British vote to leave EU may hit Apple

Fallout from the UK’s decision to leave the EU is adding to Apple’s woes.

An economic slowdown and currency fluctuations following the UK’s June 23 referendum are contributing to weaker demand for Apple devices, according to Citigroup Global Markets analyst Jim Suva. 

The vote result is intensifying a broader challenge facing Apple of customers not upgrading their iPhones as frequently.

With the outlook unlikely to improve anytime soon, Mr Suva predicts Apple’s financial results will come in below Wall Street’s projections.

His report shows how the Brexit vote may have economic impacts that aren’t yet well understood by firms around the world. 

Real estate firms, banks, grocers, and airlines are among those grappling with the fallout.

Apple reports financial results on July 26.

The roots of Apple’s slowdown go far beyond UK politics. 

With high-end smartphones already available in much of the world, the company is simply running out of new people to sell iPhones to. 

A lack of fresh high-profile features in the recent models has made it easier for people to hold off on buying a new handset.

Mr Suva said the iPhone replacement rate has expanded from 24 months in 2013 to 28 months in 2016 — and may extend to 36 months. The trend already contributed to Apple reporting its first quarterly sales decline in 13 years in April.

The ripple effect is being felt by suppliers who provide components for Apple’s devices. 

With demand expected to be lighter for the upcoming iPhone 7, Pacific Crest Securities lowered its outlook for a slew of companies within Apple’s supply chain yesterday, including semiconductor companies Cirrus Logic, Skyworks Solutions, and Qualcomm.

Meanwhile, it has emerged BlackBerry will no longer manufacture the BlackBerry Classic, a beloved, updated model of the original that made the company a smartphone leader before Apple entered the scene.

Chief executive John Chen introduced the Classic after joining the company in 2013, bringing back the raised- button keyboard that BlackBerry enthusiasts loved, and which his predecessor, Thorsten Heins, let fall by the wayside with his push to full touchscreen devices.

The decision to end production of the Classic is one step further toward eliminating the BB10 operating system, which will now only be running on the Passport model, in a pivot to newer phones running on the Android platform.

Bloomberg


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