Apple Inc. (AAPL): iPhone Market Share to Drop, Says Analyst

Apple Inc. (NASDAQ:AAPL) is due to release its quarterly earnings report this week, and here are pretty high expectations for the company in the wake of launching the iPhone 5, and the iPad Mini. One analyst, however, came out with a note Tuesday suggesting that observers should dampen their expectations  of the numbers, saying there is evidence that suggests the company might see a drop in profits for the first time in a decade and that the iPhone will lose market share due to waning demand for the device.

First, in a blog post on the Financial Post Web site, there is a prediction that Apple Inc. (NASDAQ:AAPL) profit will drop 2 percent this quarter, which will mark the first drop in profit since 2003 and just the second quarter in the last 10 years where Apple profits didn’t jump by at least 10 percent. However, the consensus of analysts is that sales of Apple products are expected to be up 18 percent to nearly $55 billion, though it’s expected to be the slowest rate of growth since 2009.

“Sentiment could not be worse,” said Peter Karazeris, an analyst at Thrivent Financial for Lutherans. “It does take something fundamental to turn that, and we’ll see if they can deliver.”

In a related note, Citi analyst Glen Yeung wrote in his research note that he sees evidence that Apple Inc. (NASDAQ:AAPL) is expected to lose market share with its iPhone to aggressive competitors like Samsung Electronics Co. Ltd. Yeung notes that a survey of suppliers reported a significant decrease in component orders for the devices – while there are others who say the decrease could be blamed more on better production efficiency than on waning demand.

“Our checks mid-December revealed initial signs of order cuts from Apple, now evident across a larger array of suppliers,” Yeung wrote. How does this affect the company?