Apple’s earnings fall despite rising iPhone sales
SAN FRANCISCO, USA
APPLE’S quarterly earnings are still sagging even as sales of its iPhones are rising, a vexing phenomenon feeding investor worries about whether stiffer competition in the mobile device market will continue to undercut the company’s prosperity.
The fiscal fourth-quarter results announced Monday closed the books on a sobering year that saw Apple’s market value plunge by about 25 per cent, or about US$160 billion. Apple Inc. remains the world’s most valuable company, despite the downturn.
The company’s earnings have been shrinking along with its share of the smartphone and tablet computer market that Apple reshaped with the 2007 release of the first iPhone and the 2010 introduction of the iPad. Apple hasn’t come up with another breakthrough product in a new category since then, raising questions about the company’s ability to innovate following the death of co-founder and chief visionary Steve Jobs two years ago.
Apple’s earnings have now fallen from the previous year in three consecutive quarters after a decade of steady growth.
The Cupertino, California, earned US$7.5 billion, or US$8.26 per share, during the three months ending Sept. 28. That compared to income of US$8.2 billion, or US$8.67 per share, last year.
The latest quarterly earnings topped the average estimate of US$7.92 per share among analysts polled by FactSet.
Revenue rose 4 per cent to US$37.5 billion — about US$600 million above analyst predictions.
Investors were evidently hoping for a better showing and, perhaps, a more optimistic forecast for the current quarter, which covers the crucial holiday shopping season. Management predicted Apple’s revenue will range from US$55 billion to US$58 billion in the quarter ending in late December. Analysts had projected revenue of US$55.6 billion. Apple also indicated that its profit margins would be in the same range as the past quarter.
Apple’s stock dipped US$6.45, or about 1.2 per cent, to US$523.43 in extended trading after the numbers came out.
Activist investor Carl Icahn, who holds a 0.5 per cent stake in Apple, is pressuring the company to spend US$150 billion buying back its own stock in an effort to boost the price. His idea would more than double the US$60 billion that Apple’s board has budgeted for buying back stock during the next three years.
Apple apparently doesn’t have any immediate plans to placate Icahn. CEO Tim Cook told analysts on a Monday conference call that the board won’t announce any potential changes to its current programme for buying back stock until early next year.
The latest quarter included early sales of the latest iPhones released last month.