Apple sales will grow with new iPhone

On Tuesday, analysts predict, Apple will announce that its quarterly profit grew 35 percent to $9.86 billion, and that sales are projected to rise 31 percent to $37.3 billion.

And those breathtaking numbers will be disappointing.

While that kind of growth would outpace gains by most of Apple's technology peers, it would be the Cupertino company's slowest since 2009.

The reason? Blame iPhone fans awaiting the release of a new model. They are delaying purchases, slowing the Apple juggernaut's seemingly relentless expansion.

With a redesigned iPhone probably arriving in October, analysts estimate that sales of the sleek smart phones - Apple's biggest source of revenue - slid in the fiscal third quarter from prior periods. While analysts predict that the next iPhone will be the best-selling yet, the purchasing delays will probably weigh down results until the device hits stores.

Bad now, 'great later'

"People are waiting," said Andy Hargreaves, an analyst at Pacific Crest Securities in Portland, Ore. Apple will sell about 25.4 million iPhones, he estimates, compared with 35.1 million in the previous quarter. "It's going to be bad now, but great later."

A similar slowdown occurred ahead of last year's iPhone 4S release in October, causing Apple's shares to slide when the company reported profit that fell short of analysts' estimates for the first time since 2003.

Apple hasn't said when it will unveil a new iPhone, and has given no details about plans for the product. Yet the dip in unit sales underscores how speculation about Apple's plans, including a slew of websites dedicated to publishing rumors about new devices, can lead potential buyers to sit on their wallets while waiting for a new product.

'Latest and greatest'

"Customers are increasingly tech-savvy and they want to have the latest and greatest," said Anthony Scarsella, the chief gadget officer at Gazelle.com, a website that buys and sells used iPhones and other consumer electronics. He said people wind down trading in their iPhones about four to six months ahead of an iPhone release. "It's something we definitely see year after year."

Apple is preparing to overhaul the look of the iPhone and has placed orders with suppliers for screens that are bigger than the phone's current 3 1/2-inch screen, people with knowledge of the matter said in May.

Jim Ferrer, a commercial insurance broker in San Francisco, is among those waiting for the next iPhone. He bought the first model when it was released in 2007 and has held on to it ever since.

Ferrer considered getting the iPhone 4S, and then decided to delay the purchase when he saw that the newest model may be lighter and have a stronger processor that will make applications run faster.

"There are so many changes that keep coming out that I want to make sure I get the right one," he said. "Then I'll stick with it."

Potential barrier

Another potential barrier to near-term sales is a weak global economy that's crimping consumer spending, as well as changes by carriers including Verizon Wireless that extend how long a customer must wait to get a subsidy for a new device, said Pacific Crest's Hargreaves.

Apple also is facing competition from rivals including Samsung Electronics Co., which, according to NPD Group, is the world's biggest seller of smartphones. Samsung released the Galaxy S III phone in May.

Still, Wall Street analysts have a history of underestimating Apple's results. The company's earnings have exceeded average estimates every quarter except one since at least 2003, according to data compiled by Bloomberg.

Sales to balance out

Any third-quarter drop in iPhone sales also may be partially balanced out by iPad purchases, according to Horace Dediu, a former analyst at phone maker Nokia Oyj who now publishes industry research at Asymco.com.

In addition to individual customers, schools and companies are buying the leading tablet computer, he said.

"There will be a significant story there," he said.

Apple's earnings reports have consequences for the broader market. The company, which also makes the iPod music player and Mac computers, accounts for more than 12 percent of the valuation of the Nasdaq Composite Index, meaning fluctuations in its stock price can influence pension funds, mutual funds and other investments tied to the benchmark index.

Source: http://feeds.sfgate.com/click.phdo?i=5634e932e6e7950ab5030469cb7cba5d

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