RBC Capital Markets has lowered its estimates for Apple Inc. (NASDAQ:AAPL) as the company gears up to launch new products. RBC senior analyst Amit Daryanani said his checks suggest that the iPhone maker’s sales slowed in the second quarter. Apple Inc. (NASDAQ:AAPL) is scheduled to announce its second quarter results on April 23, 2013.
The analysts reduced their March quarter estimates to $41.2 billion in revenues and $9.59 per share in earnings. That’s lower than Wall Street consensus of $42.7 billion revenue and $10.08 in earnings. RBC estimates Apple Inc. (NASDAQ:AAPL)’s gross margin to be at 38 percent in the second quarter.
It also lowered the iPhone unit sales estimate from 37 million units to 35 million, which would be a 26 percent Q-o-Q drop from the record December quarter sales. Though iPad sales are expected to grow 55 percent Y-o-Y to 18.3 million units in the second quarter, over 50 percent of that will be iPad Mini. RBC reduced its gross margin estimate by 60 basis points to 38 percent.
For June quarter, analysts estimate the revenues and earnings to decline further to $37.3 billion and $8.72 per share respectively. However, that will be mainly because of product transitions in the quarter.
The iPhone sales are expected to come down to 28.6 million as the company plans to launch iPhone 5S and the low-cost iPhone in July. The iPad shipments will remain stable at around 19 million units. Due to the product transitions, quarterly sales will decline 10 percent to $37.3 billion, and gross margins will come down to 37.6 percent.
Furthermore, RBC analysts expect that Apple Inc. (NASDAQ:AAPL) may surprise investors by increasing the dividend payment by 50 percent from $10.60 to $16+. The company is expected to generate $45 billion in free cash flow this year.
Mr. Daryanani said that the company’s growth momentum will return in the latter half of this year due to a number of catalysts including: launch of iOS 7 at WWDC, iPhone 5S and low-cost iPhone launch in July, upgrades of iPad and iPad Mini in September quarter, and carrier expansion in China during the fourth quarter. The surprise elements may be iWatch and iTV launches.
RBC Capital Markets has an Outperform rating on the stock with $550 price target (lowered from $600). Apple Inc. (NASDAQ:AAPL) shares were down 1.05 percent to $429.78 at 12:27 PM EDT.