Holiday spending may have been up headed into the end of the year, but a rising tide may not lift all boats, especially in the tech sector.
Barron’s reported that a few sell-side shops on Wall Street are ringing some early alarm bells on consumer spending that might stymie results, and investor hopes, for some technology giants, including Apple, Garmin and Fitbit.
In one instance, Raymond James Analyst Tavis McCourt said that consumer spending in the past few weeks may have been weaker than some might expect, carrying over into consumer technology. The data, said that analyst, shows qualitatively some slowdown and echoes findings by the Commerce Department that the electronics category showed some slippage, down 3.8 percent in the latest reading, measured year over year. Tech seems to stand out as a laggard with at least some bright spots, including smart devices, but the overall picture painted brought McCourt to lower Apple estimates for areas outside the U.S., including China. Overall, iPhone units now are projected to be 222 million for the fiscal year, down from a previous projection from the analyst of 240 million.
Garmin and Fitbit, he continued, saw “substantial discounting” in the month that just ended, which may squeeze margins a bit. Both companies may feel the impact of a wearables market defined as mature, with weaker-than-expected U.S. sales performance. Those sentiments echo other research showing wearables gaining less traction than expected. IDC said late last month that Apple’s own watch sales are not benefitting from as much uptake as expected (down 71 percent year over year), and Fitbit may also be seeing weaker demand.