Apple revenues miss expectations as iPhone sales disappoint
Computing giant Apple has reported flat profits and record revenues that still fell short of market expectations.
Net profit came in at $13.1bn (£8.7bn), unchanged from a year earlier due in part to higher costs associated with new product launches.
Revenue was up 18% at $54.5bn, thanks to record sales of iPhones and iPads, the company said.
But Apple shares fell in after-hours trading, as sales of the iPhone in particular disappointed.
After seeing Apple's shares plunge nearly 30% - a move based almost entirely on sentiment rather than hard information - investors finally have some data to assess. Apple's Tim Cook said he was thrilled by results showing his firm's best ever revenue. The superlatives kept pouring out during the analysts' conference call - best ever iPhone and iPad sales, record music and app sales, growth in iPhone sales in China in the triple digits - and a cash pile of $137bn.
But, strange as it might seem, all of that evidence that Apple continues to be a phenomenal money-making machine may not be enough for Wall Street, which had expected even more. The big worry will be about iPhone sales which analysts had expected to be about 2 million higher.
Tim Cook was pressed on whether the firm had got the right sized screens, and on rumours that orders for new component supplies had been cut. He insisted Apple had got the best screens in the ideal size and that a complex supply chain made the rumours about cuts meaningless.
But the real problem for Apple is not the numbers but the fear amongst investors that its best days may be over, that it will never find another innovation to match the iPhone or iPad. Tim Cook insisted his firm was working on some "incredible stuff" but Wall Street will want to see it before it starts buying the shares again.
Shares in the firm have fallen almost 30% since September over concerns the company may be losing its edge over increasingly confident competitors.
The company's products are facing a growing challenge from Samsung and other makers of Android-based devices.
Some analysts have said Apple is not competitive on price in key emerging markets where many cannot afford their products and other firms sell smartphones at much lower prices.
However, as well as a rival, Samsung is also a supplier to Apple. Its shares fell 1.7% on the news of the disappointing iPhone sales.
LG, which provides displays for Apple products, fell 3.1%, and Hon Hai, which assembles iPhones and iPads, dropped 3.2%.'Thrilled'
Apple said it sold 47.8 million iPhones in the quarter, up from 37 million a year earlier, and 22.9 million iPads, compared with 15.4 million in the same period in 2011.
Many analysts had expected iPhone sales, following the release of the iPhone 5 in September, to break the 50 million mark.
"We're thrilled with record revenue of over $54bn and sales of over 75 million iOS devices in a single quarter," said Tim Cook, Apple's chief executive.
"We're very confident in our product pipeline as we continue to focus on innovation and making the best products in the world."
Analysts took rather a different view.
"The revenue number is dismal as far as what the expectations were," said Jeff Sica at Sica Wealth Management. However, he added that Apple was suffering from a "curse of high expectations".