Business World

Wednesday 27 August 2014

Lacklustre results take big bite out of Apple's share price

Peter Flanagan New Technology Correspondent

Published 25/01/2013 | 05:00

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Fears that days of huge growth over as rivals take the limelight

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APPLE plunged the most in at least four years yesterday after the technology giant reported lacklustre fourth-quarter results, raising doubts about the future growth of the company.

In New York, shares in the company, which employs some 600 people in Cork, closed down over 12pc.

The fall knocked almost $54bn (€41bn) off the value of the company. That is about the same value as the investment bank Morgan Stanley, or nearly four times the size of CRH.

The company marginally beat profit forecasts on Wednesday night when it said earnings between October and December topped $13.1bn.

That was almost flat quarter-on-quarter, however. Sales grew 18pc to $54.9bn, but that was the worst rate of growth in more than three years, while MacBook sales plunged and iPhone sales came in much lower than expected.

That has sparked concerns among investors that the days of huge growth may be over for Apple unless it can come up with yet another game-changing product – something it has singularly failed to do since the death of Steve Jobs in 2010.

"People are concerned about how quickly sales are falling off after the initial product launches and whether the company can deliver new and interesting products to reignite growth," said Walter Piecyk, co-head of research at BTIG in New York.

Apple has reportedly cut orders for iPhone and iPad parts in recent weeks, in a sign the smartphone and tablet markets are slowing down.

Wars

"We think Apple is losing the screen-size wars," Jeffries analyst Peter Misek said, noting that demand was moving away from the iPhone's 3.5-inch and 4-inch screens to screens of 5-inches offered by rivals such as Samsung, HTC and Nokia.

For the fiscal second quarter, now under way, Apple forecast sales of $41bn to $43bn. That compares with predictions by analysts for revenue of $45.5bn.

Gross margin will be 37.5pc to 38.5pc. In a departure, Apple said it planned to stick to its guidance. Up to now the company has usually given very conservative guidance and then blown it out of the water with its final results.

The scale of the sell off that followed the results took market analysts by surprise. Several cut their target price for Apple immediately after the earnings had been released.

By last night at least 20 analysts who follow Apple had lowered their target price by an average of about 14pc.

By mid-afternoon shares in the company were down 10.5pc at $460.05.

Despite the plunge, it remained the most valuable public company on the planet, with a market capitalisation of $432bn. (Additional reporting by agencies)

Irish Independent

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