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Is the Apple Watch Losing Its Appeal?

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Apple Stocks

Is the Apple Watch Losing Its Appeal?

June 17 2015, 06.42am GMT


When the Apple Watch was launched in March this year, there was a lot of hype that the new gadget would be Apple’s next cash cow but analysts seem to be changing their tune.

On Tuesday, Pacific Crest analysts announced that they are currently contemplating lowering their forecast on Apple Watch unit sales for 2016.

These analysts went on to say that unless the iPhone giant introduces compelling and new functionality for the smartwatch, the unit sales are likely to decline.

According to a note to clients by Andy Hargreaves, an analyst at Pacific Crest, while Apple Inc. (AAPL, +0.54%) witnessed strong demand for their new gadget initially, the follow-in interest for the Apple Watch seems to be declining.

Hargreaves had estimated the sale of 11 million Apple Watch units in 2015 and this number has remained unchanged.

After suppliers indicated that there has been a decline in the volume of component orders until September this year, Hargreaves believes that the forecast of 24 million units for 2016 will need to be adjusted lower.

When Apple was approached about this matter, they declined to respond.

Despite the possible reduction in Apple Watch sales over the next year, Hargreaves does strongly believe that the sales and high retention rate of iPhones will continue to support the buyback activity and cash flow at Apple.

Interestingly, if we look at the initial estimates of orders for iPhone components for the 4th quarter, it is likely that Apple will see a stronger than expected demand for the next cycle of iPhone sales.

In early morning trade on Tuesday, Apple shares traded at $126.76, down 0.1 percent. Over the last 3 months, these shares have advanced 1.5 percent compared to a decline of 0.7 percent for the Dow Jones Industrial Average (DJIA).

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