Apple Inc delivered a second straight quarter of disappointing results and iPad sales fell well short of Wall Street’s targets, marring its record of consistently blowing past investors’ expectations.
Shares in the world’s most valuable technology company briefly dipped to levels not seen since the start of August, after it delivered a 27 per cent rise in fourth-quarter revenue and a 24 per cent increase in earnings.
The numbers, while in line with expectations, lacked the positive surprises that investors have grown used to, and came after Apple undershot revenue targets in the previous quarter.
Its shares bounced back after CEO Tim Cook told analysts on a conference call that the latest iPhone 5 was heavily backlogged but the company had mostly worked out kinks in its supply chain.
Apple shipped 26.9 million iPhones in the last quarter, just ahead of analysts’ predictions but iPad sales of 14 million were well below lowered forecasts for the tablet as the economy remained weak and consumers awaited the iPad mini, which will hit store shelves next month.
South Korean rival Samsung Electronics Co sold 56.3 million smartphones in the quarter, according to research firm IDC, giving it 31.3 per cent global market share, more than double that of Apple. Analysts say the real test for Apple will come during the crucial year-end holiday shopping season, when competition will reach fever-pitch against new gadgets from Amazon. com Inc, Google Inc and Microsoft Corp.
“Going into earnings we were wondering if the slowing economy will catch up with Wall Street, and it has,” said Channing Smith, co-manager of the Capital Advisers Growth Fund.
“Apple is very well positioned with the iPad and now the iPad mini. It has a great smartphone and we expect the iPhone 5 to sell very well. The outlook is conservative, but that’s not surprising. Err on the side of caution is a proven formula.”
Apple heads into the current quarter after refreshing almost all of its product lines, including introducing an upgraded, fourth-generation full-sized iPad. The December quarter will show how well consumers respond to its latest gamble – the iPad mini – which goes on sale on Friday.
Quarterly revenue in China, Apple’s second-largest market, rose 26 per cent and jumped nearly 80 per cent to €18.3 billion over the full year, contributing 15 per cent of Apple’s total, Cook told analysts. Apple plans to launch the iPhone 5 in China in December, hoping to staunch market share loss in what is set to become the world’s largest smartphone market this year.