Apple’s iPhone Sales, Revenue Forecast Fall Short; Shares Plummet

Apple reported iPhone sales that fell well short of analyst estimates, sending the stock falling in after-hours trading.

The world’s most valuable technology company sold a record 51 million iPhones in the quarter, but that was shy of the 55 million or so analysts had expected, reflecting intense competition from arch-foe Samsung Electronics during the crucial period. Photo: atmtx/ Flickr

Apple sold more tablets than analysts predicted, giving its invertors the iPad Christmas. However, iPhone sales fell short, even after CEO Tim Cook introduced two new models, and the sales forecast for the quarter ending in March were below expectations.

The world’s most valuable technology company sold a record 51 million iPhones in the quarter, but that was shy of the 55 million or so analysts had expected, reflecting intense competition from arch-foe Samsung Electronics during the crucial period. The company also sold 26 million iPads over the period, as well as 4.8 million Macs, compared with 4.1 million over the same quarter in 2012.

Sales of iPhones have been challenged in recent years by ever more sophisticated offers from Samsung and other rivals running Google’s Android operating system. Samsung too has struggled amid ever intensifying competition, however, and it reported a dip in profits in December.

Tim Cook, Apple chief executive, said: “We are really happy with our record iPhone and iPad sales, the strong performance of our Mac products and the continued growth of iTunes, software and services.

“We love having the most satisfied, loyal and engaged customers, and are continuing to invest heavily in our future to make their experiences with our products and services even better.”

The company forecast sales of $42 billion to $44 billion this quarter, brisker than usual because of Apple’s new deal to sell iPhones through China Mobile Ltd, the country’s No. 1 carrier. But Wall Street had expected even more – $46 billion, on average, reports Reuters.

Meanwhile, Apple CFO Peter Oppenheimer said the company’s iPad sales in mainland China more than doubled during the holiday quarter and saw strong growth in emerging markets like Latin America and Russia, however, the company has been struggling to keep up with sales of the iPhone 5s.

“We generated $22.7 billion in cash flow from operations and returned an additional $7.7 billion in cash to shareholders through dividends and share repurchases during the December quarter, bringing cumulative payments under our capital return program to over $43 billion,” Oppenheimer said in the company’s press release.

He added: “We continue to invest heavily in the future and remain confident in our product pipeline.”

The March quarter is especially important because of the China Mobile deal and the initial launch in that region. So the lower-than-expected revenue guidance was a troubling sign.

“The report for the December quarter was fine, but the real problem is the forecast for the March quarter,” said Brian Colello, an analyst at Morningstar, Inc. “The revenue certainly appears to be a shortfall.”

In addition to the financial results, Apple announced a $3.05 per-share dividend. Apple noted that the company returned $7.7 billion to shareholders through dividends and share repurchases during the December quarter, which also generated $22.7 billion in cash flow.

As CNet writes, Apple isn’t the only company facing a tougher smartphone market. Rival Samsung last week reported its first quarterly operating profit decline in two years. Perhaps most troubling was the slowdown in Samsung’s mobile business and a warning that the first half of 2014 would remain weak.

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