Apple sales, profit and Q4 forecast miss analyst estimates; board declares dividend. Says rumors about new Macs, iPhones had an effect on sales.
Apple did something today that it rarely does. It missed analyst expectations for earnings.
While it continued to capitalize on demand for the iPhone and iPad, reporting a gain in third-quarter sales as customers around the world kept taking home its tech gadgets, Apple didn’t sell as many iPhones as analysts hoped.
Sales rose to $35 billion from $28.6 billion a year ago in the quarter ended June 30, Apple said in a statement. Net income was $8.8 billion, up from $7.3 billion. Profit was $9.32 a share. Analysts on average were expecting sales of $37.2 billion and profit of $10.36 a share.
This is a rare miss for the Cupertino, California-based company, which has topped analyst estimates in every quarter except for one since 2003, according to data from Bloomberg.
Investors are focused on how well the iPhone is selling since it accounts for more than half of revenue (this chart shows a breakdown of sales by product and geography). Apple has been enjoying spectacular demand for the iPhone 4S, released in October, in the U.S. and in China, it’s fastest-growing market.
Apple said today it sold 26 million iPhones, down from 35 million last quarter. Analysts were anticipating iPhone sales of 25 million to 27 million, though some started saying their estimates might be low since Verizon and AT&T delivered better-than-expected iPhone activations in the U.S. in their recent earnings reports.
Apple also said today that it saw a huge gain in sales of the iPad tablet to 17 million units, up from 9.25 million last year and 11.8 million in the second quarter. Sales of the Mac, including new MacBook Air and MacBook Pro laptops introduced at Apple’s developer conference in June, came in at 4 million computers.
Apple’s board of directors also declared a cash dividend of $2.65 per share of the company’s common stock. The dividend is payable on August 16, 2012, to stockholders of record as of the close of business on August 13, 2012, Apple said.
Apple shares dropped about 5 percent in late trading after the report was released. They earlier fell $2.91 to close at $600.92 in regular Nasdaq trading. They’ve gained 48 percent so far this year.
“We’re thrilled with record sales of 17 million iPads in the June quarter,” Tim Cook, Apple’s CEO, said in the statement. “We’ve also just updated the entire MacBook line, will release Mountain Lion tomorrow and will be launching iOS 6 this fall. We are also really looking forward to the amazing new products we’ve got in the pipeline.”
The biggest takeaway from today’s report is that analysts are likely to move past it as they look for new products later this year and in early 2013, including an updated iPhone, a smaller-screen iPad mini and a smart TV.#
Smartphone buyers are expected to pause for the next few months as they wait for a new iPhone in September or October. Dubbed the iPhone 5 by Apple watchers, it’s expected to sport a larger, thinner screen than the iPhone’s current 3.5-inch display, a faster processor, 4G LTE connectivity, a better camera and a redesigned body, according to various reports.
Apple hasn’t said anything about when it will update the iPhone, but it has released a new version every year since entering the phone market in 2007 so it would be notable if they didn’t announce a new model.
Taking into account the iPhone pause, analysts have been saying for weeks they expect the company to give an even more conservative forecast than it usually does for the back-to-school shopping season ending in September. Apple CFO Peter Oppenheimer said today the company anticipates sales of about $34 billion and profit of $7.65 a share in the fourth quarter. Analysts were expecting $38 billion in sales and profit of $10.22 a share.
Ben Reitzes, an analyst with Barclays Capital, said there’s some noise that Apple is having a hard time getting enough in-cell displays for the iPhone 5 from suppliers Sharp and LG Display. “If reports of in-cell display manufacturing issues are accurate and indeed persist, Apple may need to issue cautious guidance tonight for its September quarter as more iPhone sales would get pushed into the December and March quarters,” Reitzes told investors in a note earlier today.
Even so, he remains bullish on the company’s prospects. “We believe that Apple is disrupting whole sectors, extracting profits and revenues from companies in the PC, mobility, printing, and even retail sectors,” Reitzes wrote. “We still believe Apple can ship well over 30 million iPhone 5′s in the December quarter. In our experience, product transitions — like the one with the iPhone 4S in the September 2011 quarter — have proven to be buying opportunities over the last 10 years.”
James Hickman
forbes.com
25th July 2012
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