With concerns mounting about slowing growth and increased competition from rivals, Apple investors were hoping the iPhone—and iPad—maker would blow the doors off of its first quarter financial results. But while the Cupertino, Calif. company came close, it didn’t quite meet Wall Street’s expectations.
Apple reported earnings of $13.1 billion (U.S.) in the first quarter, about the same as what it earned during the same period last year. But investors were focused on Apple’s $54.5 billion in sales, which was less than the $54.9 billion that was expected by analysts. Another key figure—profit margin—also came in below the Street’s expectations at 38.6 per cent instead of 39.5 per cent, suggesting Apple’s ability to command a premium price for its products in the face of competition from rivals like Samsung is slipping faster than anticipated. Shares of Apple dropped below $500 in after-market trading. The stock has fallen by 26 per cent since September.
As for device sales, Apple said it sold 47.8 million iPhones, 22.9 million iPads, 4.1 million Macs and 12.7 million iPods in the quarter.
CEO Tim Cook reminded analysts on a conference call that Apple remains an impressive story, noting that it has so far sold well over half a billion devices running its mobile iOS platform. He also took on rumours that demand for the iPhone, which accounts for nearly half of all sales, was faltering amid reports it had cut orders for parts from some of its suppliers. “The supply chain is very complex,” Cook said, adding that it would be a mistake to try to interpret a single piece of data, even if it’s accurate, as being representative of Apple’s broader business. He also said initial iPhone 5 sales were constrained by Apple’s ability to make them quickly enough.
Apple is still an impressive company with impressive prospects. But investors have grown accustomed to being dazzled. Good simply isn’t good enough anymore.