Apple Profits Fall for the First Time in a Decade

Apple shares opened down 3% in New York on Wednesday, as the market digested the technology giant’s first fall in profits in a decade.

Apple’s stock collapsed below $400 last week for the first time since 2011 following weak sales results from some of Apple’s supply and manufacturing partners. Photo: Dennis Goedegebuure/ Flickr

Apple beat Wall Street’s estimates for revenue and sales of the iPhone and iPad in the March quarter, but for the  first time in many years the company’s profits declined.

Tuesday, Cook made the rare admission to analysts on a conference call that Apple’s growth has slowed and margins have decreased.

Apple’s stock collapsed below $400 last week for the first time since 2011 following weak sales results from some of Apple’s supply and manufacturing partners. The stock is currently down more than 40% from the intraday trading high of $705 a share that it hit when the iPhone 5 was released.

Unfortunately for the company, the shares fell 1.2 percent to $401.24 in early trade on Wednesday, continuing a 43 percent slide in the stock since mid-September.

At least 17 brokerages lowered their price targets on the stock following the quarterly results, including JPMorgan, which cut its target by 25 percent.

“They are modulating into a state where the highs are not as high and lows are not so low,” Forrester analyst Sarah Rotman Epps said.

Still Apple has some good news, as it sold 37.4 million iPhones and 19.5 million iPads, surpassing analysts’ estimates by about 1 million on both fronts.

Those device sales helped Apple bring in $43.6 billion in revenue for the quarter, beating the consensus estimate of $42.6 billion and setting a new record for March quarter revenues, says Mashable.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” said Tim Cook, Apple’s CEO, in a statement.

“Our teams are hard at work on some amazing new hardware, software, and services and we are very excited about the products in our pipeline.”

Also analysts have predicted that the company would launch a cheaper iPhone for the emerging market, as well as a larger one to compete with Samsung’s 5” S4 model.

However, Mr Cook said that older models of the existing iPhone were selling well in the crucial Chinese market, and that larger screens required too many compromises.

In the longer term, Apple needs another blockbuster gadget to accelerate its momentum — and win investors back for the longer term, says Reuters.

He also declined to give investors any hints on future products. Nevertheless, he said that “we have some great stuff coming in the fall and across all of 2014”, and emphasised that Apple’s strength came from its library of apps and existing customer base.

“They need something that breaks into new verticals, whether it’s TV or something that’s wearable, that opens up a new revenue stream,” Epps said.

Last night Apple CEO,Tim Cook said that Apple would devote $60 billion of its $137 billion cash pile to a share buyback programme, and that it would increase its dividend by 15pc to $3.05. Apple also announced that it would return $100 billion to shareholders by the end of 2015.

Mr Cook also dashed hopes that payment technology would be built in to Apple’s highly sought-after products in the near future, saying that the idea, already adopted by Samsung, remained “in its infancy”.

Apple shares rose 5.5pc in extended trading, after closing up 1.9pc at $406.13, still far below September’s record high of $702.10, reports the Telegraph.

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