Retina iPad Mini Release Date Nears: Apple Hints At Supply Shortages Amid Concerns About Slower Holiday Sales

 @KukilBora
on October 29 2013 7:08 AM

During Apple’s (NASDAQ:AAPL) fourth quarter earnings call on Monday, CEO Tim Cook cautioned analysts and investors that Apple might not be able to meet demand for the new Retina iPad mini this holiday season, adding to concerns stemming from the company's forecast of slower holiday sales growth in 2013.

On Monday, Cook was reluctant to guarantee investors that the company could produce enough Retina iPad mini units to satisfy consumer demand, and said: “It's unclear whether we will have enough for the quarter or not,” in response to a question from Steve Milunovich, an analyst with UBS. “We know how many we will have, but you really don't know the demand until you start shipping.”

While the fifth-generation iPad Air will be released on Nov. 1, the Retina iPad mini is said to become available later in November. The fact that the new iPad mini is launching after the new full-sized iPad also could be interpreted to mean that Apple may not be able to meet demand for the new 7.9-inch tablet this holiday season, Apple Insider reported.

Prior to the announcement of the Retina iPad mini last week, multiple reports surfaced predicting that production issues could limit the device’s supply through the end of this year and until early 2014.

Last week, Timothy Arcuri of Cowen and Company said in a note to investors that the Retina iPad mini could face tight supply constraints ahead of this year’s holiday shopping season as Apple is expected to encounter problems with producing the high-resolution displays for the tablet. According to him, the company is not expected to ramp up production of its Retina iPad mini 2 until early 2014.

Following Apple’s announcement of the new iPads, Rhoda Alexander, an analyst at IHS iSuppli, also noted that the supplies of the Retina iPad mini would be “severely constrained.”

“The supply of the Retina Mini is going to be ridiculously tight in the fourth quarter,” Alexander was quoted by The Telegraph as saying. “Apple’s 2013 iPad shipment growth is shaping up to be comparatively modest and the shift in launch cycles has played a major role in the slowdown.”

Despite the new iPad mini's potentially supply constraints, Cook told analysts that the company would do “fairly well” in overall iPad sales this quarter, thanks to high quantities of the iPad Air.

“I think it's going to be an iPad Christmas,” Cook said.

When the iPad Air hits stores on Nov. 1, Apple is expected to offer same day in-store pickup for orders. Meanwhile, the company has forecast the slowest holiday sales growth in five years, indicating that iPhones and iPads are no longer providing the growth they once used to offer.

During the Q4 earnings call, Apple estimated that its revenue for the current quarter would be in the $55 billion to $58 billion range, up 0.9 percent to 6.4 percent, from $54.5 billion in 2012, which represents the slowest holiday-sales rise since 2008, when the company’s revenue was up 6 percent, Bloomberg reported.

Many analysts believe that new products would help Apple regain its foothold as both the smartphone and tablet markets have become increasingly crowded.

According to Strategy Analytics, Apple’s worldwide smartphone market share in the last quarter was about 13.4 percent, down from 15.6 percent during the same period in 2012. During the same period, Samsung’s (KRX:005935) global share in the smartphone market rose to 35.2 percent from 32.9 percent.

Apple’s share of the tablet market has also declined, as its competitors introduce new products at comparatively lower price points. According to International Data Corporation, Apple’s worldwide table market share dropped 27.9 percentage points, year-on-year, to 32.4 percent from 60.3 percent in the second quarter of this year.

“The question is, can they return to growth?” Walter Piecyk, an analyst at BTIG in New York, told Bloomberg. “You had a company that was growing, and then it went negative.”

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