Apple Expects Weak Holiday Sales Ahead

Apple Inc. (AAPL) forecasted weak growth sales this holiday season indicating iPhones and iPads are not able to provide a growth they once provided owing to increased competition in the saturating mobile market. The stiff competition from the Samsung Electronics Co through its lower-priced smartphones and tablets is making Apple struggle a bit.

Estimates in sharp contrast to earlier holiday seasons

Yesterday, during the earnings call, Apple told that for the present quarter the revenues can be $55 billion to $58 billion, an increase of 0.9 percent to 6.4 percent prior from $54.5 billion a year before. This will be the weakest rise in the holiday sales since 2008 when revenue increased 6 percent. According to the guidance provided, profit will be similar to that of the last year.

The estimates provided are in total contrast to the previous year’s such as 2011 and 2012, where the company sales jumped more than 70 percent.

Apple to rebound in 2014

Walter Piecyk, an analyst at BTIG in New York, believe that Apple will regain its lost ground in 2014 with stabilizing profit margin and rising sales in countries like China. The company produced $5.73 billion in the previous quarter in China, which was a rise of 5.6 percent from the previous year. On the other hand, sale in Japan increased 41 percent to $3.34 billion after it entered into a deal with NTT Docomo Inc to sell the iPhone.

Under pressure to raise buyback program

Apple is also under pressure to return more money to its shareholders. Activist investor, Carl Icahn is working on a campaign to make Apple initiate a $150 billion buyback program to boost the company’s stock price.

Cook, addressing indirectly Icahn’s concerns, over a conference call told that the board is in discussion to decide on how to utilize the cash on an “ongoing basis”. Cook, further, said that Apple will take inputs from its shareholders and will announce any change in the existing dividend and buyback plan in the early 2014. Apple in the last five years has paid $36 billion in dividends and buybacks.

For the last quarter, Apple reported $146.8 billion in cash and investments, a surge of $100 million from the last quarter. The Cupertino based firm paid $2.8 billion to its shareholders in dividends and repurchased $5 billion worth of shares, last quarter.