Business World

Friday 24 November 2017

Apple leads tech rout on investors' iPhone fears

Apple didn’t release sales figures for its new smartwatch.
Apple didn’t release sales figures for its new smartwatch.
John Mulligan

John Mulligan

US tech giant Apple was poised to see as much as $50bn (€46bn) wiped off its market capitalisation yesterday amid concerns about the long-term prospects of its much-vaunted smartwatch and iPhone sales that were lower than expectations.

Apple, led by chief executive Tim Cook, made record profits in the three months to the end of June, with net income jumping almost 38pc to €9.8bn.

The firm sold 47.5m iPhones during the second quarter. That was 35pc more than in the second quarter last year. But analysts had forecast that Apple would sell almost 49m, with some predicting that up to 52m would be sold in the period.

The company said full-year revenue is likely to be between $49bn and $51bn - less than the $51.1bn expected by analysts.

Apple has a market capitalisation of $753bn (€690bn). Its shares fell 1pc in trading yesterday, with the results released after the market closed in New York. In pre-market trading yesterday, the stock was down over 6pc.

And Apple wasn't the only bad news in the tech sector.

Microsoft shares were down over 4pc in pre-market New York trading yesterday. That would see $16bn evaporate from its $383bn market capitalisation once markets opened.

The software company also released results on Tuesday that made investors jittery. It made a $3.2bn (€2.9bn) loss in its fourth quarter, which ended in June. That was the highest net loss in its history.

It said its results included the impact of a $7.5bn non-cash impairment charge related to assets associated with the acquisition of the Nokia handset business, as well as a $780m restructuring charge. Earlier this month, Microsoft announced that it's cutting 7,800 jobs, most of them in its phone hardware unit.

The purchase of the Nokia business has been seen as a failure, with Microsoft failing to break the dominance of rivals including Apple and Google.

Sales of Windows to computer makers that then install it on new PCs, slumped 22pc during the fourth quarter, the company also said.

Microsoft, headed by chief executive Satya Nadella, said the decline was because computer makers were tightly managing PC inventory ahead of the launch of Windows 10 next week.

Yahoo was also poised yesterday to be a victim of the tech share rout. In pre-market trading, its shares were trading 2.2pc lower. That will knock over $800m from its $37.1bn market capitalisation.

The company, headed by chief executive Marissa Mayer, said that it is likely to generate lower than expected revenue in the current quarter as it struggles to revive advertising.

Microsoft pins hopes on Windows 10: p6-7

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