Apple Misses at 3Q Earnings

Cupertino, California

Apple posted weaker than expected third quarter results on Tuesday, signaling that the world’s most valuable company is not immune from a global slowdown and is vulnerable to weaker growth as Apple i-Phone consumers wait to purchase a newer model later in the year. 

In afterhours trading Apple’s stock fell over 5%. It was only the second time in a decade that Apple has missed at earnings since 2003.

After easily beating estimates last quarter, Apple reported earnings this quarter of $9.32 per share on revenue of $35.02 billion.

Analysts from Bloomberg had previously estimated a profit of $10.37 per share on revenue of $37.2 billion.

Net income rose 21 percent to $8.82 billion, or $9.32 a share. Sales jumped 23 percent to $35 billion.

Apple sold 26 million iPhones in the quarter, representing 28 % year over year growth but still down 26% from the second quarter.

As a comparison, Apple sold 37 and 35.1 million iPhones during the first and second quarters of 2012.

Sales from China, Taiwan, and Hong Kong, totaled $5.7 billion for the third quarter ending in June, a decline of $2.2 billion from the January-March period.

During the conference call CEO Tim Cook said that iPhone 4S sales were very strong in China over the first three months of 2012 which was reflected in last quarter’s strong earnings.

But it is believed that sales of the iPhone 4S have gradually slowed in China compared to last quarter.

Additionally, strong sales of the Samsung Galaxy smartphone, which are reportedly selling well across China, may have also cut into some of the iPhone 4S sales during this past quarter. 

Apple executives said on the conference call that the disappointing earnings report is due in part to the weak economy in areas such as Europe and Brazil as well as the slowdown in iPhone sales attributed to consumers waiting for the next iPhone model.

Apple sold 17 million iPad units during the June quarter, an increase of 84 % year over year, and a 44% gain from last quarter. 

Apple only recently began selling iPads in China on July 20th.

Apple sold 4 million Mac computers and 6.8 million iPods during this past quarter.

Lower Guidance

Apple said sales in the next quarter ending in September would lower to about $34 billion, and profits would drop to $7.65 a share, below analysts’ estimates.  

Richard Windsor, Global Technology Specialist at Numura Securities told Francine Laqua on Bloomberg’s On the Move that Apple’s 5%  selloff in afterhours shows that “people are a little bit disappointed…. but they are still hopeful that the new products expected to come out launched sometime in October should really drive a very strong quarter in Q4.”

iPhone 5

Many tech consumers are expecting the widely anticipated iPhone 5 to compete well against the popular 4 inch Samsung Galaxy smartphone which operates on Android using a faster 4G LTE network.

Compared to the iPhone 4S, the future iPhone 5 is expected to have a better camera, longer battery life, larger display screen (4 inch), and thinner frame. The casing is expected to be in aluminum. The speed will be faster with 4G LTE, likely using Qualcomm chips. Siri will be enhanced. The iPhone 5 will be using Apple maps instead of Google maps. Facebook will be integrated. It is also rumored that facetime may be run over the 4G LTE network instead of Wifi (current modus operandi with the iPhone 4S).

Apple is also expected to release an iPad mini tablet (date unknown) to better compete with the more affordably priced Google Nexus 7 Tablet, Amazon’s Kindle Fire Tablet, Barnes and Noble’s Nook Tablet, and Microsoft’s Surface Tablet (which is expected to be available in the fall before the holiday season running on the new Windows 8).

Mountain Lion, the latest operating system for Macintosh, has just begun selling in Apple stores as of yesterday.

 

 

 

 

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