“Cupertino, we have a problem!” – top executives Apple would be happy to hide in his cozy headquarters, but there is no turning back. Journey to the unknown “middle” markets ended the disaster. Only for the first week of 2016 capitalization of the Corporation fell to $52 billion, And Chinese competitors are ready to strike back.
The importance of the Chinese market for Apple is difficult to overestimate. For the fiscal year ended September 26, sales rose by 84%, and this would bring the total revenue to a record $233 billion in the Spring of the market value of American companies reached $750 billion On the joys of the inhabitants of the social networks began to compare the sales and the capitalization of Apple revenues for the Russian budget. What is the correlation kind of a mystery, but let’s leave it on conscience of experts cushions. Actually there is a much clearer and unexpected parallel between the structure of “Apple” and the Russian economy, which will tell.
As you know, Russia is sitting on “an oil needle”. Should hydrocarbons be cheaper, the economic situation worsens. For this reason, despite extensive reserves, our country has fallen into a trap.
What about Apple? The largest company in America dominates the market through single brand: iPhone. Miracle smartphone already dug a grave for their fellows – iPod and iPad, at the same time pushed competitors from other manufacturers. In the fourth quarter of fiscal 2015 revenue from iPhone sales amounted to $32 billion and total revenue of $52 billion it is Obvious that the company doesn’t want to put all the apples in one basket, but it turns out.
Complements the picture of the Apple agreement with Chinese mobile operators. It allowed the capitalization to grow at a record pace: the Outlook for the Chinese market attracted investors as the forbidden fruit. What we finally got? Huge business, which is based on a single model and a single point of sale.
In the first half of 2015, everything turned out extremely well. Chinese competitors of Apple lost on all fronts. Even the rising star of tech of China, Xiaomi, has abandoned its goal of 100 million handsets. One of the reasons was the problem of the Qualcomm Snapdragon 810 processor, which allegedly is too hot. Despite the fact that many experts and users sided with Qualcomm, not noticing any problems with the CPU, almost all the models of gadgets equipped with this stone, was not selling too well. In addition, Samsung started to actively promote their own SoC system.
Now everything has changed. The Chinese market began to transform. From the uncontrolled growth it tries to reach equilibrium, what is good for the Chinese, but bad for Apple itself. Its products are of high value, providing a record margin. While the middle class of China were the extra money, the Americans knew that the demand for fashionable smartphones runs out. Now the first expected fall in sales on an annual basis it is because China, which in the fight against the crisis is still actively devalues the yuan.
You should pay attention to another news. The same is preparing a new Xiaomi Mi5 smartphone powered by the Snapdragon 820. It has already received great reviews and without flaws of its predecessor. The flagship Xiaomi will enter the market on 8 February, the Chinese New year. And this is only the first of the unpleasant surprises for Apple, because other manufacturers will also begin to sell the devices on the basis of this stone.
Another problem: the iPhone 6s is too much like its predecessor. As in the case with the 5 and 5s, many users see no reason to change to a new smartphone. Against this background Apple is actively considering new design solutions. Appeared on the market rumors that the Cupertino discuss three radically new look of the iPhone. But in the coming months, i.e. before the release of iPhone 7, this will not help Apple. Maybe that’s why it is rare to meet a smile on the face of the CEO of the company.
What will bring “Apple” this new year? Is it possible to restore capitalization? Vestifinance analysts believe that to exclude such a scenario is impossible, but it is possible only if demand in the Chinese market will recover. Once China is completely dependent on the export of their products to other countries and could fall into recession due to financial problems of customers. Now Apple’s business is directly dependent on demand in China and other emerging markets. You can switch to India, but there the popularity of the products of the premium segment is still limited.
In addition to sales in China, Apple’s success will determine next generation iPhone and action “androids”, which is at the end of last year I’ve taken a breather before another throw.
If we talk about the goals for the that Apple put Analytics, they all remain above $100. The variance from the $102 from Rosenblatt to $179 at Piper Jaffray. Considering the very modest ratio P/E 10,54 (Google – 30,12) and overall negative market conditions, not to mention a rich cushion of liquidity and a generous buyback programs, it is clear why experts are not waiting for disaster. But the key word here is “yet”.
Even if Apple’s stock for some time will grow no thanks, one bad report can dramatically change investor sentiment. Component suppliers Qorvo and Cirrus Logic, warned that orders for production of chips became smaller. If the business Tim cook will report on the drop in sales year-on-year buyback programs, and even a favorable ratio of P/E will not be able to keep an American company from the loss of market capitalization, which is directly dependent on market share.