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Apple's earnings disappoint Wall Street as prices sink for iPads, iPhones

By Associated Press

LAST UPDATED: 12:20 p.m. HST, Jul 24, 2012

NEW YORK >> Apple is getting less for its products. That’s a disappointment for investors who thought the company would keep boosting profits and revenues at its previous breakneck pace.

Apple Inc. revealed today that its growth slowed in the most recent quarter. In both revenue and net income, the company posted the smallest increases in years, and failed to meet analyst expectations.

It wasn’t so much the volume of sales: Apple sold 17 million iPads in April to June period, beating expectations, and 26 million iPhones, at the low end of expectations.

But Apple’s average selling prices for both gadgets declined to levels last seen in 2010 for the iPhone and the lowest levels ever in the case of the iPad. 

Apple introduced a new iPad in March, but kept the older model in stores while cutting its price.

The average selling prices of Macs also fell.

Net income in Apple’s fiscal third quarter was $8.8 billion, or $9.32 a share. That was up 21 percent from $7.3 billion, or $7.79 per share, a year ago.   

Analysts polled by FactSet were expecting earnings of $10.37 a share. 

Revenue at the Cupertino, Calif., company was $35 billion, up 23 percent. Analysts were expecting $37.5 billion.   

Apple shares fell $29.82, or 5 percent, to $571.10 in after-hours trading, after the release of the results.

Apple forecast earnings of $7.65 a share for the current quarter, well below the average analyst forecast at $10.26. Normally, Apple’s forecasts are ignored, because the company routinely exceeds them. But for the just-ended quarter, Apple’s cautious forecasts were more accurate than those of analysts.

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Kapakahi wrote:

A careless reader would be misled by the headline and lede paragraph of this article. Apple's profits are up 23% from a year ago, but some analysts were hoping they would be up 24% or 25%?

We should all have such a bad financial report!

Even the content of the analysis presented is odd. Apple decided to not raise the prices on iPhones, iPads and their computers, based upon THEIR OWN read of their market niche. And their pricing strategy has contributed to a massive jump in profits, as well as continued domination of the smartphone and digital tablet market. Yet the article presents this as a poor performance because some analysts were greedy for even higher profits?

on July 24,2012 | 12:59PM
entrkn wrote:
on July 24,2012 | 02:24PM
publicuser wrote:
When a stock like Apple is up almost 50% in a few months from the beginning of the year, what do you expect? The stock goes up anyway and every is happy because they are all Apple fanboys? Get serious. The stock is priced to perfection and only continued growth and gangbuster results can support Apple's current valuation of being the highest in the world.
on July 24,2012 | 03:23PM
publicuser wrote:
Consumers are realizing that Apple's products aren't the only good ones in the world. Android smartphones and much cheaper tablets give you the same capability as Apple's products.
on July 24,2012 | 03:25PM
false wrote:

SOME consumers are willing to buy other products. But most consumers, if given a choice, prefer the Apple products over the Android devices. And iPhone users report significantly higher consumer satisfaction with their purchase than those who buy an Android.

This poorly written article may have given you the impression that the price of Apple products have "sunk," but that is a gross over-statement of the facts. The new iPads and iPhones came in at the same price point as the earlier models, but the older models were discounted and remain on the market in order to fill the craving for Apple products by people who cannot afford the cutting edge product, but who DO NOT WANT to buy an Android.

This article incorrectly reports this decision to sell older versions at a discount to be a sign of Apple's sagging fortunes. No. It is not.

on July 25,2012 | 03:22PM
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