Wednesday, January 23, 2013

Apple stock tanks as iPad, iPhone sales set records, but miss expectations

Apple announced its fiscal Q1 2013, calendar year Q4 2012 financial results on Wednesday. Those concerned about possible iPhone 5 sales problems should read Apple's press release: There were a record number of iPhones sold.

The iPhone 5 saw its first full quarter of availability this period; however, Apple doesn't break out its results by iPhone model, and the iPhone 4 and 4S continue to be sold. Still Apple's numbers show a record 47.8 million iPhones sold, compared to 37 million year-over-year.

iPad fans can look to steady popularity of that device, as well; Apple set another record for its iOS tablet, selling a record 22.9 million iPads during the quarter, compared to 15.4 million year-over-year.

Other hardware numbers are in the red, though: Apple sold 4.1 million Macs, compared to 5.2 million year-over-year. In terms of the steadily decreasing sales of the iPod, Apple sold 12.7 million iPods in the quarter, compared to 15.4 million year-over-year.

Looking at financial numbers, Apple posted record quarterly revenue of $54.5 billion along with record quarterly net profit of $13.1 billion, or $13.81 per diluted share. These results compare to revenue of $46.3 billion and net profit of $13.1 billion, or $13.87 per diluted share, year-over-year, but in addition, fiscal Q1 2012 was a 14-week period, and fiscal Q1 2013 was only 13 weeks in length.

Those numbers mean that Apple narrowly missed street estimates on its revenue, but topped estimates on profits.

Gross margin was 38.6 percent compared to 44.7 percent in the year-ago quarter. International sales accounted for 61 percent of the quarter’s revenue. The lower gross margin might be an indication of iPad mini sales; Apple does not break out those numbers nor those of the still-selling iPad 2.

If Apple does release a lower-cost iPhone, as is rumored, it might see its gross margins drop still further.

Apple is providing the following guidance for its fiscal 2013 second quarter:
  • revenue between $41 billion and $43 billion
  • gross margin between 37.5 percent and 38.5 percent
  • operating expenses between $3.8 billion and $3.9 billion
  • other income/(expense) of $350 million
  • tax rate of 26 percent
Despite the record numbers, the stock market is not happy with those numbers. Apple stock is way down, -$50.53‎ (-9.83 percent) in after-hours trading at the time of this writing.  That price is a far cry from Apple’s 52-week high of $705.07.

One can see why this is happening based on last quarter's results, without even looking at the company's guidance.

Consensus analyst estimates for Apple were: $54.58 billion (a slight miss), 50 million iPhones (a miss), 23 million iPads (a narrow miss), 12 million iPods (above Street estimates), and 5 million Macs (well below Street estimates).

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