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.
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01