Apple set to announce first profits dip in 10 years after chip sale slowdown

 

Apple is expected to reveal its first profit slide in a decade when it releases its latest figures today.

The technology giant is widely forecast to announce a decline in earnings amid reports of a slowdown in sales of its iPhone and suggestions that the company has lost crucial ground to rivals such as Samsung.

Just last week Apple lost its position as the world's most valuable publicly traded company when its shares hit their lowest levels in a year-and-a-half.

This came after one of the firm's suppliers - Cirrus Logic which provides sound components for the iPhone and iPad - said sales of a particular chip were slowing down.

Industry observers expect today's report to show a dip in profits of up to about 20 per cent, compared with the same period last year.

The result would mark the first time Apple has suffered a fall in earnings since 2003 when it opened its iTunes Store.

The company has enjoyed huge success during the past decade but suffered a bruising winter after its rocket-like growth stalled.

This led to speculation that demand for its flagship phones was shrinking and accusations that Apple was running out of ideas.

The firm was dealt a further blow in January when figures for the Christmas period showed earnings of 13.1 billion US dollars (then £8.2 billion) remained flat compared to the year before - the first time in years that the technology giant had not boasted double-digit increases in earnings.

More recently, Apple has faced pressure from investors calling for new hit products, and mounting competition from Samsung which unveiled its latest Galaxy S4 handset to much fanfare in New York last month.

But analysts suggested a slide in profits would not necessarily spell bad news for Apple.

Stuart Miles, founder of technology and gadget site Pocket-lint, said today's results were likely to reflect the fact that there were no major Apple launches during the most recent quarter.

"Apple is in a quiet period before the next bang when they unveil a new product," he said.

"They are keeping their heads down and letting the products speak for themselves.

"Apple has also had a lot more competition. You might find people aren't buying the iPhone 5 because they are waiting for (Samsung's latest offering) the SGS4.

"If iPhone sales have dropped, that is probably the reason."

Apple's next iPhone was initially expected to be unveiled in June but rumours suggest its release may not take place until September.

Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers, said Apple had "fallen foul" of some Wall Street investors.

"Its ability to innovate and shock has been brought into question, whilst the company is under pressure to deploy some of its massive cash pile," he said.

"However, with the new versions of the iPhone and iPad yet to come, and with the rumoured Apple TV and iWatch in the pipeline, it would be a brave call to continue to bet against Apple.

"Despite the pressure, the market consensus is still a strong buy."

PA

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