Apple Inc’s profits and margins slid last quarter, despite selling 33.8 million iPhones, while its Greater China revenue climbed just 6 percent even though two smartphone models hit store shelves in its second-largest market last month.
Wall Street had hoped for a stronger beat on quarterly sales after the company predicted last month that its revenue and margins would come in at the high end of its own forecasts.
Apple chief executive Tim Cook predicted a “really great” holiday season — a crucial time for Apple as its new iPads go up against Amazon.com Inc’s Kindle Fire and its new iPhones compete with lower-cost gadgets made by Samsung Electronics Co and other rivals running Google Inc’s Android software.
Photo: Reuters
However, revenue from Taiwan, China and Hong Kong climbed just 6 percent to US$5.7 billion in the quarter, despite the iPhone 5C and 5S going on sale in the region last month. The previous generation of the iPhone 5 only began selling in China in December last year, meaning that comparisons should have benefited from a more typical quarter in that year, analysts said.
Sales grew by about 24 percent from the previous quarter, or by about US$1.1 billion, but that lagged behind the about US$1.4 billion that Apple managed to tack on in the final quarter of last year.
“It does raise the question, how well is Apple doing really, in China?” JMP Securities analyst Alex Gauna said.
“Apple is a very healthy company,” he said, but added: “If you look at the last few quarters, and even with the guide, it’s not much of a growth company.”
Cook told analysts on a conference call that results from China were “pretty good,” but acknowledged room for improvement.
“We obviously want to do better,” he said.
Cook did not address the overall popularity of the iPhone 5C on his call with analysts, but mentioned there was “a very significant backlog” for the more expensive 5S.
Apple on Monday said it expected revenue of between US$55 billion and US$58 billion this quarter, outpacing Wall Street’s forecast for about US$55.65 billion.
Gross profit margin for the quarter ended last month was 37 percent, down from 40 percent a year ago as intense competition from the likes of Samsung took a toll. That was about level with analysts’ average 36.9 percent forecast.
Apple shares, which have gained 17 percent since its upbeat forecast last month, slid as much as 5 percent on Monday before recovering after Cook said the company will continue studying its capital return program, addressing recent demands by investors to share more of its cash hoard.
Apple is increasingly hard-pressed to fend off rivals.
Strategy Analytics estimated on Monday that Apple’s market share slipped to 13.4 percent in the calendar third quarter from 15.6 percent previously, while Samsung led with 35.2 percent.
As growth tapers off, some shareholders have become increasingly aggressive at seeking a bigger return of cash. Billionaire Carl Icahn, who owns 4.7 million Apple shares, has led the charge, demanding the company initiate a tender offer to buy back US$150 billion of its stock.
Cook told analysts the company would continue to seek shareholder input on its capital return program and announce any changes in the first part of the new calendar year.
Apple said it sold 33.8 million iPhones last quarter, approximately in line with expectations for between 33 million and 36 million.
It sold 14.1 million iPads during the third quarter, up very slightly from 14 million the previous year, and moved 4.6 million of its Mac computers, down from 4.9 million a year ago.
Apple’s revenue for the quarter was US$37.5 billion, surpassing of Wall Street’s average forecast of US$36.8 billion, according to Thomson Reuters I/B/E/S.
The company’s earnings per share slid for the third straight quarter to US$8.26, but beat analysts’ average estimate of US$7.94.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS