Last updated: July 25, 2012 12:03 am

iPhone 5 gossip hits Apple profits

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Apple, the most valuable public company, missed Wall Street forecasts with its third-quarter revenues and earnings as fans held out for the next iPhone.

The California-based company sold 26m iPhones in the three months to June 30, up 28 per cent on the same period a year ago and topping the company’s own guidance. But the figures marked a slowdown in the rate of growth over recent quarters, sending its shares below $600 in after-hours trading.

By missing analysts’ estimates, Apple has raised the stakes for its next iPhone – and the rumoured smaller iPad or new TV that many expect to be released this year – as it faces a growing competitive and legal challenge from Samsung.

Gossip about the next generation of iPhone, expected to be a more significant upgrade than the iPhone 4S was over its predecessor, has already begun to dissuade buyers ahead of an expected autumn launch, Apple said on Tuesday.

The company saw a similar build-up of anticipation weigh on sales before October’s iPhone 4S release but the impact has been earlier this year.

“IPhone sales continue to be impacted by rumour and speculation around new products,” said Peter Oppenheimer, Apple’s chief finance officer. Flat growth in Europe was also a drag, with France, Greece and Italy all particularly weak.

But Tim Cook, Apple’s chief executive, said that sales of the smartphone in the US and China remained robust, with sales in mainland China doubling in the past year despite a sequential revenue slowdown overall. “We are not seeing anything there we would classify as an obvious economic issue,” he said of its two largest regions.

Apple’s revenues of $35bn compared with analysts’ estimates of around $37.2bn, while earnings of $9.32 per share were also below forecasts of about $10.32. The company’s cash pile grew by $7bn in March to $117.2bn by the end of June, ahead of the company’s planned dividend payout and share buyback.

Apple’s shares fell more than 5 per cent in after-hours trading to $569.75, after earlier closing 0.5 per cent lower at $600.92.

Sales of the iPad, the latest model of which was launched in March, leapt 84 per cent year-on-year to 17m devices, beating expectations. Sales of the older and cheaper iPad 2 were particularly strong in the US educational market, Mr Cook said.

Apple said that iPhone unit sales fell 26 per cent sequentially, with revenues down 28 per cent over the first quarter.

Mr Oppenheimer told analysts that Apple’s gross margin, which grew year-on-year but fell sequentially, would be 4 percentage points lower at 38.5 per cent in the next quarter, due to the impact of a stronger US dollar and a “fall product transition”.

Although no further details were provided about this lower-margin product, it may point to a widely rumoured cheaper iPad to compete with Google’s $200 Nexus 7 tablet or a lower priced iPhone. Mr Cook also said that Apple TV, the $99 set-top box which has sold 4m units in the last nine months, was still a “hobby but we continue to pull string to see where it takes us”.

Despite anticipation of new products dampening sales growth, Mr Cook concluded: “I’m glad that people want the next thing. I’m super happy about it.”

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