The designer of processors for Apple’s iPhone, United Kingdom-based ARM Holdings, reported earnings Tuesday in a mostly positive call, but there was one comment with regard to a drop in future high-end smartphone sales that may give potential buyers of Apple pause.
The reason I pay a lot of attention to the details of ARM Holdings’ UK: ARM business is because such details provide one of the most reliable independent data sets about smartphones, especially about Apple AAPL. About 95% of the world’s smartphones have an ARM processor.
After adjusting for extraordinary items, earnings for ARM Holding came at GBP0.05 compared to consensus of GBP0.06; revenues came at GBP189.1 million vs. consensus of GBP183.72 million. The company guided mostly in line with consensus. In spite of good earnings, the stock got crushed before recovering later in the day.
The most interesting quote from the conference call was, “And while it will be a glorious thing if everybody on the planet spends $700 on smartphone, it just isn’t going to happen.” This is a reference to iPhones. This common-sense statement points to a flaw in many analyses of Apple.
The company estimated that in 2013, 1.1 billion smartphones were sold in the world, bringing the total to about 2 billion. The company stated that the growth is in entry- and mid-level phones, and that high-end-phone sales are slowing. Herein lies the problem for Apple. When Apple stock was in full bloom approaching $700, I wrote that the high-end smartphone market in developed countries was near saturation, and that would cause trouble for Apple…Read more at MarketWatch
