Arab Today, arab today apple shares tumble despite new revenue high
Last Updated : GMT 21:09:51
Arab Today, arab today
Arab Today, arab today

With concerns of weaker profits

Apple shares tumble despite new revenue high

Arab Today, arab today

Arab Today, arab today Apple shares tumble despite new revenue high

A man uses an iPhone to make a video outside Apple Store in New York
San Francisco - Arab Today

A man uses an iPhone to make a video outside Apple Store in New York Record iPhone and iPad sales pushed Apple quarterly revenue to a new high but shares tumbled Monday over concerns of weaker profits ahead in fierce mobile gadget markets. The California-based tech giant reported net income of $13.1 billion on revenue of $57.6 billion in the quarter that ended December 28, helped by selling 51 million iPhones.
The profit was the same as Apple reported in the same quarter a year earlier when its revenue was $54.5 billion.
Apple shares fell more than seven percent to $506.75 in after-hours trade on a weaker-than-expected outlook ahead.
While Apple profit beat Wall Street expectations, shares were "trading down" largely due to "disappointing" guidance that revenue will drop in the current quarter despite the benefits of launching the iPhone last week on China's largest telecom network, RBC Capital Markets said in a note to investors.
"China Mobile has more subscribers than anyone in the world," Apple chief Tim Cook said during an earnings call when asked about the iPhone launch on that network.
"I do see it as a watershed moment for Apple and have a very strong belief in the ability of the two companies to do great things together."
Apple said it sold 26 million iPads during the quarter, also an all-time quarterly record, as well as 4.8 million Macs.
"We are really happy with our record iPhone and iPad sales, the strong performance of our Mac products and the continued growth of iTunes, software and services," Cook said.
While Apple remains the most valuable and among the most profitable companies, some analysts are concerned it is losing its edge and failing to keep up with rivals in the smartphone and tablet markets.
"Some of the shipments may be records, but Apple shares are taking it on the chin here. Sometimes great is not great enough," said Jon Ogg at 24/7 Wall Street.
Apple profit topped Wall Street forecasts, but Apple's outlook for the current quarter is less than was expected at between $42 billion and $44 billion in revenue.
Apple has been facing pressure from billionaire Carl Icahn, which wants the company to boost the size of its share buyback to deliver more cash to shareholders.
Apple is progressing on a plan to return $100 billion to investors through dividends and repurchasing shares by the year 2016 and gave no indication it intended to expand the program.
"We are a big believer in buying back the stock," Cook said.
Some analysts expressed concern that while sales of iPhones and iPads leapt, the overall smartphone and tablet markets jumped much higher in a sign that Apple was not gaining share.
International Data Corporation (IDC) reported that global shipments of smartphones last year topped a billion for the first time, up 38.4 percent from the 725.3 million shipped in 2012.
Apple had the "lowest year-on-year increase" of all major smartphone makers even though 5S and 5C models were available in more countries, according to IDC.
"Samsung ended the quarter the same way it began the year: as the clear leader in worldwide smartphone shipments," IDC said.
"Now that Apple has finally arrived at China Mobile, it remains to be seen how much Apple will close the gap against Samsung in 2014."
Cook assured analysts that Apple remained on track to release later this year innovative new products that are more than improvements on devices the company already offers.
Apple has been under pressure to wow the world yet again with another lifestyle-changing innovation like it did with iPads and iPhones.
"It is a bit of a tempest in a teapot," Forrester analyst Frank Gillett said of the market's reaction to Apple's earnings report.
"Apple as a company seems to be doing fine; it is just that expectations are so out of whack because they haven't invented a new category in a while."
All smartphone makers are under pressure to expand the market, which increasingly means tailoring prices or models to countries where potential customers are on tight budgets, according to Gillett.
He recommended that investors begin looking more closely at streams of revenue promised by the trend toward buying games, music, films and more using mobile devices.
Source: AFP

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