The slightly weak guidances from handset chip names like Qualcomm and Texas Instruments seemed to indicate that European demand went wobbly in June.
Apple‘s small iPhone miss seems to support the trend. The iPhone shortfall relative to expectations was 3 M units, with spring volume coming in at 26 M. Clearly, Europe is the issue – Apple’s European revenues declined by a surprising -6% sequentially. Samsung’s big EU product roll-outs combined with the debt crisis may have been something of a double whammy. Year on year, European sales growth cooled to 16% – still strong, but somewhat sub-par pace for a sizzler like Apple.
Europe is a far bigger source for Apple’s revenues than Asia Pacific or Japan, where the growth is still on track.
Texas Instruments discussed order weakness that surfaced at the very end of the spring quarter, with June trend deterioration. It would not be surprising if Apple was heading for a rocky iPhone autumn, with Samsung Galaxy S3 a potent force in Germany and the UK, while overall smartphone demand wilts badly in Spain and Italy.
Piece by piece, evidence of a summer mobile slump in Europe builds – from Vodafone‘s dismal revenue plunges in Spain and Italy, to KPN’s 3% sales decline, to Texas Instruments comments about order weakness.
It’s worth noting that the major economies of Spain and Italy really got sucked into debt crisis only after the spring quarter ended. The current drama’s impact on business and consumer confidence will not be evident until we see July retail numbers – which we won’t for at least a month.
In that sense, the tech investors are left sweating over just how soft the autumn quarter will be. The panic in Mediterranean debt markets is hitting just before the crucial back-to-school consumer electronics buying season kicks off in Europe.