Apple posts strong financial quarter: But iPhone slump may also exceed seasonal dip

Apple Inc. posted impressive gains in revenue (43%) and profit (36%) in its fiscal second quarter, but analysts said the iPhone’s sales momentum has stalled more than what can be attributed to the post-holiday quarter effect.
Apple also delivered a forecast that fell below analysts’ expectations, raising concerns that a slowdown in consumer spending could indeed take its toll on the company. Despite its outlook, the iPhone maker stuck to its original forecast of selling 10 million units worldwide by the end of this year.
Reports that iPhones were out-of-stock at certain U.S. Apple stores in the past month raised questions of whether the cause was tight inventory control ahead of a 3G launch, component shortages or another factor.
Apple shipped 1.7 million iPhones in the first quarter, down from the 2.3 million shipped the prior quarter. That translated to a market share drop from .7% to .6%, according to Strategy Analytics.
“The upcoming (presumed) launch of the 3G iPhone in June is sorely needed and Apple must not repeat the mistake of overpricing its new, second-generation device,” said Neil Mawston analyst at Strategy Analytics.
Ben Wood at CCS Insight said that T-Mobile Germany’s recent price cut and, thus, introduction of a subsidy, to the iPhone signaled more than inventory management ahead of a 3G launch.
Wood pointed out that Apple’s attempt to expand its international markets for the iPhone have stalled, with its recent launch in Ireland and Austria merely an extension of pre-existing agreements with Euro operators. Expectations that the iPhone would enter markets in the Asia-Pacific region early this year have not come to fruition, he said.
“Other operators appear to have decided that Apple’s contractual terms (which include revenue-sharing of resulting data usage) are not attractive,” Wood said. “(We) believe Apple needs to rethink its approach. … Apple’s secretive and U.S.-centric approach to conceiving the iPhone has resulted in some missteps in its marketing strategy.”