SEOUL, Jan.29 (Korea Bizwire) – Two leading tech giants, Apple and Facebook, seem to be in different leagues given their recent performance. With demand for smartphones on the wane, industry watchers even predicted a quarter of negative growth for Apple. On the other hand, Facebook is performing far better than market expectations.
On January 27, Apple’s share price dropped 6.6 percent to $93.44. This was the lowest price since mid-2014. Compared to the stock’s high in February 2015, Apple shares have lost a quarter of their value.
The drop has been caused by disappointing sales of Apple’s recent iPhone models. Industry watchers expect that Apple’s sales will actually drop in the third quarter of this year.
The iPhone is the product that represents Apple, as it is responsible for two thirds of the company’s overall sales. However, the global economic slowdown and the saturation of the smartphone market lead to disappointing sales in key markets such as China and Hong Kong. The strong dollar was another blow for sales, and competition with other manufacturers such as Samsung Electronics and Huawei is fierce.
Apple is trying its best to shift from hardware to software. Tim Cook, Apple’s CEO, mentioned “Apple has never been a hardware company” at a conference in February 2015. He emphasized that Apple is the only company that has an organic connection between hardware, software and services.
However, according to a report from the Financial Times (FT), Wall Street investors are evaluating Apple as a ‘hardware’ company. Sales derived from services such as the app store only reached 7 percent of Apple’s total sales in Q4 of 2015.
The Financial Times points out that changing the perception that Apple is dependent on the sales of iPhones will take a long time.
In contrast, the world’s largest social network, Facebook, showed a drastic leap in sales. From Q4 of 2011 to Q4 of 2015, sales increased fivefold. Facebook’s Q4 sales reached $5.84 billion, which exceeded market expectations of $5.37 billion.
The number of people who log on to Facebook every month reached 1.6 trillion, which is one fifth of the total global population. More than one billion people use Facebook every day.
As people are increasingly using Facebook on their mobile phones or tablet PCs, the share of mobile among profits from ads in Q4 expanded to 80 percent. This represented an 11 percentage point increase compared to the 69 percent the previous year.
Since ‘mobile’ is the latest industry buzzword, and Facebook has the upper hand in the field, industry watchers expect at least 20 percent of the total sales of online advertisements in America will come from mobile ads on Facebook.
Currently, ‘FANG’ companies are in the spotlight. ‘FANG’ is an acronym for the four companies – Facebook, Amazon, Netflix, and Google – that pulled up the American stock market in 2015.
The New York Times reports that investors are migrating to FANG stocks instead of Apple, as FANG company sales are growing at a rate of 23 to 40 percent, while Apple only achieved 1.7 percent growth.
In the meantime, negative prospects are stirring in a corner, as the FANG stocks are also weak with American stock prices dropping due to the economic shock from China.
By Francine Jung (email@example.com)