Apple forecasts $52 billion revenue
New York, October 27, 2012
At least three brokerages cut their price targets on Apple by up to $50 a share after the iPhone maker surprised analysts by forecasting lower gross margins for the current quarter, a report said.
For the December quarter, Apple forecast revenue of $52 billion, below estimates of $55 billion, according to Thomson Reuters, said the report published in our sister publication, the Gulf Daily News.
It expects margins of 36 per cent, far lower than analysts' expectations of 43 per cent.
Analysts focused on the decline in margins and played down the significance of a fall in iPad sales in the last quarter, as users waited for the iPad mini, and they did not expect this to continue.
Apple's forecast decline in gross margin, even assuming it was deliberately aiming low, still pointed to an unusual decline, Evercore Partners analysts Rob Cihra and Edison Yu said in a research note. Evercore cut its price target on the stock to $775 from $800.
Nomura Equity Research said it expected production costs to rise in the current quarter, after Apple redesigned so many of its products at once.
"The iPhone 5, iPod Touch, iPod nano, iPad mini and iMac all feature new form factors and our checks with the supply chain indicate that many of these are very complex to manufacture and are likely resulting in reduced production efficiencies," Nomura analysts said in a note as they lowered their price target to $660 from $710.
Apple heads into the current quarter after refreshing almost all of its product lines, including introducing a lower-priced 7.9-inch "iPad mini" and an upgraded fourth-generation full-sized iPad.
Apple said it expects 80 percent of revenue in the current quarter to come from new products but did not increase the product prices to offset higher costs and maintain its margins.