Apple is having a really bad quarter, analysts warn

Several analysts are warning that Apple will come in below its own guidance this quarter

Financial trends and news by Faith Merino
March 26, 2013
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Apple hasn’t been feeling so hot the last few quarters. The company has consistently missed analyst expectations every quarter since Tim Cook took the helm at the end of 2011. The death blow came when Apple came in below estimates during the holiday season—typically its best quarter. So is it any wonder that several analysts are lowering their expectations for this quarter?

Piper Jaffray’s Gene Munster is the latest analyst to join the tide of naysayers. Munster is forecasting $41.4 billion in revenue for the March quarter, which is lower than consensus estimates that peg revenue at $42.8 billion for the quarter. He also expects Apple to reveal lower than expected iPhone sales—35.5 billion for the quarter. Meanwhile, Wall Street is anticipating 37 million iPhones sold.

To put this into perspective, Apple announced $39.2 billion in revenue in the March quarter of 2012, compared to $24.7 billion in the March 2010 quarter. So while revenue increased 59% between spring 2010 and spring 2011, Munster estimates that revenue will only increase 6% between 2011 and 2012.

Munster also forecasts lower profit margins of 38%, while consensus is holding onto 39% to 40% margins. Compare that to the same quarter last year, when Apple revealed 47.4% margins.

If that’s not depressing enough, Munster believes the June quarter will be even worse, and he’s predicting a guidance of $36 to $38 billion.

He doesn’t necessarily believe Apple is receding from its high water mark, however. While his price target has dropped to $767 from $900 in December, he believes Apple will have a stronger second half of the year with new devices and even a couple of surprises, like perhaps a new smart watch or a TV.

He’s not the only analyst who believes Apple is having a dismal quarter. Citi, Jefferies, and BTIG analysts have all warned that Apple has a good chance of coming in below its own guidance this quarter. Earlier this month, Jefferies analyst Peter Misek warned that iPhone sales likely saw a drop in March due to consumer anticipation over Samsung’s new Galaxy S4.

BTIG’s Walter Piecyk actually upgraded Apple’s stock to a “buy” rating while simultaneously warning of a bad March quarter. Even though his price target is just $540 and he expects poor March earnings and even worse June earnings, he believes the long-term outlook is bright. Specifically, he said in a research note, he believes Apple will deliver a lower-priced iPhone by the end of the year, along with another mystery device that will generate an additional $5 billion in revenue. 


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