Thursday, May 23, 2013
Apple's earnings disappoint Wall Street as prices sink for iPads, iPhones
POSTED: 12:13 p.m. HST, Jul 24, 2012
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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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?
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.
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