iPhones selling like hot cakes but Apple is predicting slowdown in Q2
AS record iPhone and iPad sales for Apple’s first quarter fiscal 2014 (Oct – Dec) are announced, shares slump after a slowdown is forecast.
The Cupertino-based tech giant posted “record” Q1 revenues of US$57.6 billion and net profit of $13.1 billion, or $14.50 per diluted share. International sales accounted for 63 percent of revenues, as Apple grows its footprint in China.
This marks a $3.1bn revenue rise over Q1 2013 although there was no profit growth in the 12 months.
However, the outlook for Q2 is not as rosy, with Apple CFO predicting revenue to slump more than $10bn, to between $42bn-$44bn, blamed on changes in channel inventory, lower iPod sales and a stronger US dollar. However, Apple CFO insists revenue growth will be stronger than the forecast implies.
Company shares fell as much as 8% to $505.95 in after-hours trading after investors were irked after the lower than expected forecast.
Still, Apple says it hit “an all-time quarterly record” in Q1 selling 51 million iPhones, compared to 47.8 m a year-ago, and 26 m iPads were sold, up 3 m year-on-year.
However, iPod sales declined 52% year-over-year and Apple predicts sales to weaken further.
The Company sold 4.8 million Macs, a 700,000 rise, with Peter Oppenheimer, Apple’s CFO noting the growth is in spite of slowdown in the global PC market.
Oppenheimer also hit out at rival Google, noting rival software developers are less loyal to Android than iOS, and said the company was also very pleased with iTunes, apps software and services growth.
“We are really happy with our record iPhone and iPad sales, the strong performance of our Mac products and the continued growth of iTunes, Software and Services,” said CEO Tim Cook.
He also confirmed “we’re working on things you can’t see today” and also spoke of “a lot of opportunity” in the area of mobile payments, during the earnings call, today.
The company generated $22.7 billion in cash flow from operations and returned $7.7 billion in cash to shareholders through dividends and share repurchases.
Apple is providing the following guidance for its fiscal 2014 second quarter:
. revenue between $42 billion and $44 billion
. gross margin between 37 percent and 38 percent
. operating expenses between $4.3 billion and $4.4 billion
. other income/(expense) of $200 million
. tax rate of 26.2 percent