Friday, October 26, 2012

Apple Inc. (NASDAQ:AAPL)’s Earnings Lagged On High Expectations and Supply Hindrance

The iPhones are the core of Apple Inc.(NASDAQ:AAPL)’s strategy and this was brought home forcibly when Apple reported its fourth quarter results.

While the earnings came in below expectations and sent its shares down, sales of the iPhones were in line with what the market had expected.

However the disappointment with Apple's earnings is relative, because the Street has very high expectations from the company and when these expectations are not met it becomes a disaster for them.

In the fourth quarter of its fiscal year, the company earned $8.2 billion on revenues of $36 billion.

“We’re very proud to end a fantastic fiscal year with record September quarter results,” Apple CEO Tim Cook said in a press release. “We’re entering this holiday season with the best iPhone, iPad, Mac and iPod products ever, and we remain very confident in our new product pipeline.”

Apple sold about 27 million iPhones during the quarter that also included about ten days of sales of the iPhone 5. This is about 58 percent than what it had sold in the comparable quarter a year earlier.

Analysts had expected sales of the iPhone at 25 million units.

iPad sales weren’t quite so stellar, though. Apple sold only 14 million this quarter, down from 17 million last quarter and below Wall Street estimates of 16 million. The disparity caused Apple stock to dip before trading was stopped.

“We continue to be very confident that the tablet market will surpass the PC market,” Cook said. “It is already extremely compelling for many customers to choose a tablet, in particular an iPad, over a PC. And when you look at the size of the PC market there is an enormous opportunity for Apple there.”

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