Are Apple shares overvalued?
iPhone 5 and iPad Mini rumors affecting Apple’s sales
Apple reported disappointing third-quarter earnings , which some blamed on never-ending iPhone 5 rumors holding off potential buyers from buying smartphones. Currently, it seems investors’ attention is shifting to the company’s upcoming product, the iPhone 5. Stock was slightly affected during the past two days and trades in the green territory ahead of the opening hours today.
According to Apple’s CFO Peter Oppenheimer, iPhone 5 and iPad Mini rumors are continuing to affect sales of the devices. ”We’re reading the same rumors and speculation about a new iPhone as you are, and we think this has affected sales,” he said.
Nevertheless, sales of iPhones are growing less quickly than they used to. During the past one year, Apple’s shares traded between $644 and $353. This fact represents over 40% increase, which is not sustainable in a long run.
Barclays’ analysts had pointed out earlier that growth in sales of iPhones is expected to slow, although not by as much as happened. It is possible, some potential buyers to be waiting for Apple’s iPhone 5, rumoured to be due in stores this autumn alongside a new, smaller iPad. But is the sentiment towards iPhone 5 strong enough to keep the stock price rising further?
So far, the company sold 35.1 million and 26 million smartphones, respectively, in its recent fiscal second and third-quarters. Many analysts are predicting the iPhone 5 release will be the biggest product launch Apple has ever had. CEO Tim Cook alluded to the coming “fall product transition,” suggesting new and upgraded products will be announced then.
But Apple offers many other products such as Mac computers and laptops, ipods and TVs, along large variety of digital products. So, what happen to the sales of these products?
The iPhone 5 is expected to be sensational, with a slew of new features, such as Near Field Communications (NFC), a larger screen, and a better camera. Apple has no other option, but to continue to improve the competitive advantages it already has, because it locked already so many users into their ecosystem. Along that, the company should considering options for lowering the cost of the next generation products in order to make them more affordable.
Altogether, tech companies throughout the world have lowered guidance and report weak demand, because of the struggling global economy and the transition period ahead of major new Apple, Android and Windows product launches.
For Apple, is seems a lot is riding on the iPhone 5 and new iPad. Investors generally seem confident that Apple is one tech company that won’t let them down, but some doubts arise about the stock value.