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October 18, 2011 10:11 pm
Apple reported $6.62bn in third-quarter profits, but missed quarterly earnings expectations for the first time in years, sending its shares down more than 6 per cent in after-hours trading.
Analysts had been looking for earnings of $7.25bn, according to one survey, but Apple missed that target as iPhone sales proved disappointing. Apple said it sold 17.07 million iPhones in the quarter, up 21 per cent in units from a year earlier, but below projections of about 19m.
The iPad did better than expected, with 166 per cent increase to 11.12 million units. Mac sales of 4.89m units set a new record by growing 750,000 from last year’s period, six times the growth rate of the PC industry overall
Apple had beaten Wall Street consensus profit estimates by at least 13 per cent in each of the past four quarters, and the miss on Tuesday was a disappointment to investors encouraged by the strong early sales of the iPhone 4S, which launched after the most recent quarter closed.
After closing near an all-time high at $422.24, Apple shares fell in after-hours trading to $394.48 even though the company gave optimistic projections for the coming quarter, the latest phones and other products. Overall, earnings rose 54 per cent from last year’s $4.31bn as revenue climbed to $28.27bn from $20.34bn. Apple made $7.05 a share, compared with $4.64 a year ago.
In comments to investors, Apple’s chief financial officer, Peter Oppenheimer, stressed that the iPhone sales had been expected to decline from the June quarter as customers held out for the anticipated new model. The comparison to last year’s quarter was made harder because the previous year’s June quarter marked the introduction of the iPhone 4.
The disappointing phone performance also depressed Apple’s store revenue, which rose just 1 per cent to $3.1bn. Sales per store fell to $10.7m from $11.8m.
Favorable component costs are outweighing lowered prices on older iPhones and the lower margins on the iPad, and gross margins should stay at about 40 per cent of sales in the fiscal first quarter, the executives said. They projected revenue of $37bn in the new quarter, above previous Wall Street expectations.
Tim Cook, Apple chief executive, noted in introductory remarks on a conference call that the announcement was the first after the death of company founder Steve Jobs.
The results will turn up the scrutiny on Mr Cook and the company during its transition. Mr Cook and Mr Oppenheimer said they were pleased with the quarter, excited about the holiday season coming up, and enthusiastic about the product pipeline.
Mr Cook went so far as to say that he believes the tablet market, which Apple created and has dominated with 40m unit sales to date, would one day surpass the PC market, which is still an order of magnitude larger.
In response to questions, he said Apple and others in the industry would be affected by the monsoons and flooding in Thailand, where the company sources disk drive components. He said Apple was investigating the circumstances of a temporary factory shutdown by another supplier, Taiwan-based unibody casing maker Catcher Technology, by Chinese environmental authorities.
Mr Cook deflected questions about whether Apple might come up with new plans for a hoard of cash and equivalents that has now grown to $81bn, two-thirds of it overseas.
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