Apple reports lower-than-expected earnings

PanARMENIAN.Net - Apple Inc. reported lower-than-expected earnings on Thursday, Oct 25, and gave indications that strong demand and limited supply of the iPhone and iPad products will persist into the current period, according to MarketWatch.

The company reported a 24% jump in earnings for its fourth fiscal quarter, despite a slowdown of iPhone and iPad sales ahead of major product upgrades.

Apple shares fell initially in after-hours trades but later moderated. The stock closed down 1.2% to $609.54 in the regular session, and is off more than 13% from its peak of $700 on the day of the iPhone 5 launch last month.

The miss was not a major surprise, given that many analysts had been predicting a decline in sales in the midst of major rumors of product upgrades. The company also gave a forecast that was lower than expected — reflecting tight supply of the new iPhones and iPads that will extend into the December period.

Apple launched the iPhone 5 on Sept 21, and will launch its new iPad mini next week. It also re-designed its iPod lineup, the iMac desktop, MacBook Pro and updated its regular 10-inch iPad with a new chip — all over the last six weeks, with all new products going on sale in the December period.

On a conference call, CEO Tim Cook and CFO Peter Oppenheimer said this makes the current quarter the busiest in the company’s history, in terms of new launches.

The iPhone 5 is the key product for the quarter, as the product line is Apple’s largest source of revenue and earnings. Cook said the company is “in a significant state of backlog right now” on the product, and would not predict when supply would come in line with demand.

Apple projected earnings per share of $11.75 with revenue of $52 billion for the December quarter. Analysts had been expecting earnings of $15.41 per share on revenue of $55 billion for the period.

For the quarter ended Sept. 29, Apple reported net income of $8.2 billion, or $8.67 per share, compared with net income of $6.6 billion, or $7.05 per share, for the same period last year. Revenue jumped 27% to $36 billion.

Analysts were expecting earnings of $8.75 on revenue of $35.8 billion for the quarter, according to consensus estimates from Thomson Reuters.

The company said it shipped 26.9 million units of the iPhone and 14 million iPad units for the quarter; analysts had been expecting iPhone shipments around the 26 million mark, with about 17 million iPad shipments.