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A slice of Apple for everyone: Profit falls, beats expectations and has analysts worried over outlook

Published 24 April 2013 09:20, Updated 11 June 2013 11:53

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A slice of Apple for everyone: Profit falls, beats expectations and has analysts worried over outlook

Apple chief Tim Cook says Apple is being hit by a number of factors outside its control, such as supplier costs and exchange rates, but says the company will remain focused on innovation. Photo: AP

Whatever your opinion on the future of tech giant Apple, its quarterly earnings results will help you make your case.

Apple’s earnings for the three months to March fell from $US11.6 billion to $US9.5 billion, with revenue rising from $US39.3 billion to $US43.6 billion. It is the first time earnings dropped in almost a decade.

However, it isn’t all doom and gloom.

The market had expected Apple’s earnings per share to be $US9.98, so the actual number of $US10.09 is welcomed in many quarters as a pleasant surprise.

Apple’s own forecast had been for a profit of between $US9.23 and $US10.23 per share on sales of $US41 billion to $US43 billion.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” Apple chief Tim Cook says in a statement.

The company says it sold 37.4 million iPhones in the quarter, compared to 35.1 million last year, while iPad sales increased to 19.5 million from 11.8 million.

Cook acknowledged on a conference call with media that the Apple train was slowing, but says comparisons to last year were unfair because the financial results were so big.

“We acknowledge our growth rate has slowed and our margin has decreased from our exceptional 2012,” Cook says.

There are also questions over the short-term outlook, with Apple saying sales in the current quarter will be between $US33.5 billion and $US35.5 billion, well below the $US38.4 billion estimate from analysts.

A lot more surprises in the works

But Cook works hard to talk about Apple’s future, declaring Apple is excited about the pipeline of products it has under way.

“Our teams are hard at work on some amazing new hardware, software and services that we can’t wait to introduce in the [northern] autumn and into 2014. We remain very confident in our product plan.

“This is the same company that brought the world the iPhone and the iPad and we’ve got a lot more surprises in the works.”

Most analysts expect products that could be released in the Australian spring will include a new iPhone model, a new iPad and, potentially, a cheap version of the iPhone.

But Cook concedes that Apple has not been happy with the recent slide in its shares, which have fallen 35 per cent since the start of the year to around $US406, and are a long way off their $US705 52-week high.

“The decline in Apple’s stock price over the last couple of quarters has been very frustrating to all of us. But Apple remains very strong and we will continue to do what we do best – we can’t control items such as exchange rates and world economies and even certain cost pressures – but the most important objective for Apple will always be creating innovative products. And that is directly within our control.”

Also in Cook’s control is Apple’s huge pile of cash, which sits at $US145 billion at the end of the quarter.

This has allowed the company to increase its share buyback from $US55 billion to $US100 billion over the next three years. That should provide some level of support to the Apple share price although the developing outlook for Apple will of course be more closely watched by investors.

Meanwhile, the competitive threats faced by Apple are highlighted by the unveiling of Samsung’s new smartphone, the Galaxy S4 in Australia.

The phone goes on sale on the weekend for $899.

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