Apple Inc missed Wall Street's revenue forecast for the third straight quarter after iPhone sales came in below expectations, fanning fears that its dominance of consumer electronics is slipping.
Shares of the world's largest tech company fell 10% to US$463 in afterhours trade, wiping out some US$50bil of its market value nearly equivalent to that of HewlettPackard and Dell combined.
On Wednesday, Apple said it shipped a record 47.8 million iPhones in the December quarter, up 29% from a year earlier. But that lagged the 50 million that analysts on average had projected.
Expectations heading into the results had been subdued by news of possible production cutbacks by some component suppliers in Asia, triggering fears that demand for the iPhone, which accounts for half of Apple's revenue, and the iPad could be slowing.
But some investors clung to hopes for a repeat of years of historical outperformance, analysts said.
”It's going to call into question Apple's dominance in the space. It's still one of the strong players, the others being Samsung and Google. It's still a twohorse race, but Android continues to grow rapidly,” said Sterne Agee analyst Shaw Wu.
”If you step back a bit, it's clear they shipped a lot of phones. But the problem is the high expectations that investors have. Apple's conservative guidance highlights the concerns over production cuts coming out of Asia recently.”
Apple is forecasting revenue of US$41bil to US$43bil in the current, second fiscal quarter, lagging the average Wall Street forecast of more than US$45bil.
Fiscal firstquarter revenue rose 18% to US$54.5bil, below the average analyst estimate of US$54.73bil, though earnings per share of US$13.81 beat the Street forecast of US$13.47, according to Thomson Reuters I/B/E/S.
Apple also undershot revenue targets in the previous two quarters, and these results will prompt more questions on what Apple has in its product pipeline, and what it can do to attract new sales and maintain its growth trajectory, analysts said.
Net income of US$13.07bil was virtually flat with US$13.06bil a year earlier on higher manufacturing costs. The yearago quarter also had an extra week compared to this year.
Gross margins consequently slid to 38.6%, from 44.7% previously.
“You can't just keep rolling out iPhones and iPads and think that everybody needs a new one,” said Jeffrey Gundlach, who runs DoubleLine Capital LP, the US$53bil bond firm. “The mini? What is that all about? It is a slightly smaller iPad, so what? So that is our new definition of innovation?”
“There are plenty of competitors like Samsung and other legitimate competitors like them,” added Gundlach, one of the highest profile Apple bears. He maintains a US$425 price target. Taking into account the drop in shares in Wednesday's afterhours trading, Apple's stock is now down 34 % from its September record high.