Apple delivers disappointing results with iPad sales short of targets
APPLE delivered a second straight quarter of disappointing results and iPad sales fell well short of Wall Street's targets, marring its record of consistently blowing past investors' expectations.
Shares in the world's most valuable technology company briefly dipped to levels not seen since the start of August, after it delivered a 27pc rise in fourth-quarter revenue and a 24pc increase in earnings.
The numbers, while in line with expectations, lacked the positive surprises that investors have grown used to, and came after Apple undershot revenue targets in the previous quarter.
Its shares bounced back after CEO Tim Cook told analysts on a conference call that the latest iPhone 5 was heavily backlogged but the company had mostly worked out kinks in its supply chain.
Apple shipped 26.9 million iPhones in the last quarter, just ahead of analysts' predictions, but iPad sales of 14 million were well below lowered forecasts for the tablet as the economy remained weak and consumers awaited the iPad mini, which will hit store shelves next month. South Korean rival Samsung Electronics Co sold 56.3 million smartphones in the quarter, according to research firm IDC, giving it 31.3pc global market share, more than double that of Apple.
Analysts say the real test for Apple will come during the crucial year-end holiday shopping season, when competition will reach fever-pitch against new gadgets from Amazon.com Inc, Google Inc and Microsoft Corp.
"Going into earnings we were wondering if the slowing economy will catch up with Wall Street, and it has," said Channing Smith, co-manager of the Capital Advisors Growth Fund.
"Apple is very well positioned with the iPad and now the iPad mini. It has a great smartphone and we expect the iPhone 5 to sell very well. The outlook is conservative, but that's not surprising. Err on the side of caution is a proven formula."
Apple heads into the current quarter after refreshing almost all of its product lines, including introducing an upgraded, fourth-generation full-sized iPad. The December quarter will show how well consumers respond to its latest gamble - the iPad mini - which goes on sale on Nov. 2.
Quarterly revenue in China, Apple's second-largest market, rose 26pc, and jumped nearly 80 percent to $23.8bn
over the full year, contributing 15pc of Apple's total,
Cook told analysts. Apple plans to launch the iPhone 5 in China in December, hoping to staunch market share loss in what is set to become the world's largest smartphone market this year.
Apple's China smartphone market share almost halved to 10pc in April-June as buyers waited for the iPhone 5.