Apple forecasting slower holiday sales amid Samsung gains

Apple Inc.’s (NASDAQ:AAPL) forecast for the slowest holiday sales growth in a half decade reflects how iPhones and iPads aren’t providing the growth surges they once did as competition accelerates in the saturated mobile market.

The trend was outlined yesterday when Cupertino, California-based Apple said revenue for the current quarter would be $55 billion to $58 billion, up 0.9% to 6.4%, from $54.5 billion a year earlier. That would be the slowest holiday-sales rise since 2008, when revenue jumped 6%. Profit will be about the same as last year, based on Apple’s predictions for gross margins.

The forecast is a turnaround from previous years such as 2011 and 2012 when Apple saw holiday sales swell by more than 70%. While Apple’s devices have upended the technology industry, Chief Executive Officer Tim Cook has overseen a stock fall of 25% in the past year as profit declined for the first time in a decade. The world’s most-valuable company is grappling with competitors led by Samsung Electronics Co. that are exerting pricing pressure through lower-priced smartphones and tablets.

“The question is, can they return to growth?” said Walter Piecyk, an analyst at BTIG in New York. “You had a company that was growing, and then it went negative.”

There are signs Apple will regain its footing in 2014, with profit margins stabilizing and sales in countries like China expanding, said Piecyk. The company generated $5.73 billion in China last quarter, up 5.6% from a year earlier, while sales in Japan rose 41% to $3.34 billion after it forged a deal with the country’s largest carrier, NTT Docomo Inc., to sell the iPhone.

Bright Spots

“The product line is seeing strong demand,” said Laurence Balter, an analyst at Oracle Investment Research. “They need to get back on a positive climb.”

Apple rose 1.1% to $535.43 at 9:32 a.m. in New York.

The company is rolling out new iPhones and iPads for the end-of-year shopping season, which is Apple’s most important quarter. Cook, speaking on a conference call yesterday, said the new iPhone 5s is backlogged and that he expects new iPads to be similarly popular.

Apple will begin selling a new iPad Air Nov. 1, followed later in the month by an updated iPad mini with a high- definition screen.

“It’s going to be an iPad Christmas,” Cook said on the call. He also hinted that products are in development for release next year, including new categories where the company doesn’t currently do business.

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