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Apple stock plunges, Wall Street concerned

Posted: 28 Jan 2013  Print Version  Bookmark and Share

Keywords:smartphones  iPhone  stock 

Apple reported its highest ever quarterly sales, $54.5 billion, for the quarter ended Dec. 29. Even so, sales were slightly below consensus analysts' expectations. The tech giant's stock price declined nearly 10 per cent in after it predicted sales would dip by more than 20 per cent sequentially in the current quarter.

"No technology company has ever reported this kind of results," said Tim Cook, Apple's CEO, in a conference call with analysts following the financial report. "Apple is in one of the most prolific periods of innovation in new products in its history."

But Apple's stock price sank to $463.49 in afterhours trading after closing at $514.01 earlier in the day, prior to the quarterly report.

Apple sold a record 47.8 million iPhones in the quarter, up 78 per cent from the previous quarter and up 30 per cent from the year-ago quarter. The company sold 22.9 million iPads, up from 15.4 million in the year-ago quarter. Mac sales declined to 4.1 million, down from 5.2 million in the year ago quarter, while iPod sales declined to 12.7 million compared to 15.4 million in the year-ago quarter, Apple said.

Paul McWilliams, editor of technology investment newsletter Next Inning Technology Research, was disappointed by Apple's quarterly report and the presentation by executives that followed. In a report circulated late Wednesday, McWilliams said he planned to sell his Apple shares in the near future after being "an Apple bull" for nearly 10 years.

"Apple was built on vision, innovation and a near perfect execution of design that delivered products that redefined some markets, and in other cases (many other cases) created entirely new markets," McWilliams wrote. "Today I view Apple as a huge ship that lacks not only a rudder, but also the forward vision needed to set the direction of the rudder."

CFO defends forecast

But Peter Oppenheimer, Apple's chief financial officer, defended the company's projected sales for the current quarter, saying projected sales of $41 billion to $43 billion would represent a 5 to 10 per cent increase from the year-ago quarter. The quarterly sales target would represent a sequential decline of 21 to 25 per cent and be short of consensus analysts' expectations of about $45.6 billion, according to Yahoo Finance.

Oppenheimer said the rollout of the iPhone 5 was Apple's fastest ever, with the company selling the handset in more than 100 countries by the end of December. Oppenheimer said the average selling price of Apple's iPads decreased by about $100 due to the introduction of the iPad mini and the company's decision to continue selling a reduced price iPad 2 line. He also pointed out that the PC market grew 4 per cent in the first quarter of 2012 and is expected to decline by about 3 per cent in the first quarter of this year.

"Considering these factors, the underlying performance of the business is much stronger than the 5 to 10 per cent year-over-year growth implies, and we remain very confident in our business and our new product pipeline," Oppenheimer said.

Apple's quarterly revenue of $54.5 billion was up 41 per cent from the previous quarter and up 18 per cent from the year-ago quarter. Apple's net profit for the quarter was $13.1 billion, or $13.81 per share, up 60 per cent from the previous quarter and roughly flat with the year-ago quarter.

Apple's quarterly sales came up slightly short of consensus analysts' expectations of $54.7 billion, according to Yahoo Finance.

International sales accounted for 61 per cent of Apple's revenue in the quarter, the company said.

- Dylan McGrath
  EE Times





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