IPad Sales May Miss Estimates as Customers Trim Spending

Apple Inc.’s iPad and other tablets may not sell as well as analysts had estimated as customers cut back spending on new technology or opt for new smartphones and laptops instead, according to Rodman & Renshaw LLC.

Apple, which sold 4.19 million iPads last quarter, may have trouble hitting some analysts’ estimates of 6 million sold in the fourth quarter, said analyst Ashok Kumar, who predicts Cupertino, California-based Apple may sell as few as 5 million of the touch-screen tablets.

Tablet computers, which let customers watch videos and read digital magazines and books, are still a “tweener” niche with limited capabilities that might prevent consumers from adopting the technology as quickly as some industry analysts had forecast, Kumar said. Samsung Electronics Co. is cutting its planned production by about 50 percent for the Galaxy after poor sales, he said, citing discussions with suppliers.

“It’s a nice-to-have product, for those of us who don’t have a budget, but is it a must-have product? I don’t think so,” said New York-based Kumar, who rates the shares “market outperform” and doesn’t own any.

Apple has allowed other retailers, including Verizon Wireless, AT&T Inc. and Wal-Mart Stores Inc., to sell the device in the U.S. as it looks for ways to increase sales. The company had captured 95 percent of the global tablet market in the third quarter, according to researcher Strategy Analytics.

Photographer: George Frey/Bloomberg

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Photographer: George Frey/Bloomberg

An Apple iPad tablet computer is displayed for a photo.

Tablet Market

A number of handset makers are betting on growth in the tablet market. Sales of the devices will almost triple worldwide to 54.8 million units next year as they invade the markets for netbooks, e-readers, gaming devices and media players, researcher Gartner Inc. said in a report last month.

Research In Motion Ltd., which makes the BlackBerry line of smartphones, will release a tablet for less than $500 in North America in the first quarter to compete with the iPad. Dell Inc. has released its Streak tablet with a five-inch screen. Motorola Inc. is also planning a tablet release early next year, co-Chief Executive Officer Sanjay Jha has said.

Trudy Muller, an Apple spokeswoman, declined to comment. The Galaxy Tab has only been available in some markets for a few days and it’s too early to make predictions about sales, said Kim Titus, spokesman for Samsung’s U.S. business.

“We do expect this device to be a very hot holiday device,” he said in an interview.

Apple declined $8.63, or 2.7 percent, to $308.03 in Nasdaq Stock Market trading at 4 p.m. New York time. The shares have gained 46 percent this year. Samsung, based in Suwon, South Korea, rose 1.4 percent to 778,000 won in Seoul trading.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net.

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.

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