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Apple's iPad Sales Weren't Shockingly Low, But They Are Declining

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Apple's (NASDAQ: AAPL) tablet franchise is not performing as poorly as some had feared, but iPad sales are definitely declining.

"They were low," Andy Hargreaves, Senior Research Analyst of Digital Media at Pacific Crest Securities, told Benzinga. "Our estimates were low compared to most people's, so it wasn't a huge shock to me."

Earlier this week, Hargreaves said that he expected Apple's second quarter earnings to show further evidence of deceleration or saturation in the tablet market.

On Wednesday, April 23, Apple announced that it had sold 16.35 million iPads during the March quarter. This represented a significant decline from the year-ago period when Apple sold a record-breaking 19.5 million tablets.

Related: Apple's 12.9-Inch iPad Rumored For October 2014

"For the vast majority of people, it's their device," Hargreaves said of the iPad. "And it's a device that lasts a fairly long time. Put those two things together and you end up saturating the market faster than you would with an iPhone, for instance."

Market saturation risks have yet to plague the iPhone. Apple sold an impressive 43.7 million units in the quarter, which is notably higher than the 37.4 million units that were sold during the year-ago period.

iPod sales are down to a trickle, however. Apple sold a mere 2.7 million units, indicating that this device may be approaching its swan song.

Investors may fear that the iPad will follow a similar path, but that is not likely to happen. Unlike the iPod, which can be replaced with a high-end smartphone (such as an iPhone), the iPad is not easily replaced. Sales may continue to fall because of saturation, but it will still be a big part of Apple's portfolio.

That said, this sales decline could gain the attention of analysts who want Apple to release an entirely new set of products. They think that if Apple doesn't broaden its product lineup, sales will not increase.

One analyst even fears that Apple may slowly turn into the next Sony.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Latest Ratings for AAPL

DateFirmActionFromTo
Sep 2014JefferiesInitiates Coverage onHold
Sep 2014Evercore PartnersMaintainsOverweight
Sep 2014Pacific Crest SecuritiesDowngradesOutperformSector Perform

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