Apple’s (Nasdaq: AAPL) sales forecast for the crucial holiday quarter topped analysts’ projections, as the world’s most-valuable company also predicted lighter-than- estimated gross margins.
However, its latest quarterly earnings fell 9 percent as more people bought the company’s lower-priced iPhones and iPads.
The company’s fourth-quarter results announced Monday included early sales of the latest iPhones released late last month.
The models, called the 5S and 5C, helped Apple Inc. increase its iPhone sales from the same time last year. But the average price that Apple fetched for its iPhones declined to extend a recent trend that has trimmed the Cupertino, Calif. company’s profit margin and depressed its stock price.
This marks the third consecutive quarter that Apple’s earnings have dropped from the previous year.
Apple earned $7.5 billion, or $8.26 per share, in the quarter. That compared to income of $8.2 billion, or $8.67 per share, last year.
Revenue rose 4 percent to $37.5 billion.
This quarter, Apple forecast that revenue will be $55 billion to $58 billion, and gross margins will be 36.5 percent to 37.5 percent. That compares with $55.5 billion and 38 percent, the average of analysts’ estimates compiled by Bloomberg.
Profit for the just-ended quarter fell 8.6 percent to $7.51 billion, or $8.26 a share, above the $7.92 projected by analysts on average and the third-consecutive period of declines.
Chief Executive Officer Tim Cook is rolling out new iPhones and iPads for the end-of-year shopping season, which is Apple’s most important quarter. The company, which is grappling with lower-priced products from Samsung Electronics Co. and others, is under pressure to reignite growth and maintain its margins with a new blockbuster product. Apple’s earnings jumped 61 percent in its previous fiscal year ended September 2012, then fell this year for the first time in at least a decade.
“The key question is if holiday sales are going to take Apple to another record-breaking quarter,” said Laurence Balter, an analyst at Oracle Investment Research, whose clients are Apple shareholders.
Apple fell as much as 5.1 percent in extended trading after the results were released. The shares advanced less than 1 percent to $529.88 at the close in New York, leaving them down 25 percent from a record in September 2012 following the debut of the iPhone 5.
New IPhones
Apple said sales for its fiscal fourth quarter ended in September rose 4.2 percent to $37.5 billion. IPhone sales, including about a week of the new 5s and 5c models hitting store shelves, were 33.8 million, more than the 32.8 million predicted by analysts on average in a Bloomberg survey. The company also sold 14.1 million iPads, compared with an estimated 14.3 million units. Back-to-school shopping helped push purchases of Mac computers to 4.6 million.
“We’re excited to go into the holidays,” Cook said in the statement. He indicated earlier this year that new products will be forthcoming in 2014.
Product Lineup
Apple has been busy updating its product lineup ahead of the holiday season. The company has said its new iPhones will be available in about 100 countries by the end of the year. The higher-end iPhone 5s costs $199 with a two-year wireless contract and includes a more powerful processor, improved camera and fingerprint-reading technology.
The new iPhone 5c is mainly last year’s model with colorful plastic cases. The handset is seen as Apple’s bid to win more customers in emerging markets like China and Russia. Without a contract, the handset costs about $800, leading analysts to say it’s too expensive for those markets and that demand is light.
A new iPad Air also goes on sale on Nov. 1, followed later in the month by an updated iPad mini with a high-definition screen.
The holiday releases arrive as some of the momentum in the smartphone and tablet industries has shifted toward the lower- end of the market. Samsung has become the world’s largest smartphone maker by offering customers handsets with different screen sizes and prices. The South Korean company also is Apple’s closest competitor in tablets, along with devices from Google Inc., Amazon.com Inc. and Microsoft Corp.
Apple also is being pressured to return more money to shareholders. Billionaire activist investor Carl Icahn has been on a publicity campaign to get Apple to initiate a $150 billion buyback to boost the company’s stock price.
