Will Apple’s Next Few Quarters Be Weak?

Supply chain issues have worried yet another firm; Citigroup’s Glen Yeung discussed the firm’s negativity toward Apple (NASDAQ:AAPL) stock and expectations about future products in a research note circulated Monday to CNET.

Last week, there were many reports suggesting that Apple product forecast for the summer might be delayed anywhere from 1 to a few months. Some key supplier for Apple components had lowered their revenue estimates, which suggested that they might be hurt by lower-than-expected orders from Apple. This kind of activity has lead many analysts to believe that Apple’s devices wouldn’t come out within the predicted time frame.

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The rumored iPhone 5S was expected to be launched in June, but now some analysts think it could be pushed back to July or even August, taking it out of Apple’s second quarter and dropping it into the third quarter. An iPhone 6 isn’t expected to launch within the year.

The next-generation, 10-inch iPad and maybe even the iPad Mini 2 could also see some delays if there are any problems with suppliers, but what’s worse, some are expecting weakened sales for the devices. The next 10-inch iPad could, and seems likely to, follow the downward trend that has been set year-over-year and sequentially…

Consensus expectations for Apple’s revenue growth in the fiscal fourth quarter were set at 12 percent, but the delays in products could affect that estimate. Weakening demand has already lead analysts to expect Apple’s second-quarter results to be at the low-end of its guidance, around $42.6 billion, when the company makes its earnings call Tuesday.

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Citi remained negative on Apple’s stock, suggesting that investors don’t buy it. However, the analyst does expect a capital allocation strategy in the third quarter, which could include a share buyback program between $8 billion and $10 billion. The total capital allocation strategy could cost anywhere from $20 billion to $25 billion. Citi also predicted an increase in dividends to $3.05 per share. To do all of this, Apple may need to repatriate cash or take on debt.

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