Apple misses quarterly sales; disappoints for the first time in years
By Hayley Tsukayama,
Apple failed to meet quarterly expectations Tuesday, a rare miss for the electronics giant, as sales of its signature iPhone disappointed analysts and prompted a late sell-off of the stock.
The firm, the most valuable company in the world before the after-hours trading dip, still racked up $6.6 billion in profit over the past three months, a record quarter for the Cupertino, Calif., company. That would have been an impressive performance for most companies other than Apple, which has defied the highest of analyst expectations in quarter after quarter.
But the string of mighty results ended Tuesday. Now the company is fighting a view among a small but growing number of analysts who speculate that the company’s otherworldly sales growth will slow.
Steve Jobs, its iconic founder, died Oct. 5, raising questions over whether Apple could continue to invent category-busting products. Its competitors are rapidly stealing market share, particularly in the smartphone business. And Apple’s unveiling of its latest iPhone — which was more of an update than a groundbreaking release — disappointed some fans and experts.
Shares reached a record of $422.24 before the close of regular trading and then fell sharply after-hours when Apple released its quarterly figures. The stock was down almost 6.5 percent at one point Tuesday evening.
“Expectations just got too hot,” said Colin Gillis, a technology analyst for BGC, who stopped recommending the stock to investors earlier this week. “Just to hit expectations, Apple has to sell over half a million devices every single day.”
“That doesn’t mean that Apple’s not going to be putting out billions of profits, but growth is slowing down,” he added. “It can’t not.”
The quarterly results were the first of chief executive Tim Cook’s tenure. During a conference call, he played down the low iPhone sales figures, saying that he is confident that the company will set a record for iPhones this holiday season.
“We knew that there was great anticipation of a June or July iPhone,” he said, which may have led consumers to delay their purchases.
He noted that the company sold more than 4 million iPhone 4S handsets in its first three days, a record (those results were not included in the quarter). By comparison, the iPhone 4 sold 1.7 million units in its first weekend.
Cook also pointed to China and other world markets where Apple is seeing fertile opportunities and selling gadgets as fast as it can make them. “The sky’s the limit there,” he said.
Once nearly extinct, Apple has been one of the best-performing stocks of the past decade. Its shares have shot up almost 6,000 percent since 2003, and the company took over the mantle of most valuable company in the world this year from ExxonMobil. The stock is now one of the most widely held in America – so when it does well, so does much of the country.
But the company’s revenue has become increasingly dependent on the iPhone, which is in sharp competition with devices running Google’s Android software. Collectively these rivals now have a higher share of the market. Apple’s 17 million iPhone sales for the quarter fell short of the 20 million most analysts were expecting.
Apple sold more iPads and Mac computers than those analysts were expecting. Its overall revenue of $28.3 billion was about $1.5 billion less than forecasts.