Rare sales disappointment at Apple as customers wait it out

IT LOOKS as if many people are so sure the next iPhone is going to be good that they are not buying the ones Apple is selling now, a problem a lot of companies would love to have – if it can be called a problem, given that Apple still sold 28 per cent more iPhones last quarter than a year earlier.

Yet in the world of outsize expectations that envelops Apple, it still contributed to a rare earnings disappointment from the company.

In response to the earnings report overnight on Tuesday, Apple investors registered their unhappiness with the results by sending its shares down more than 5 per cent in after-hours trading. In the regular session, the stock fell 2.9 per cent, to $600.92.

The iPhone appeared to be the main issue. In a now-familiar pattern, analysts have been warning of potential weakness in iPhone sales because of the likelihood that the company would introduce a new version in the autumn.

In a conference call with analysts, Apple executives blamed economic weakness in Europe, Australia, Brazil and other countries for some of the sales shortfall. But the company also said the widespread chatter about which smartphone it will sell next was significant.

It is possible Apple is losing some business to other smartphones, most likely devices running Google’s Android operating system, which have built a substantial following. But Apple is still expected to gain market share this year.

“I’m glad people want the next thing,” said chief executive Tim Cook. “I’m not going to put any energy into trying to get people to stop speculating.”

The newest pillar of Apple’s business, the iPad, has started to take some of the pressure off the iPhone to dazzle investors every quarter. For the fiscal third quarter, to June 30th, Apple sold 17 million iPads, bringing in $9.17 billion, compared with nine million iPads and $6.05billion in revenue a year ago.

Sales got a lift from a new version of the iPad with a higher-resolution display introduced in March. The iPad now accounts for 26 per cent of Apple’s total revenue.

Apple reported net income of $8.82 billion, or $9.32 a share, up from $7.31 billion, or $7.79 a share, in the period a year earlier. Revenue was $35.02 billion compared with $28.57 billion a year earlier.

The figures were above the $8.68 a share in profit and $34 billion in revenue that Apple had previously forecast for the quarter. But they fell short of the estimates of Wall Street analysts, who typically take Apple’s own forecasts with a grain of salt because of the company’s long history of underpromising and overdelivering on its financial performance.

– (New York Times service)