Tuesday, January 28, 2014

Apple stock tanks as fiscal Q2 2014 forecast underwhelms

Apple announced the results of its latest quarter, calendar year Q4 2013 (its first quarter for its fiscal year 2014), after the markets closed on Monday, and as Reuters noted, the results sent the stock tumbling in after-hours trading. Despite record revenue, the forecast and results from China were not good news to analysts.

Apple's revenue set a quarterly record of $57.6 billion, but while profits were $13.1 billion (or $14.50 a share), equal to a quarterly record set last year, that difference showed profit margins continue to shrink for the electronics giant. It had been expected that Apple's new deal with China Mobile would reap fruit, but the fruit was not as ripe as most had anticipated.
Pacific Crest Securities' Andy Hargreaves wrote, There's no doubt that shipments (to China Mobile) are lower than almost anybody expected. (Globally) the high-end smartphone and tablet markets are saturated, and that's not going to grow.
The iPhone 5c had been expected to be a lower-end smartphone that might leverage the low-mid range markets that have been the realm of Android, but it turned out to be a different take at Apple's normal procedure of selling the prior year's model at a lower price -- but still not as low as many had hoped (speculation ran that the device would sell for $99 unsubsidized, like Verizon's version of Moto G).

While Apple has never broken down its device sales in terms of which models sold which number, the company sold a record 51 million iPhones during the December quarter. Unfortunately for investors, that was still far lower than the approximately 55 million (average) that analysts had predicted.

The company forecast sales of $42 billion to $44 billion this quarter, which is better than normal because of Apple's new China Mobile deal. Still, though, analysts had forecast more, about $46 billion, on average.

Again, the China Mobile deal was expected to help Apple's bottom line a great deal, as not only is the carrier no. 1 in China, it is no. 1 in the world. However, Monday's Kantar Worldpanel Comtech report on its 12-week sliding sales window said that both Samsung -- and Apple -- took a back seat to Xiaomi, a homegrown OEM.

It's not as though Apple is that close to Xiaomi or Samsung, either. In Nov. 2013, a report said that Samsung then led in sales with 21 percent, while Lenovo and Yulong Computer took 13 percent and 11 percent respectively, and Huawei in the fourth slot with 9 percent. At the time, Apple edged past Xiaomi jumping from seventh in Q2 2013 to fifth, at 6 percent.

Apple stock is down 7 percent in early morning trading, at the time of this writing.

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