Apple Inc. (NASDAQ:AAPL) and almost every other U.S. company which does business in other countries are expected to report their weakest earnings in about four years, thanks to the strengthening U.S. dollar. Bloomberg’s Chris Burritt reports that the most recently completed quarter will likely be Apple’s first back to back profit decline in a decade.
Apple Struggles Thanks To The Dollar
The company had to raise the price of its iPods and iPads in Japan earlier this year to help curb the problems caused by the weakening yen. The strength of the dollar against the euro, yen and bolivar (Venezuela) is expected to cause a 1 percent fall in quarterly earnings across the board for non-financial companies which are part of the S&P 500.
ValueWalk's Raul Panganiban interviews Dr. Kathryn Kaminski, Chief Research Strategist at AlphaSimplex, and discuss her approach to investing and the trends she is seeing in regards to quant investing and hedge funds. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with AlphaSimplex's Read More
According to Bloomberg data, there are about two dozen companies on the S&P 500 which earn half of their revenue or more in the Asia Pacific region. Apple Inc. (NASDAQ:AAPL) is among the companies that are most vulnerable to the strength of the dollar because China passed the U.S. as the company’s biggest market earlier this year. India is the company’s third biggest market.
Slumping Sales For Apple
As if the strengthening dollar wasn’t a big enough problem for Apple Inc. (NASDAQ:AAPL), the company’s sales are slumping overall as the high end smartphone market drops off significantly. Analysts started slashing their expectations for the company the day after its last earnings report, which was released on April 24.
Just this week, one analyst said Apple Inc. (NASDAQ:AAPL) itself would cut guidance for iPhone shipments for the second half of the year, signaling further distress in the sagging high end smartphone market. Even Samsung, Apple’s biggest competitor, has been struggling to sell its Galaxy S4 because of saturation at the high end of the market.
Is A New Product Forthcoming?
For right now, investors are hoping that Apple Inc. (NASDAQ:AAPL) is gearing up to release a completely new product, whether it’s an iPhone 6 that’s completely unlike previous models or the iWatch, a name which the company has been snapping up trademark rights to all over the world, including in Japan.