Apple Q3 likely to disappoint in wake of Brexit, slower iPhone upgrade cycles, analyst says

Posted:
in AAPL Investors
Apple's stock price is down over 1 percent in Tuesday trading in the wake of a Citigroup investor memo, calling for the company's sales to slide below Wall Street predictions when it announces third-quarter results on July 26.




The company is suffering not just from people choosing to upgrade their iPhones less often, but from the aftermath of June 23's "Brexit" referendum in the U.K., Citi analyst Jim Suva wrote in a memo seen by AppleInsider. The threat of the U.K. leaving the European Union has led to enough economic trouble and currency fluctuations that demand for Apple's products has supposedly dropped even further.

As of this writing, Apple shares were down to just under $94.80 in Tuesday trading, from an opening of $95.39.

Suva noted that between 2013 and 2016, typical iPhone replacement cycles have stretched from 24 months to 28, and could eventually hit 36. The analyst blamed the sitaution on a lack of high-profile features in recent models -- while the 6 and 6 Plus updated the iPhone to modern screen sizes, the 6s and 6s Plus were only modest improvements, their one significant departure being the addition of 3D Touch.

The situation could potentially be exacerbated by this fall's "iPhone 7" and "7 Plus," since reports have suggested the devices won't have many major feature upgrades, and could in fact lose the industry-standard 3.5-millimeter headphone jack. Apple is thought to be devoting work to 2017 models instead, which could feature OLED screens with integrated Touch ID and camera components.
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Comments

  • Reply 1 of 34
    sky kingsky king Posts: 189member
    What a bunch of balderdash.  Apple is going to be just fine.  So are the people who left the EU.  
    evilutionbadmonk
  • Reply 2 of 34
    macxpressmacxpress Posts: 4,885member
    I don't really get how Brexit could have a huge negative effect on Apple sales...Does Britain really have that many sales to have a negative effect on Apple's bottomline? Are people from other countries all of a sudden not buying Apple products because of this? I just can't connect the dots. Maybe someone here can. 

    Even if they are lower than normal...I bet their still higher profits than most other companies. You can't continue to have blowout profits quarter after quarter. 
    edited July 2016 ericthehalfbeepalomine
  • Reply 3 of 34
    apple ][apple ][ Posts: 8,657member
    Brexit, lol. What the hell does Brexit have to do with Apple earnings? Isn't the earnings on the 26th of this month? 

    I do know one thing though.

    The iPhone SE has been virtually impossible to buy in store at any Apple store. I know because I've been checking from time to time, and it's basically been out of stock since first released. They're selling faster than they can make them. Apple has not been able to keep up with demand since first released.
    edited July 2016 ration alfastasleep
  • Reply 4 of 34
    thewhitefalconthewhitefalcon Posts: 4,453member
    Brexit is the new global warming, you can blame everything on it.
    designrfotoformatevilution
  • Reply 5 of 34
    thewhitefalconthewhitefalcon Posts: 4,453member
    apple ][ said:
    The iPhone SE has been virtually impossible to buy in store at any Apple store. I know because I've been checking from time to time, and it's basically been out of stock since first released. They're selling faster than they can make them. Apple has not been able to keep up with demand since first released.
    It's probably a case of Apple not wanting to ramp up production too sharply, and then end up with a glut of inventory. Probably just hoping to ride the wave out.
  • Reply 6 of 34
    seanie248seanie248 Posts: 174member
    we all know the Brexit was Apples fault anyway. Most things in the world are these days, if you go by the ANALysts. Considering all of Europe's sales are about 10% of Apple's Revenue, I would think the UK counts for less than 1%, i this Apple might be OK. Barely.
  • Reply 7 of 34
    crowleycrowley Posts: 5,832member
    Pretty major currency fluctuations in both the UK and EU. 

    Seems plausible.
  • Reply 8 of 34
    gwydiongwydion Posts: 1,067member
    macxpress said:
    I don't really get how Brexit could have a huge negative effect on Apple sales...Does Britain really have that many sales to have a negative effect on Apple's bottomline? 

    The only thing I can think is that UK is the country in EU where iOS has more market share, if the prices go up because of the pound being weaker against the dollar perhaps they sell less phones there
  • Reply 9 of 34
    designrdesignr Posts: 503member
    I suppose it's possible that the irrational currency panics due to Brexit might have some short-term negative effects for Apple, but once things settle down and the Chicken Littles are (hopefully) silenced by the reality that the sky is not actually falling, things will get back to normal and Apple will be just fine long term (or at least not negatively affected by Brexit stuff.)

    ration al
  • Reply 10 of 34
    SylvainLSylvainL Posts: 28member
    You can blame Brexit but the market is saturated. Apple needs to open new markets from Asia. Phones are better and performance improvements are not as major as they were few years ago. Average Joes don't need to change phones as often as they have to in the past.
    designrgizmosf
  • Reply 11 of 34
    designrdesignr Posts: 503member
    SylvainL said:
    You can blame Brexit but the market is saturated. Apple needs to open new markets from Asia. Phones are better and performance improvements are not as major as they were few years ago. Average Joes don't need to change phones as often as they have to in the past.
    Yes. This.
  • Reply 12 of 34
    john.bjohn.b Posts: 2,720member
    The complete lack of updates to the MBP don't help, I'm sure.  :/
    dasanman69
  • Reply 13 of 34
    wdowellwdowell Posts: 208member
    I used to work at one of the European institutions and believed the UK was better in the EU (and the EU better off having the UK onboard within the EU) However... To blame 3rd quarter results on Brexit is laughable. Firstly, these are results which only JUST cover, what a week?, of the post-results and currency fluctuations, secondly, Apple cant have been materially affected by the slow down which preceded the vote - with companies holding off investment decisions or could somebody actually give me a believable scenario where this is the case? it's utter BS. As I say I am FIRMLY in the 'Remain' camp, and lost it, and there are economic convulsions ongoing and will continue in the UK and across Europe , but for Apple's 3rd Quarter results to be materially affected is one piece of journalism seriously gone wrong. Now , it MAY well affected Q4 - though frankly I think Apple has bigger problems for its outlook than a weakened GBP and Euro, - namingly - and ussing the rumours of the '6SE' are accurate - a lame duck iPhone release.
    ration alfastasleep
  • Reply 14 of 34
    wdowellwdowell Posts: 208member
    gwydion said:
    macxpress said:
    I don't really get how Brexit could have a huge negative effect on Apple sales...Does Britain really have that many sales to have a negative effect on Apple's bottomline? 

    The only thing I can think is that UK is the country in EU where iOS has more market share, if the prices go up because of the pound being weaker against the dollar perhaps they sell less phones there
    They may well do, but not in a material/meaingful way, in the 1 week between the vote and the reporting.
    edited July 2016 ration al
  • Reply 15 of 34
    dick applebaumdick applebaum Posts: 12,517member
    Brexit is the new global warming, you can blame everything on it.

    The interesting thing is that the Brexit referendum is non-binding -- the British Government could just ignore it!

    ration al
  • Reply 16 of 34
    stoobsstoobs Posts: 40member
    Wouldn't a weaker pound actually be better for Apple?

  • Reply 17 of 34
    dachardachar Posts: 330member
    sky king said:
    What a bunch of balderdash.  Apple is going to be just fine.  So are the people who left the EU.  
    Despite what is being said no one has left the EU yet.  For the UK to leave the EU it has to exercise Article 50. This has not happened yet, may not happen for some months, and it is possible that it may not happen for years or ever.  There is a lot to negotiate on both sides, and it is possible that there could be some blood letting in the EU resulting in a change approach. 

    My impression is that the UK is one of the better markets for its products in Europe. It always seems to be included in day one for new Apple hardware releases which does not appear to be the case with some of the other European Countries. 
    ration alargonaut
  • Reply 18 of 34
    decondosdecondos Posts: 9member
    Apple is stagnant - no vision. Post Jobs Era. I knew we would miss him - just not this much.
    dasanman69gizmosf
  • Reply 19 of 34
    rogifan_newrogifan_new Posts: 3,999member
    Forget Brexit what are the major changes coming to this phone that would make people really want to upgrade? It's going to look almost like the 6/6S so to many it will seem like the same phone.
    dasanman69
  • Reply 20 of 34
    crowleycrowley Posts: 5,832member
    stoobs said:
    Wouldn't a weaker pound actually be better for Apple?

    Why?  Apple don't buy anything from the UK, they sell here, and they haven't put their prices up.  

    Apple are making around 2% less revenue on daily sales in the UK than they were two weeks ago.  And they may well be selling less too as consumers are wary of spending.
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