Apple sells 26.9M iPhones, misses analysts' expectations
Apple (NASDAQ:AAPL) sold 26.9 million iPhones in its fiscal fourth quarter, a 58 percent increase from the year-ago period. The quarter only represented nine days' worth of sales of the iPhone 5, which went on sale Sept. 21. Yet Apple's earnings missed analysts' expectations.
Click here to see Apple's iPhone and iPad sales since the devices were first released.
The iPhone numbers were likely lighter than perhaps some analysts had expected because customers may have pulled back on buying iPhones in advance of the iPhone 5's debut. Apple sold 17.07 million iPhones during its fiscal fourth quarter in 2011 (which did not include the first sales of the iPhone 4S) and 26 million in its fiscal third quarter this year, which Apple reported in July.
Though Apple has had trouble meeting iPhone demand since launching the iPhone 5, Apple CEO Tim Cook said the company is working to increase iPhone production.
"The demand for iPhone is extremely robust," he said. "We're thrilled with what we see. ... Our output has improved significantly from earlier this month."
As for the iPad, Apple sold 14 million iPads during the quarter. For reference, Apple sold 11.12 million iPads in the year-ago quarter and 17 million in its fiscal third quarter.
Starting in November Apple will begin selling an updated version of the 9.7-inch iPad as well as the smaller, 7.9-inch iPad mini, both of which will support LTE networks.
Interestingly, during Apple's earnings conference call, Apple's Cook was asked about Microsoft's (NASDAQ:MSFT) new Windows 8 Surface tablet, and how the product will compete with Apple's iPad. "It's a fairly compromised, confusing product," Cook said of the Surface. "I suppose you could design a car that flies and floats, but I don't think it would do all of those things very well."
Financially, Apple's quarter was strong, even if earnings missed the expectations of Wall Street analysts polled by Thomson Reuters. Apple posted quarterly revenue of $36 billion and net profit of $8.2 billion, up from $28.3 billion in revenue and net profit of $6.6 billion in the year-ago quarter. Apple's gross margin was 40 percent, down slightly from the 40.3 percent it recorded in the year-ago quarter. The company said international sales accounted for 60 percent of the quarter's revenue.
Looking ahead to its fiscal first quarter, which will include holiday sales of the iPhone and iPad, Apple said it expects revenue of about $52 billion and diluted earnings per share of about $11.75, both of which are below Wall Street's forecasts.
"The iPhone 5, iPod Touch, iPod nano, iPad mini and iMac all feature new form factors and our checks with the supply chain indicate that many of these are very complex to manufacture and are likely resulting in reduced production efficiencies," Nomura analysts said in a note as they lowered their price target on Apple to $660 from $710, according to Reuters.
During the company's earnings conference call, Apple executives addressed questions about the company's lower-than-expected earnings-per-share guidance for the coming quarter, which is the all-important holiday shopping season. Apple's CFO Peter Oppenheimer said the situation was due to a number of factors, including the fact that there is one more week in Apple's holiday quarter this year when compared with last year. He also blamed a stronger U.S. dollar.
But perhaps most importantly, Oppenheimer said that Apple doesn't expect to earn as much profit from its products on sale this holiday quarter. "All of these products (iPhones, iPads and Macs) have higher costs than their predecessors and therefore lower margins."
Added Apple's Cook: "We're unwilling to cut corners to deliver the best customer experience in the world. ... We're managing the company for the long run and will continue to make good long-term decisions."
Added Cook: "We think it's going to be an incredible holiday season."
- see this release
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Fortune article
- see this The Verge article
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Mike Dano contributed to this report.