Apple Inc. iPhone Sales to Decline – BMO

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Apple Inc. iPhone Sales to Decline - BMO

Apple Inc. (NASDAQ:AAPL) is set to release their earnings for second quarter 2012 before the markets open on Tuesday 24th April 2012.

Apple’s board and investors should really be patting themselves on the back. The company’s only serious remaining competitors are Samsung and Google Inc.  It’s other would be challengers, such as Research in Motion Limited  and Nokia have been left panting by the wayside as the market for non-smartphones has gone into freefall everywhere outside the developing world.

Apple’s share price is accordingly still flying high as it has done throughout 2012 but is being strongly buffeted ahead of Tuesday’s declaration.  In the last ten days of trading Apple Inc. (NASDAQ:AAPL) has only managed to finish with a gain once.  At the time of writing shares are up and down erratically after opening down at start of trade.  It is anyone’s guess whether or not Apple will again close in the red.

This is a concerning trend: A Bank of Montreal (NYSE:BMO) (TSX:BMO) Capital report released today paints an ambiguous picture for the coming quarter.  Whilst on the surface Apple is given an Outperform rating with a price target of $675, iPhone sales are predicted to fall flat or even to slip into the negative.

The real damage comes from the report’s time of release – at a time when other companies in the sector are raising their price targets to $1,000 or even higher.  Despite it’s stock being 40% up in value so far in 2012, Apple are not the strongest technology company out there.  The ranks of the S&P 500 contain many stock charts that show greater strength and more promising prospects.

At a time of  caution and uncertainty, Apple Inc. (NASDAQ:AAPL) investors will be paying very close attention to the 50-day moving average.  This currently stands at $570.77, which is right on the current price. Some analysts are confident of a bounce whilst others suggest the Kings of Computing are on a downward trend.

The question is whether the dubious stock chart will spook potential and current investors, despite the blanket of outperform ratings.  My opinion is that this is unlikely, although in uncertain times breaking news often has effects far stronger than their intitial significance warrants.

The case in point is going to be the iPad, especially how it is affecting sales of MacBooks and desktop Macs.  Investors will be paying close attention to any emerging trends that come out of tomorrow’s release.

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Reuters has given an earnings estimate of $10.00 EPS on quarterly sales of $36.6 billion.  This equates to an earnings gain of more than 50% and sales gains of almost 48.5%, figures that should keep all but the jitteriest investors happy.

However, with several hours of trading to go and a pall of uncertainty hanging over Apple’s stock, it may well be that a shaky minority could call the shots, and if that happens then the cautious majority might be compelled to follow.

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