Best Buy said flagging mobile sales were primarily to blame for a year-over-year drop in its holiday revenues, yet another indicator that the smartphone market is plateauing in the U.S. and other regions.
The electronics retailer said its U.S. revenue declined 0.8 percent during the 2015 holiday season compared with the previous year, noting that dip "was primarily driven by the mobile phone category, which was softer than both our expectations and the prior year." Domestic revenue increased year-over-year excluding mobile phones, Best Buy added.
The company updated its fourth quarter outlook in response, saying it now expects a 1.5 percent dip in revenue during the quarter compared to previous expectations of "near flat" revenue due to lesser demand for mobile phones as well as declines in other categories that were more severe than expected. The company also reported "significant declines" in the sales of tablets and digital imaging products.
Meanwhile, the Wall Street Journal reported that slowing iPhone sales are forcing Apple's (NASDAQ: AAPL) component partners to warn of lower-than-expected first-half revenues. Chipmaker Taiwan Semiconductor Manufacturing Co. said softening demand for high-end smartphones would result in a decline in its first-quarter revenue by as much as 10.8 percent over the previous year. Suppliers Samsung, Largan Precision and Catcher Technology are also being affected by the slowdown in iPhone sales.
And Walter Piecyk of BTIG joined the growing crowd of analysts cutting short-term estimates of iPhone sales, saying "the noise and consistency of supply chain data points has become too loud to ignore." A fourth-quarter contraction in the phone upgrade rate in the U.S. "provided an incremental headwind to sales growth," Piecyk said, conceding that "we should have acted earlier in noting the weakness in the Q4 phone upgrade rate of wireless operators in the United States."
BTIG maintained its "Buy" rating for Apple shares, however, and didn't revise its price target of $160.
Piecyk's thoughts echoed those of Morgan Stanley's Katy Huberty, who last month predicted that iPhone sales will dip by roughly 3 percent in 2016. And market research firm IDC said in August that worldwide smartphone sales growth in 2015 would be slower than expected as China -- which remains the world's largest smartphone market, although India is closing quickly -- joins the U.S. and Western Europe "in a more mature growth pattern."
For more:
- see this Best Buy press release
Related articles:
Analyst: iPhone sales to shrink 3% next year
Apple raked in 94% of smartphone industry's profits in Q3, analyst estimates
Apple sells 48M iPhones, just below Wall Street expectations
IDC: Smartphone growth to be weaker than expected in 2015 amid China slowdown