Apple iPhones to face the music due to Brexit

Apple iPhone user
Devices major Apple is set to experience tough times in the next one or two quarters as a possible after-effect of the Brexit and the increase in interval between iPhone replacements.

Analysts have also cut down the revenue and earnings expectations for Apple, in the coming two quarters of 2016.

The shares of the smartphone vendor dropped by 1.3 percent to touch $94.62. It has seen a steady drop of 14 percent over the last three months and 25.2 percent over the last twelve.

The fallout of the United Kingdom’s decision to exit from the European Union stands out as the main reason, as the third-quarter revenue expectations hit $41.19 billion. UK has about 2.3 percent share and the EU has an approximate 13.2 percent share in the total revenue of the company, state reports by FactSet.

The estimate is still in the range of $41 billion to $43 billion as expected by Apple, but has went below those of Citi and an average estimate derived from 37 analysts as revealed by FactSet of $42.2 billion.

Jim Suva, an analyst, has confirmed that the factors of Brexit and delayed replacements may pull down the demand of the premium brand in smartphones.

Apart from the economic atmosphere, the building up of iPhone replacement cycle from 24 to 28 months are also to blame, as per the Suva analyst. The analyst estimate also adds that the time could go up to 30 to 36 months within the next two to three year span.

The third-quarter non-GAAP earnings per share estimate, as given by Citi, also fell to $1.35 from $1.40, which is nearer to the bottom of the Apple guidance range of $1.30 to $1.42, while failing to meet the Wall Street consensus estimate of $1.40.

Apple expects a sale of 40.3 million iPhones, less than the previous estimate of 41 million iPhones with 47.5 million iPhones sold in the previous year quarter.

Apple may start to recover at the end of next year with the launch of the iPhone 8 and expansion into newer horizons like India. Apple will announce its quarterly financial result on July 26.

Vina Krishnan
[email protected]