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News : Innovation Last Updated: Jan 24, 2013 - 7:33 AM


Apple reports strong quarter but shares slide
By Finfacts Team
Jan 24, 2013 - 7:12 AM

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Apple on Wednesday reported a strong quarter posting a profit of $13.1bn from selling 28% more iPhones and 48% more iPads, its two biggest products. However, its shares fell 11% as it did not meet heady market expectations.

Apple’s shares which hit a record high of $702.10 last September, on Wednesday in after-hours trading fell to $461.30, down 34% from their peak.

“There’s nothing that can help the stock from sliding now,” said Mark Moskowitz, an analyst at JP Morgan Securities, who said Apple’s holiday sales met his own forecasts, even though they missed others’ predictions.

"It will no longer be the hyper-growth company of the last five years, but rather a premium, branded consumer company, along the lines of Nike, Louis Vuitton and Saks," forecast Toni Sacconaghi at broker Sanford C Bernstein in a note published ahead of Apple's results.

Apple posted record quarterly revenue of $54.5bn and record quarterly net profit of $13.1bn, or $13.81 per diluted share. These results compare to revenue of $46.3bn and net profit of $13.1bn, or $13.87 per diluted share, in the 14-week year-ago quarter. Gross margin was 38.6% compared to 44.7% in the year-ago quarter. International sales accounted for 61% of the quarter’s revenue.

The flat earnings in the holiday quarter came after several years of hyper growth and in recent weeks rumours of a loss in momentum in iPhone 5 sales.

Apple has a world level price for its iPhone and in key markets such as Asia, Samsung, its key rival, is forging ahead. Last week, Apple announced an installment credit scheme in the Chinese market.

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.

Average weekly revenue was $4.2bn in the quarter compared to $3.3bn in the year-ago quarter.

The firm sold a record 47.8m iPhones in the quarter, compared to 37m in the year-ago quarter. Apple also sold a record 22.9m iPads during the quarter, compared to 15.4m in the year-ago quarter. The company sold 4.1m Macs, compared to 5.2m in the year-ago quarter. Apple sold 12.7m iPods in the quarter, compared to 15.4m in the year-ago quarter.

“We’re thrilled with record revenue of over $54bn and sales of over 75m iOS devices in a single quarter,” said Tim Cook, Apple’s CEO. “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world.”

Cook urged investors to be skeptical of reports about the company cutting orders with manufacturers. He 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 added.

The Wall Street Journal says Samsung's devices held nearly 27% share of the US mobile subscriber market in the three months ended in November, according to market researcher comScore, up from more than 25% in the summer. Apple, by comparison, commanded 18.5% market share in November, up from 17.1% in the previous quarter.

Apple appears to be preparing a response, however. The Wall Street Journal reported earlier this month that the company is working on a lower-end iPhone that could launch later this year.

Apple has a cash or near equivalent trove of $137bn - - most of this is technically 'overseas/ trapped' but in reality is in the US.

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Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

Bob O'Donnell,  vice president, Clients and Displays, IDC says Apple's latest earnings is another sign that the company isn't as invincible as once thought. He says analysts have been overly optimistic on Apple:

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