Apple on Wednesday reported the kind of quarter most big companies would envy, posting a profit of $13.1 billion and selling 28 percent more iPhones and 48 percent more iPads, its two biggest products.
Shares of the world’s largest tech company fell 10 percent to $463 in after-hours trade, wiping out some $50 billion of its market value – nearly equivalent to that of Hewlett-Packard and Dell combined, says the Reuters.
“No technology company has ever reported these kinds of results,” Tim Cook, CEO of Apple, said on the earnings call.
The results did little to improve sentiment towards the once high-flying shares. Apple has lost almost a third of its market value since September, as it faces increased competition from the likes of Samsung and concerns grow over whether Apple products will still dazzle consumers.
“It’s going to call into question Apple’s dominance in the space. It’s still one of the strong players, the others being Samsung and Google. It’s still a two-horse race, but Android continues to grow rapidly,” said Sterne Agee analyst Shaw Wu.
Apple executives predicted growth would continue to slow. The company expects revenue to rise about 7% in the current period after reporting an 18% gain in the holiday quarter.
“The revenue number is dismal as far as what the expectations were,” said Jeff Sica president and chief investment officer of SICA Wealth Management.
But he added that while it’s an “incredible number” on its own, Apple has “fallen victim to the curse of high expectations.”
According to the Telegraph, investors were quick to focus on Apple’s sales forecast of $41bn to $43bn for the current quarter, which fell short of expectations of $45bn.
The question is “going to be around innovation and where the next product is coming from,” said Shannon Cross, an analyst at Cross Research. “What does Tim Cook see in the next 12 to 18 months.”
Late last year, the company warned that its aggressive product rollout schedule for the holidays, including new iPhones, iPads, iPods and a new iMac desktop, would hurt profit as the company perfected manufacturing efforts. Manufacturing costs more in early stages until the company perfects production processes.
Apple said it sold 47.8 million iPhones, up from 37 million from the year-earlier period and below some analyst expectations. The fiscal first quarter began soon after the release of the iPhone 5 and Apple’s new mapping software, and encompassed the debut of the iPad Mini, a smaller tablet carrying an equally slimmer price tag, writes the Wall Street Journal.
Taking into account the drop in shares in Wednesday’s after-hours trading, Apple’s stock is now down 34 percent from its September record high and the company has lost about $227 billion in market value.
Last week, a report that Apple had decreased its order for iPhone parts may have contributed to a decrease in its stock price to near $500.
“It will be interesting to see if Apple is really pushing the envelope in terms of innovation and shortening the product cycle,” said Brian Colello, Morningstar senior equity analyst.
Tim Cook, Apple’s chief executive, in a conference call urged investors to be skeptical of reports about the company cutting orders with manufacturers.
Mr. Cook said Apple gets parts from various suppliers, and manufacturing efficiency can vary, making it hard to discern the company’s overall business based on individual pieces of information.
“There’s just an inordinately long list of things that would make any single data point not a great proxy for what’s going on,” he said.
Investors initially supported Mr. Cook’s efforts, roughly doubling the company’s shares from the day he was promoted from operations chief until the iPhone 5’s launch day.
Now, they have begun to question his efforts, and whether or not the company that created the personal computer and jump-started the mobile device revolution has lost its edge, reports the Wall Street Journal.