Memo to Apple: Prepare for weak Christmas season sales or something

“Numerous seasoned retail analysts have already labeled the looming 2013 Holiday Season as the worst sales event of its kind since 2008. In 2008, Americans were coping with the fallout of a credit crisis that was the epicenter that jarred the real estate and stock markets into major corrections,” Kofi Bofah writes for Seeking Alpha. “This year, American consumers have been left to navigate after affects of a government shutdown, alongside the ongoing launch of The Affordable Health Care Act, or Obamacare. Earlier this year, Social Security payroll taxes increased from 4.2% to 6.2%. The additional taxes are most likely to affect the buying habits of middle-income Americans. Prospective Apple customers are now in the market for value, instead of performance, or whatever hipsters may believe to be cool.”

“A recent report out of investment bank Morgan Stanley warned retailers to ‘expect coal’ throughout this 2013 Holiday Season. Morgan Stanley analysts foreshadowed a slight 1.6% year-over-year increase in comparable store sales (Morgan Stanley estimates exclude J.C. Penney) through this Holiday Season and fourth calendar quarter,” Bofah writes. “According to Morgan Stanley, the projected scant growth in sales is solely due to an expansion of the population, rather than heightened consumer interest. The National Retail Federation did anticipate that gift spending per person would actually decline by 2.5% to $536.85 during the 2013 Holiday Season. Most likely, this coal-in-stocking undertow will also drag down Apple results.”

“A weak 2013 Holiday Season would foreshadow another year of flat earnings statistics at Apple. The stock market functions as a pricing mechanism to discount future growth, rather than immediate balance sheet snap shots,” Bofah writes. “As such, the $146.8 billion in cash and securities now lying fallow on the Apple books shall not be mistaken for game changing innovation. Apple may very well begin to trade like a utility through 2014.”

Read more in the full article here.

MacDailyNews Take: iCal’ed.

Bofah doesn’t understand Apple customers.

The fact is that Apple customers are among the least likely to be affected by macroeconomic conditions to the point of forgoing Apple products during the holiday season. Worry about HP, Microsoft, McDonald’s, Samsung and Walmart, Kofi, not Apple.

In addition, Apple is a global company. While the U.S. is indeed an important market for Apple, it certainly isn’t the only market into which Apple sells.

Related article:
Android has the most unit share, but Apple dominates profit share, making more money than all Android smartphone makers combined – November 15, 2013
Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013
What we mean by ‘Hee Haw demographic’ – November 13, 2013
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
Android phones 3 times more likely than Apple iPhones to have been bought at discount store – August 22, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013
Twitter heat map shows iPhone use by the affluent, Android by the poor – June 20, 2013
Apple’s iPhone generates more in carrier fees than rival smartphones – January 30, 2013
Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012

26 Comments

  1. Your take is wrong, and your understanding is weak. The prediction is for OVERALL weakness in the Xmas sales holiday. Whether Apple succeeds or not is beyond the scope of the discussion.

    1. Did you bother to read the article or even the title of the article? Yes, the article was about weak holiday sales, but the other half focused on how Apple (and shareholders) should be worried about it.

      The article is rife with predictive “will” and “would” and “shall” statements. So, not only is it based largely on speculation, the author also makes it pretty clear he doesn’t really understand Apple, its products, or the customers who buy those products.

      MDNs take is dead-on. Historically, this is Apple’s best quarter of the year, and this season “will” no doubt be any different. In fact, it wouldn’t surprise me if this wasn’t Apple’s best holiday quarter ever, in spite of the “overall weakness”.

        1. poeple who spout, “turrets-like”, without taking time to absorb, won’t get it even if you give it to them 1000 times.

          just leave him alone.

          nothing to see here.

          move along

    2. The article itself is wrong. The government shutdown didn’t have long-lasting effects for most people. Even government employees furloughed received back pay.

      Social Security taxes going up 2%? Most people won’t notice. And if anything, people will be shopping for value and quality gifts and lay off the cheap junky impulse buys they throw in at the last minute, none of which affect Apple’s sales.

  2. Apple customers have always been in the market for value and are smart enough to understand that buying cheap rubbish is a false economy. Under the present economic climate, Apple will fare significantly better than most other companies as their customer base is more resilient.

    The manufacturers who are going to struggle will be those who offer cheaper options, who will find themselves facing pressure from companies that can offer an even cheaper alternative.

  3. This is just the first of millions of these articles to fill white space from the hissing masses. Empty brain-housing-groups have just begun to whine and what we’ll see between now and Apple’s next earnings call will continue to astound… just push the headphones in further..

  4. I’ve never been rich. So I drive a modest car and live in a modest condo. But with consumer electronics, I can rather easily afford Mercedez, so I go Mercedez. It’s just spelled Apple. This is the point that the vast majority of those who don’t understand Apple miss. Why drive a Chevy or Ford when I can easily afford a Mercedez?

  5. Didn’t Apple do extremely well in Christmas of 2008?

    I remember there being articles explaining Apple’s high holiday sales numbers at the time with consumers treating themselves to small luxuries to not think about the recession, or being more selective and value-conscience where they spent hard earned money.

    1. It didn’t matter that Apple sold a lot of products during the holidays in 2008. The stock fell just as hard (to about $90 a share) as any other company because no one on Wall Street wanted to believe that a company selling expensive products could survive. I’m fairly certain Wall Street still believes this to be true about Apple and if the market falls, Apple will again be the first company to take a dive in share price and be the last to recover. That’s just Apple shareholder’s rotten fate to be dumped by the Street for any reason possible.

      1. At the end of 2008 and early 2009, AAPL fell down to below $80. It finished 2009 at over $200. I’m not sure how this qualifies as “last to recover”. It outpaced almost everyone else by a very large margin.

        Let us not revise history just because the narrative works better for our current story.

    2. Memo to analysts: enough with the oracular drivel. I can’t be bothered to read all of it.

      The gist seems to be that in poor economic times people spend less and go on the cheap. But that argument has failed in cases like Apple.

      To take a single example, even the onset of the awful 2008 recession didn’t turn every consumer into a penny pincher, as the averagers of everything would have us believe.

      http://www.startribune.com/business/38084629.html

  6. Do keep in mind that Seeking Alpha is blog site, with contributions primarily from amateur investors. You can often read passionate trash of some 30-something blogger chugging away on his PC from the basement of his parent’s house. And if you check back a month (or quarter) or two later, the writer will posit that their investment theory was indeed flawed.

    I have read articles on the Web stating that the holiday quarter’s retail sales will either be strong or weak, just like every year. That the CEOs of Macy’s and TMX (the parent company of stores such as TJ Maxx and HomeGoods) both projected a good holiday season indicates that weak sales may not necessarily be guaranteed, nor even among retailers.

    Please take anything from Seeking Alpha with a grain, well, make that a handful of salt.

    NOTE TO MDN: Please cool it with all the link bait trash headlines based on Seeking Alpha. It’s the equivalent of using DigiTimes as the infallible source for all Apple rumors. See: http://www.tuaw.com/2013/11/25/rumor-roundup-the-spice-must-flow/

  7. Uncertainty due to Obamacare is most likely driving this, poor people don’t have any money to spend anyways, the rich will always spend, even in the zombie apocalypse, it is once again, the middle class that gets the shaft thanks to the tax and spend democrats and Barry. Shitcan them all….

  8. Look, if you want a really good chuckle, subscribe to Seeking Alpha’s AAPL posts (see also, “mas-e-kis-m”). Then, just read the subject lines as they hit your mailbox. It’s pure comedy. And, yeah, a clock is right twice a day, and some of those people make a decent point. But, SA is just a larger representation of Rocky Pendejo’s delusion and subsequently has become really silly.

  9. He’s never visited an Apple store obviously.
    He should really go get a reality check by actually visiting an Apple Store right now and he will see the absolute opposite of the FUD he just posted here.

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