Apple faces a few challenges that could take a bite out of iPhone and iPad sales next year, at least in the opinion of one analyst.
In an investors note out today, UBS analyst Steven Milunovich slashed his iPhone sales estimates for the March, June, and September 2013 quarters by 5 million units each quarter. Sales estimates for the iPad were cut by 2 million per quarter for the same three periods.
The analyst now expects Apple to sell 41 million iPhones in the March quarter, 36 million in the June quarter, and 33 million in the September quarter. iPad sales are forecast at 21.7 million in the March quarter, 24.5 million in the June quarter, and 20.7 million in the September quarter.
In line with the lower estimate for unit sales, Milunovich also trimmed his earnings estimates for Apple for fiscal 2013 and 2014 and lowered the stock's target price to $700 from $780.
Why the dour outlook? Milunovich cited a few reasons.
Supply chain checks show that the manufacturing rate for the iPhone is dropping to 25 million units for the March quarter. The iPhone 5 is just now starting to sell in China, but UBS's Chinese sources don't think it will sell as well as the iPhone 4S.
The lower-priced iPad Mini looks to be cannibalizing sales of the larger and more expensive iPad.
And finally, the analyst believes his previous estimates were too aggressive in light of the lackluster economy in Europe and rougher competition from other smartphones.
The analyst did throw Apple a bone, citing some optimism ahead.
"We expect that China Mobile may start to sell iPhones in the Dec quarter, so a summer 5S with TD-SCDMA and fingerprint recognition is possible," Milunovich said. "Apple is driven to make beautiful products. Whether it is an iTV, wearable computers, or another new product category, we have faith that innovation is not dead."
Earlier this week, Jefferies analyst Peter Misek struck a bearish tone when he cut his price target for Apple stock to $800 from $900.
Apple was once the dominant smartphone and tablet player. But lately the company has been challenged on both fronts. Samsung's Galaxy S lineup and other Android smartphones have given the iPhone a run for its money. And the iPad's market share has been sliced by an array of lower-cost Android tablets.
The company has also put itself in a dicey position by releasing so many new products around the same time -- the iPhone 5, the iPad Mini, the 4th-generation iPad. Though the new devices are positioned to take advantage of the holiday buying season, the timing of them puts a temporary strain on Apple's profit margins.
Apple's stock has been battered the past couple of months. From a high above $700 in September, the stock has slipped almost 200 points. In trading early this morning, shares were hovering around $514.