Apple shares have dropped as much as nine per cent in afterhours trading following the Cupertino firm's publishing of financial results and projections yesterday evening. The stock market is all about expectations so while the most recent quarter results were better than had been expected in some ways, with a record 51 million iPhones sold, profits had remained flat and the outlook was reported to be weak.
China provides few fireworks
We reported upon the Apple and China Mobile deal just before Christmas. This was supposed to be a huge opportunity for Apple as it could tap into that network's 750 million subscribers. At the time the FT reported upon the "billions of dollars in extra iPhone revenues," that could be gained. At the time of the China Mobile deal confirmation the company chairman, Xi Guohua, told us how "Apple’s iPhone is very much loved by millions of customers," but it looks like love doesn't help pay the bills...
Apparently enough time has passed since the China Mobile deal for valid estimates of how things will progress in the coming quarters. An analyst speaking to Reuters said that Apple's shipments to China Mobile have been "lower than almost anybody expected". The same analyst added that worldwide the premium smartphone market is saturated. Without the growth prospects in China (and elsewhere) it is thought that Apple's share price is too high.
iPhone 5c - what does the 'c' stand for?
The iPhone sales figures weren't broken down for us to look at. We know that the total figure of iPhones sold was a record 51 million, which was unfortunately four million less than analyst expectations. Also with shortages of the iPhone 5S model reported in recent months it's obvious the iPhone 5c is to 'blame'.
AppleInsider reports that Tim Cook offered some explanation of the negative impact of the iPhone 5c during the earnings conference call last night - by being positive about the iPhone 5S - "I think the 5S, people are really intrigued with Touch ID," said Cook. "It's a major feature that has excited people. And I think that associated with the other things that are unique to the 5S, got the 5s to have a significant amount more attention and a higher mix of sales." There are rumours of the iPhone 5c being scrapped this year in a recent WSJ article.
Other key figures from last night
Apple sold a record 26 million iPads globally in the quarter to January - China helped that figure along with iPad sales doubling during the period. Also 4.8 million Mac computers were sold during the full year with the iMac and MacBook Air contributing most to that growth from 4.1 million the previous year. The most negative result, but not unexpected, was the iPod sales slump of 52 per cent year-on-year.
Apple has a number of possibilities to pick itself up from the flat-growth prospect we saw last night, these include; the upcoming iWatch, or a living room conquering Apple TV 2 and/or the possibility of becoming a big mobile payments and advertising company.