Apple's Profit Gains 54%, but iPhone Sales Fall Short of Expectations
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For any other big company, a 54 percent increase in profit and a 39 percent jump in revenue would be enviable. For Apple though, weak sales of its star product -- the iPhone -- were enough to overshadow everything else when it reported fourth-quarter results on Tuesday, sending the company's shares tumbling nearly 7 percent in after-hours trading.
In a rare disappointment, the company missed Wall Street forecasts for its iPhone business. The company reported big increases in the sale of the iPad and of Mac computers, and even said the number of iPhones it sold in the quarter jumped 21 percent from a year ago. But investors fixated on a 16 percent decline in iPhone sales from the third quarter. Apple shares fell 7 percent after the release of the results at the close of normal trading hours.
Apple executives blamed the shortfall in iPhone sales on unusually heated rumors that the company would release a new phone in the fall, leading consumers to delay their purchases so they could get the latest version. That new phone -- the iPhone 4S -- did, indeed, come out earlier this month, to what Apple said was the best initial sales of any iPhone yet. But it was too late to benefit the fourth quarter, which ended Sept. 24.
Investors and analysts largely accepted Apple's explanation, in part because of the sales of the iPhone 4S. Apple said that during the first weekend it was available, more than four million were sold, which is more than double the sales of its predecessor in the first days after its introduction.
Mark Moscowitz, an analyst at J.P. Morgan, said he and others on Wall Street "got too excited" in predicting blow-out iPhone sales, which should have been tempered by the increasing levels of speculation that Apple would come out with a new phone. While Apple has long had to contend with rumors about coming devices that can potentially freeze current product sales, analysts believe that customers have become more sophisticated about when Apple releases new devices, typically in the summer or early fall.
First Published October 19, 2011 12:00 am
