Apple profit falls for first time in nearly a decade


Thu, Apr 25, 2013 - Page 1

Apple reported on Tuesday that its quarterly profit dipped for the first time in nearly a decade as it squeezed less money from its champions in the competitive smartphone and tablet markets.

The maker of iPhones, iPads, iPods and Macintosh computers stepped in to bolster its stock price by announcing a plan to more than double to US$100 billion the amount it will spend to buy back its stock and pay out dividends.

Apple raised a coming stock dividend by 15 percent to US$3.05 per common share.

“We will fund the capital return program from operations and borrowing,” Apple chief financial officer Peter Oppenheimer said.

Apple shares jumped briefly on the news in after-hours trade, but slid back to US$403.95, about US$2 below where they were at the close of the NASDAQ.

“They bought themselves some extra time,” Silicon Valley analyst Rob Enderle said of Apple tapping into its cash reserves to pay off investors. “They are basically selling off Apple’s future to prop up Apple’s stock price in the short term.”

The move veers from the way late Apple co-founder Steve Jobs fiercely guarded cash reserves.

The California-based company posted a profit of US$9.5 billion on revenue of US$43.6 billion in the first three months of this year, compared with a profit of US$11.6 billion on US$39.2 billion in the same quarter last year. Its gross margin shrank to 37.5 percent from 47.5 percent.

The number of iPhones sold in the quarter rose to 37.4 million, from 35.1 million in the same quarter last year. The number of iPads sold surged to 19.5 million from 11.8 million a year earlier, but sales of iPods dropped by more than 1 million to 5.6 million and Macintosh computer sales slipped about 2 percent to just below 4 million, Oppenheimer said.

The Apple board raised the overall stock repurchase target to US$60 billion from US$10 billion.

Apple chief executive Tim Cook said that the decline in Apple stock in recent quarters has been “very frustrating for all of us.”

Shares of Taiwan-listed firms in the Apple Inc supply chain staged a rebound yesterday morning after the consumer electronics giant’s first-quarter results delivered no negative surprises, dealers said.

Major Apple suppliers, such as contract electronics maker Hon Hai Precision Industry Co (鴻海精密) and smartphone camera lens manufacturer Largan Precision Co (大立光), had slumped on concerns over Apple’s numbers.

However, they attracted bargain hunting soon after the market opened, dealers said. As of 11:23am, shares of Hon Hai, which assembles iPhones and iPads, had added 1.57 percent to NT$77.40 (US$2.60) with 15.52 million shares changing hands, while Largan had gained 1.44 percent to NT$706.00.