Sales concern to eclipse Apple results

Apple is expected to deliver the second strongest set of results in its history this week, with analysts forecasting that demand for the iPhone 5 catapulted profits to $12.4bn (£7.8bn) in the final three months of last year.

Apple is expected to deliver the second strongest set of results in its history this week, with analysts forecasting that demand for the iPhone 5 catapulted profits to $12.4bn (£7.8bn) in the final three months of last year.
Although Apple still ranks as the biggest listed business in the world, its share price has fallen sharply in recent months from more than $700 (£441) in September to exactly $500 on Friday. Credit: Photo: Alamy

However, the strong results, due on Wednesday, are likely to be overshadowed by anxiety over the pace of growth at the company, and fears that its sleek iPod and iPhone are starting to lose their shine.

Wall Street analysts predict that iPhone sales could break the 50m mark for the first time in a single quarter on Wednesday, but Tim Cook, the chief executive, will face a blitz of questions over how Apple can sustain its momentum.

Although Apple still ranks as the biggest listed business in the world, its share price has fallen sharply in recent months from more than $700 (£441) in September to exactly $500 on Friday.

Investors have sold out of the business amid concern that Apple is not doing enough to dazzle customers with its products, in the way it has over the past few years. They are also anxious about competition from rival smartphone makers who have upped their game considerably since Apple first wheeled out the iPhone.

"The negative sentiment around the stock has reached epic levels," said Brian White, an analyst at Topeka Capital in New York. "Investors have two main concerns: growth and margin structure," added Adnaan Ahmed at Berenberg.

Analysts at UBS and Jefferies cut their price targets in December following reports of weakening demand for the iPhone 5, the latest iteration of its smartphone. Since then, Apple is reported to have halved its orders of the device. Meanwhile, manufacturer Sharp reportedly cut back production on larger iPad screens as demand shifted to the iPad mini.

Analysts worry that incremental improvements to the iPhone will not be enough to impress Western consumers in the way early versions of the device did, and there are deepening concerns over Apple's pipeline of other products.