Apple shares take hit after Q4 earnings

Despite 54% increase in net income, iPhone sales fail to meet expectations

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Shares of Apple (NASDAQ: AAPL) fell nearly 8% in extended trading Tuesday after the company reported a fiscal fourth-quarter earnings increase of 54%, but failed to meet Wall Street estimates.

After dropping as low as 33.33, or 7.9%, to 388.91 from Tuesday's closing price of 422.24, Apple's stock bounced back after hours to 401.63, or 4.9% below Tuesday's close.

Apple reported net income for the quarter ended Sept. 24 of $6.62 billion, or $7.05 a share, up from $4.31 billion, or $4.64 a share, in last year's fourth quarter.

Revenue was $28.27 billion, up 39% from last year's $20.34 billion.

Analysts had expected the Apple to post Q4 earnings of $7.38 a share on revenue of $29.7 billion.

Apple reported selling 17.07 million iPhones in the fourth quarter, up 21% from the year-ago quarter. That sales figure apparently was below expectations (whatever they were).

For some odd reason many investors seem to have forgotten that, unlike in other years, there was no new iPhone in July, hence the lower sales.

Further, the iPhone 4S, released last Friday, has set records for early iPhone sales. Seriously, what are some investors panicking about?

Apple also reported selling 11.12 million iPads, a gain of 166% over the 4.19 million sold in the year-ago quarter. The tablet was first released in April 2010.

In a statement accompanying the earnings release, Apple CEO Tim Cook said, "Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline."

That sounds about right.

The only downside to Q4's earnings was the 27% decline in iPod sales, but the media player is being replaced gradually by iPhones.

Let's see what Apple says in the earnings conference call, which is just beginning. We may hear something about plans for long-awaited iPhone 5.

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