Apple has been a huge name in the technology world and has provided consumers with great products over the years. It is surprising to hear that Apple might be in a bit of trouble according to Credit Suisse. The Credit Suisse Group is a leading global financial services company located in Zurich. Representatives from the group are claiming that this trouble might only be short term, and information is coming at a time when Apple’s shares are down.
Cuts made to iPhone production
In November, the Swiss bank stated that Apple cut about 10 percent of its component orders. These cuts were made due to a lower demand than expected for the new iPhone 6S and iPhone 6S Plus. Overall builds for the phone have been cut to an estimated 80 million units for the December quarter and 55 to 60 million for the March quarter. Because of this change, Credit Suisse has lowered their 2016 projected estimates from 242 million to 222 million.
Apple stocks fall in December
Investors are beginning to fear the worst, which is that the smartphone market might be slowing down. Credit Suisse reported that Apple shares were down $2.01, which is a 1.8 percent decrease, bringing the share total to $110.46. This number is down 17.8 percent from a 52 week high on April 28th of this year, when shares were at $134.54. Shares were slightly above a 20 percent bear market threshold. Now, even though the DOW was up 157 points, Apple shares were down and behind other tech companies such as Amazon, Google, Microsoft, and Netflix. The smartphone market might just be on the decline. Since prices for new smartphones can be rather costly, consumers do not feel the need to give up their old phone for a newer version that will cost them extra money.
Smartphone suppliers noticing the cool off
Dialog Semiconductor is one of the key Apple smartphone suppliers, and they are concerned over the cool off. This could mean a disappointing term for Apple, since Dialog Semiconductor dropped revenue guidance by 11 percent. They have made claims that Apple smartphone shipments might even come in lower than 50 million come March. This is lower than the 55 to 60 million projected by Credit Suisse. It could be a good thing or a bad thing that other suppliers are seeing a decrease in demand. Dialog Semiconductor is not the only one, as 3M, who makes optical film for touch screen devices of television sets and smartphones, has also noticed a lowered consumer demand. In fact, Nicholas Gangestad told investors that 3M is seeing a weaker than expected demand in the consumer electronics department. Gangestad is the chief financial officer for the company and claims this lowered demand is impacting the company’s Electronics and Energy business.
Is this only short term?
Credit Suisse, along with other brokerage firms believe this is simply a short term weakness for Apple and that stocks will rise in future months. Apple has a great marketing team and they should be successful in providing consumers with new products. Analysts are even projecting Apple stocks to increase within the next year and a half, bringing the company up 35 percent.