iPhone sales drop may stifle Apple profits

The company has warned investors that the quarterly earnings report will bear bad news about iPhone sales

The company has warned investors that the quarterly earnings report will bear bad news about iPhone sales (AFP)

There can be no more doubt that iPhone sales have slowed down and it is affecting Apple.

The company has warned investors that the quarterly earnings report will bear bad news about iPhone sales without confirming how bad the situation could be, Bloomberg reported.

The question really is that are sales that bad that it will make the company miss its revenue projections for the quarter that ended in March.

"From the stock point of view, it is already built into people's expectations," Abhey Lamba, a San Francisco-based analyst at Mizuho Securities, who recommends buying Apple shares, was quoted as saying. "If iPhone sales end up in line to slightly better than expectations then it will be taken positively."

While mounting concern of investors that customers in the US and other developed markets aren't upgrading their phones regularly leading to iPhone-maker's stock to dip 18 percent in the past 12 months, the company's introduction last month of the lower cost iPhone SE was partly seen as an effort to secure new customers in countries such as China or India -- emerging markets where a growing middle class has a mounting appetite for status symbol consumer products.

The slowdown in profits will see the company failing to meet expectations for the second quarter since 2003 as the Cupertino-based technology major in January reported that revenue in its fiscal second quarter would be from $50 billion to $53 billion, compared with $58 billion a year earlier.

Bloomberg has estimated that the company will sell products worth $52 billion for the quarter ended March. It also said that Apple will sell a little more than 50 million handsets, compared with 61.2 million in the period a year ago. However it will be interesting to see which particular smartphone will sell more in the coming period.