Delay in Release, Makes Me Sneeze - iPhone 5.
Saif is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
No doubt that iPhone has taken the smartphone industry to a different level altogether and currently iPhones yield about half of Apple's (NASDAQ: AAPL) annual $100 billion haul. But unfortunately, the world's most valuable technology company has started to lose its essence due to the delay in launching the most awaited iPhone.
The global economy did not impact iPhone sales. In 2009, Apple grew 35 percent despite a global credit crisis that had an adverse effect on most of the companies. During these days Apple generated a humongous $6.75 billion by sales of iPhone itself. It earned over $16 billion in iPhone sales last quarter alone, a little under half of its total revenue. Sales of the iPhone slipped 26 percent sequentially last quarter, reducing margins by 460 basis points to 42.8 percent.
Investors had already lowered their expectations, but they did not expect the company to miss it altogether. A lot of the blame was placed on the pause prior to the launch of the new iPhone, which some fear is becoming a yearly trend.
The competition is growing from the Samsung’s new Galaxy S III along with Nokia (NYSE: NOK), which recently announced the launch of Lumia 920/820. Samsung has already sold around 20 million units of the Galaxy S III since its launch in July 2012. This is an indication of the potential market loss Apple could possibly have because of the delay.
Nokia had made the announcement on the 5th of September that it will launch its biggest battle against Apple with the launch of its Lumia 920/820 in a tie up with Microsoft (NASDAQ: MSFT). Microsoft is providing Lumia with windows 8 (one of the most awaited operating system of Microsoft). Also, Microsoft is launching its own tablet called “Surface.” Basically, Apple is going to receive a colossal attack and it will be interesting to see how they respond.
Against its Odds
Finally, as consumers are waiting for the new iPhone, it is expected to be a completely redesigned model with a bigger display. Despite all these factors, the roughness in iPhone release would not matter as long as Apples strong growth resumes after the anticipated new iPhone hits the stores. Expectations are high that Apple will launch a phone that will again beat the competition in terms of its features. And at last the view of Apple’s growth is quite evident in the stock price, which is up 42 percent for the year. Perhaps we should wait and watch the show from the backseat till the launch!
Saifnu has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple and Nokia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
