Apple Posts £8Bn Profit But Disappoints Wall Street

Apple has produced another set of stunning financials, yet Wall Street was not overly impressed with its performance.

In just a 13-week period, the world’s most profitable company posted a quarterly net profit of $13.1 billion (£8.3bn), on the back of record quarterly revenue at $54.5 billion (£34.4bn). The figures resulted in a whopping $13.81 (£8.72) per stock share.

Strong Performance

A year ago, Apple posted quarterly net profit of $13.1 billion (£8.3bn), coupled with revenue of $46.3 billion (£29.5bn). Gross margin in the latest report was 38.6 percent compared with 44.7 percent in Q1 2012.

International sales accounted for 61 percent of quarterly revenue.

Apple’s first-quarter 2013 results also revealed it is selling 3.5 million iPhones and 1.7 million iPads per week.

The Apple financials had quickly followed rival Google’s record quarterly numbers, in which the search giant became the first primarily Web-based company to break the $50 billion (£31.6bn) mark in annual revenue. Google also makes the Android operating system for mobile devices, which currently dominates world markets and competes head to head with Apple’s iPhone.

Yet despite the glossy numbers from Apple, hard-to-satisfy Wall Street wasn’t overly pleased.

Wall Street Disappointment

Apple missed the Street’s revenue forecast for the third straight quarter because iPhone sales, despite the solid numbers, came in just below expectations. Apple said it shipped a record 47.8 million iPhones in Q1, which was up 29 percent from the year-ago period but below the 50 million that analysts had expected to see.

The stock fell 10 percent to $463 (£292) after the closing bell, evaporating about $50 billion (£31.6bn) in company market value in only a short time after it closed at $514 (£324) per share.

Average weekly revenue was a very impressive $4.2 billion (£2.6bn) in Q1 2013 compared with $3.3 billion (£2bn) a year ago, Apple said.

The Cupertino, Calif.-based device maker and Web services provider also sold a record 22.9 million iPads during the quarter, compared with 15.4 million in Q1 2012.

Among other products, Apple’s sales of PCs continue to slip along with the rest of the world market. The company sold 4.1 million Macintosh PCs, compared with 5.2 million in the year-ago quarter. Apple also sold 12.7 million iPods in the quarter, compared with 15.4 million in the year-ago quarter.

Happy Cook

Apple’s iPhone 5 sales in the United States far outdistance sales in foreign countries, which are dominated by Android devices made by Samsung, LG, HTC and numerous other handset makers.

Apple CEO Tim Cook, however, wasn’t fazed by a Morgan Stanley analyst on a conference call with analysts and journalists, who questioned whether Apple has the right screen sizes and price points to capture non-US demand.

“Sequentially, we increased by 70 percent over the previous September quarter. We could not be happier with that,” Cook said in sidestepping the question. “In terms of the geographic distribution, we saw our highest growth in China, and it was into the triple digits. I would characterise it as we’re extremely pleased.”

Apple also provided guidance for its fiscal 2013 second quarter that included revenue estimates of between $41 billion (£25.9bn) and $43 billion (£27bn), gross margin between 37.5 percent and 38.5 percent, and operating expenses between $3.8 billion (£2.4bn) and $3.9 billion (£2.5bn).

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