Apple Barometer Predicts Bad Weather for March Quarter

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Analysts at Cantor Fitzgerald have compiled their Apple Barometer report for February, which examines the financial results of Taiwanese technology suppliers that make most of their profits from producing Apple (NASDAQ:AAPL) products. This month’s report, seen by Wall St. Cheat Sheet, showed that the figures for February are “well below historical seasonality.”

The survey found that sales of companies in the Apple barometer were down 28 percent in February versus January and the figure was 10 percent below the February average over the last nine years. Cantor Fitzgerald analyst Brian White said that the lower figures for both January and February are believed to have been caused by an earlier-than-usual Chinese New Year. He said the firm had expected a weak February, but “we didn’t expect sales to be as weak as they were.”

The low sales seen in both January and February caused the firm to lower its expectations for Apple’s March quarter. The firm said that it expects Apple’s sales in March to fall between 32 and 34 percent from the December quarter. The average quarter-over-quarter decline during that time period has been 17 percent.

Cantor said that with the news of CFO Peter Oppenheimer stepping down and being replaced by Luca Maestri, the company is likely to announce increased share buybacks and a higher cash dividend when it reports this quarter’s financial results at the end of April. Apple announced that Oppenheimer would retire at the beginning of the week.

In the long-term, while the iPhone 5S is still very popular for a device that has been on the market for six months, Apple is facing some big challenges in terms of an increasingly saturated smartphone market. According to recent data from IDC, global smartphone shipments are expected to drop sharply in the coming years, with the decline in mature markets like the U.S. and Europe set to show the steepest drops. Since Apple has remained dedicated to making luxury smartphones, it will be hit by these drops first and hardest. Apple’s devices don’t perform well in emerging markets because fewer consumers in those places can afford them.

Back in October, the Apple Barometer reported all time highs, rising 11 percent versus September after Apple introduced new iPhones and iPads. The figure was well above the usually flat month-to-month percentage growth seen in October for the past eight years of collecting Apple Barometer data, the firm said. Perhaps the absence of a new product along with the disruption caused by the Chinese New Year were what led to the low sales for February and are something that could be remedied by the introduction of a new product. Devices that are expected to come out this year include the much-anticipated iWatch and a revamped Apple TV.

Cantor maintained its $777 price target on Apple’s stock.

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