed that a deal to sell the iPhone through China Mobile, the world’s largest carrier, would give Apple a boost.
Instead, analysts wondered whether the disappointing outlook was part of a broader signal that the smartphone market, especially the high end that Apple dominates, is becoming saturated. Indeed, rival Samsung also recently reported disappointing sales and Verizon Wireless also said smartphone activations were slowing.
“Apple is fighting an uphill battle in this market,” said Brian White, an analyst at Cantor Fitzgerald. “The smartphone market overall is having problems.”
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