Apple’s (AAPL) stock got poleaxed by results from smartphone company Research-In-Motion (RIMM) which said its costs were going up and hinted that its growth might slow. Component and marketing expenses are damaging its earnings. The economy is likely to trouble its sales.
As in many cases, the market sees RIM’s troubles haunting its primary competitor, Apple, the maker of the wildly popular iPhone. The Jobs handset does have some problems with connecting to the high-speed wireless Internet, but, for the time being, customers seem willing to ignore that. Some analysts think Apple could sell five million of the devices this quarter.
The anxiety surrounding RIM’s results is that they signal a deceleration of rocketing smartphone sales. Consumers and corporations may not want to buy anything new. The economy has become one in which people have their shoes repaired instead of buying new ones and keep their cars until the wheels fall off and the radio goes dead.
Wall St. suspects that discretionary spending may be completely arrested as the economy moves into the fourth quarter. Since that coincides with the holiday season companies that get 30% or 40% of their revenue from happy shoppers, those companies may have to settle for a bad patch, one which has not been seen in a decade or more.
Apple is one of the few companies which has posted six years of sales which have defied gravity.
The seventh year may not work out as well.
Douglas A. McIntyre
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