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Apple's iPhone unit sales miss expectations, iPads beat

  • Apple's (AAPL) FQ1 iPhone sales fell short of Street expectations of 56M-57M. iPad sales were above expectations of 24M-25M, and Mac sales slightly above expectations of 4.6M. Expect calls for a larger iPhone (reportedly in the pipeline) to pick up.
  • FQ2 gross margin is expected be in a range of 37%-38%, which compares with a prior-year level of 37.5%. FQ1 GM, though beating guidance, was down 70 bps Y/Y.
  • iPhone sales ($32.5B, 56% of revenue) rose 6% Y/Y vs. 17% in FQ4. iPad sales ($11.5B) +7% vs. -13%. Mac sales ($6.4B) +16% vs. -15%.
  • iTunes/software/services revenue +19% to $4.4B. iPod sales -55% to $973M on 6M unit sales. Accessories +2% to $1.9B.
  • Exc. retail, Americas revenue -1% Y/Y vs. +1% in FQ4. Europe +5% vs. flat growth. Greater China was a strong point ahead of the China Mobile launch, sales +29% vs. +6%. Japan +11% vs. +41%. Rest of Asia-Pac (features many cost-sensitive markets and seeing strong phablet demand) -9% vs. -6%. Retail +9% vs. +6%.
  • R&D spend +32% Y/Y to $1.33B (investments in new products?). SG&A +8% to $3.05B. $5B was spent on buybacks.
  • AAPL -5.7% AH. FQ1 results, PR.
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Comments (50)
  • Misho ILIEV
    , contributor
    Comments (575) | Send Message
     
    Not good, not good!

     

    It's a competitive market, everybody was warned about that. But many people chose to believe that Apple will be out-competing its rivals at all times.

     

    Well - no!
    27 Jan, 04:59 PM Reply Like
  • Yesterdays_news
    , contributor
    Comments (1358) | Send Message
     
    They made their numbers and that is all that really matters!

     

    Can you say that about Moto profits?
    http://bit.ly/1f43tVu

     

    Who cares what the analysts whisper numbers are because these are the analysts that own Google stock! They smartly set the bar way to high on every Apple report to keep investors in Google!
    27 Jan, 05:33 PM Reply Like
  • FAT BANKER
    , contributor
    Comments (951) | Send Message
     
    Re Yesterdays_news. Comment747

     

    Yes, Agreed.
    Let us see how Google do in a few days and how much profit Google make .
    AND let's see what the Wall Street lap dog Analysts will say about Google - this will be interesting !!
    27 Jan, 05:44 PM Reply Like
  • hko2012
    , contributor
    Comments (237) | Send Message
     
    64-bit doesn't seem to be the next big thing.
    27 Jan, 05:02 PM Reply Like
  • ks_droid
    , contributor
    Comments (144) | Send Message
     
    In my company we still have many PCs running on 32-bit :P
    27 Jan, 05:07 PM Reply Like
  • flux8
    , contributor
    Comments (590) | Send Message
     
    51 million iPhones + 26 million iPads = record sales.
    Earnings = 4th on the all time best earnings reports. http://bit.ly/1e3caRL
    Other tech companies in the top 22 quarterly earnings of all time? None.
    27 Jan, 05:33 PM Reply Like
  • dbt01
    , contributor
    Comments (537) | Send Message
     
    coming from you, I believe it
    27 Jan, 05:46 PM Reply Like
  • hko2012
    , contributor
    Comments (237) | Send Message
     
    @flux8: Look how 1Q2014 and 1Q2013 and 1Q2012 are almost the same. Apple is stagnating. Further, it is just wikipedia.
    28 Jan, 03:27 AM Reply Like
  • flux8
    , contributor
    Comments (590) | Send Message
     
    Slight increase in each year. Good enough to be in the top 10 of quarterly earnings reports of any company in the world, in all of history. That means they occupy 4th, 5th, and 6th place (1Q2014, 1Q2013, 1Q2012 respectively). Again, find another tech company in the top 22.

     

    You have something against Wikipedia? Are you saying the information is wrong?
    28 Jan, 01:15 PM Reply Like
  • criticalbear
    , contributor
    Comments (81) | Send Message
     
    seems like revenue isn't outpacing gross margings. apple really needs a new product category
    27 Jan, 05:06 PM Reply Like
  • techy46
    , contributor
    Comments (6268) | Send Message
     
    Smart phones and tablets are now just another PC form factor. Pick your brand and enjoy.
    27 Jan, 05:07 PM Reply Like
  • chopchop0
    , contributor
    Comments (3526) | Send Message
     
    yup.

     

    AAPL is in a commodity business.
    27 Jan, 08:09 PM Reply Like
  • MJ Pragmatist
    , contributor
    Comments (147) | Send Message
     
    Well, I think they could really expand their product offerings as well as deliver a new product. A larger iPhone is a no brainer, but I think they could also further expand their iPad offerings. And they continue to offer more software and services related products.
    27 Jan, 08:41 PM Reply Like
  • buyonpanic
    , contributor
    Comments (49) | Send Message
     
    People are not going to keep buying the newest latest and greatest Apple phone product. When most people can get the last generation phone for free via renewing cell phone agreement, they are going to wait vs paying for minimal feature upgrade. Also some of the security issues in technology may keep people from using Iphones for "everything".

     

    Ipads are still very marketable and imo what Apple should be focused on in my opinion
    27 Jan, 05:13 PM Reply Like
  • Gary J
    , contributor
    Comments (4749) | Send Message
     
    newsflash - it's not "free" then either.
    27 Jan, 05:15 PM Reply Like
  • buyonpanic
    , contributor
    Comments (49) | Send Message
     
    True. But it's easier to sign up for 2 more yrs and get the phone vs plunking down the $200 or whatever the cost. Apple is a great company but it's also one most can see when it becomes overvalued....as it did a couple years ago. It is probably fairly valued now but too many people still expect to make a killing off this stock. I just don't see that feasible in this environment
    28 Jan, 09:35 AM Reply Like
  • scott trader
    , contributor
    Comments (4895) | Send Message
     
    Yep run for the exits...".. 51 million supply constrained 5s phone sales and China just just going online....and another twenty billion added to the 146 billion cash....
    27 Jan, 05:14 PM Reply Like
  • hko2012
    , contributor
    Comments (237) | Send Message
     
    Might not be that bad but also not really exciting, given the outlook.
    27 Jan, 05:17 PM Reply Like
  • StepUp
    , contributor
    Comments (471) | Send Message
     
    what do you want. The PE is under 14. Its not like tremendous growth is priced in. 5B in buybacks, beat EPS and revenue, dividend, 51 Million users added to the iTunes and Apple store ecosystems, new products in 2014 including a mobile payments play and bigger screen phones...........
    27 Jan, 05:23 PM Reply Like
  • FAT BANKER
    , contributor
    Comments (951) | Send Message
     
    Re SetUp. Comment251

     

    Yes, agreed however, we are not discussing this with 'the rational' - this is War!
    And might even go 'thermal nuclear', as Steve said.
    Let's see how Google are treated ( and their share price) after their results in a few days time.
    27 Jan, 06:03 PM Reply Like
  • scott trader
    , contributor
    Comments (4895) | Send Message
     
    Apple insider reports.."...
    On Friday we reported that Apple's new iPhones hit Samsung's Q4 Badly. On January 07, Businessweek estimated that Samsung had shipped 13 million units of their Galaxy S4 for Q4. Yet when the real numbers came in days later, Bloomberg reported that it was actually much, much worse at a measly 9 million units, down from selling 17 million in Q3. Today, Apple announced a record-breaking 51 million iPhones were sold in the holiday Quarter which clearly demonstrates that the new iPhone 5S was a smash hit this holiday season with consumers over rival products from Samsung and others.
    27 Jan, 06:25 PM Reply Like
  • StepUp
    , contributor
    Comments (471) | Send Message
     
    wow so many nay-sayers. Apple beat its numbers handily. They always sandbag guidance. I expect they will continue to grow revenues and gross margins next quarter just as they did this quarter. Not to mention new products are in the pipeline will be released this year. Buying this dip.
    27 Jan, 05:16 PM Reply Like
  • hko2012
    , contributor
    Comments (237) | Send Message
     
    Some of the "new products" were actually released this quarter, for example two new iPhones.
    27 Jan, 05:20 PM Reply Like
  • Yesterdays_news
    , contributor
    Comments (1358) | Send Message
     
    "wow so many nay-sayers. Apple beat its numbers handily."
    Yes, they made their numbers and increased HUGE profits, but the analysts that hate Apple put the expectation "whisper numbers" way way too high once AGAIN to submarine the stock!
    This happens with every Apple report. Funny that Google's last report was not that great, yet that stock flies higher and higher on rumors, speculation, and crazy moonshot ideas!
    Can't wait for the Google report in a few days. You watch, even with a bad report, it will go up since these analysts own Google!
    27 Jan, 05:26 PM Reply Like
  • MJ Badagliacco
    , contributor
    Comments (290) | Send Message
     
    No other company can beat guidance and get hammered! Unreal!
    27 Jan, 05:20 PM Reply Like
  • ks_droid
    , contributor
    Comments (144) | Send Message
     
    Well if you really think like that, you can buy a lot of shares tomorrow ...
    27 Jan, 05:26 PM Reply Like
  • Skippy09
    , contributor
    Comments (1602) | Send Message
     
    I'm gonna' do just that.
    Talk about a buying opportunity!
    27 Jan, 11:54 PM Reply Like
  • Jack Baker
    , contributor
    Comments (896) | Send Message
     
    Apple is just hated. They beat earrings estimates by 10%. Any other company would be flying in the after hours. Not Apple. I largely blame Apple's management for this negative perception. And I am pissed that they were supply constrained on the 5s. There is no excuse for this at this point in the product cycle. Is shows incompetence at the one think Cook was supposed to do best.
    27 Jan, 05:24 PM Reply Like
  • FAT BANKER
    , contributor
    Comments (951) | Send Message
     
    Re Jack Baker
    Ridiculous to blame Tim Cook who is doing a brilliant job 24/7.
    Blame these Goons in Wall Street and their media lap dogs.
    If it had been up to Wall Street , Apple would be making Apple Mac clones
    in beige boxes and would asset strip and destroy this brilliantly creative company given half the chance.
    27 Jan, 06:14 PM Reply Like
  • Jack Baker
    , contributor
    Comments (896) | Send Message
     
    @Fat Banker
    A brilliant job, huh? How is not managing the supply chain appropriately a "brilliant job" exactly? Apple increased initial production of the 5s by 75% in the quarter from the initial output and they still only produced 10% more iPhones than the YOY quarter before they became supply constrained. How is that brilliant? How is miscalculating that the market would want an expensive plastic 5c brilliant?

     

    With 150 billion in the bank, Apple should never be supply constrained on any product.

     

    How's this for brilliance: Cook to management: "we are never going to miss one unit sale again due to supply constraints on existing products. We are going to make sure we can produce all new iterations of existing products with enough production capacity to greatly exceed the YOY period." If a desired component prevents us from doing this it will be excluded until such a time that it can be produced in ample supply to meet this goal." Now, this is NOT genius, it's common sense and a good business practice for a company that doesn't want to hamstring itself from it's maximum growth. Apparently it's too difficult a concept for Mr. Cook, the supposed supply chain genius.
    28 Jan, 11:40 AM Reply Like
  • imac007
    , contributor
    Comments (527) | Send Message
     
    The big picture is the holiday season for retailers sucked. The stores that decided to deep discount and hoped that volume would make up for margin, fell short on volume. The retailers that failed to discount saw disappointing sales, the consumers punished them because they were conditioned towards discounts. A shortened holiday interval didn't help. While initial sales were strong they must have lost momentum towards the end of quarter. I need to listen to the call.
    27 Jan, 05:25 PM Reply Like
  • David RG
    , contributor
    Comments (1317) | Send Message
     
    I don't know. The big picture is there is no growth. Zero next quarter. You can't ask for PE expansion with no growth.
    27 Jan, 06:05 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (119) | Send Message
     
    Awesome quarter and stock is on sale ! Tomorrow is going to be a good day if It opens at 510 . Pardon me I need to back the truck up through here partner.
    27 Jan, 05:26 PM Reply Like
  • shakazoid
    , contributor
    Comments (182) | Send Message
     
    Longs " Don't worry, be happy" . AAPL will come out with an ifool in no time to save us all
    27 Jan, 05:44 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (119) | Send Message
     
    Did you hear the one about the company that has 159 billion in the bank, has a market cap of 291 bb ( less cash ) and is expensive ? C'mon man! What fool would be a seller of this.
    27 Jan, 05:50 PM Reply Like
  • Warren Buffet007
    , contributor
    Comments (955) | Send Message
     
    Some weeks ago when I recomended sell Apple, I mentioned that Smartphones , Tablets and PC are not a every day bread. This electronics things are can live some years without any problem. So the point is when the actual iPhone user not can sale his old ipHone than the sells chain are brocken!, but this is valid for the entire consumer things.
    27 Jan, 06:02 PM Reply Like
  • SoldHigh
    , contributor
    Comments (1013) | Send Message
     
    The law of large numbers tempers growth here imo.

     

    What people fail to grasp is that AAPL morphed from a growth play to a value about a year ago.
    27 Jan, 06:02 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (119) | Send Message
     
    What?
    27 Jan, 06:02 PM Reply Like
  • calikym
    , contributor
    Comments (226) | Send Message
     
    Not sure why this company is getting hammered after hours. Apple met or exceeded all expectations. Apple has saturated the top demographic commerce market including over 90% of Fortune 500 companies (these are the people that have money). 69% market share in Japan. Apple just signed a deal with China Mobile - largest provider in the world with 3/4 of 1Billion customers and is expanding 4G service from 16 cities to 300 cities by end of year (4,000 new base stations). Apple couldn't meet demand for the 5S or the mini. Apple made Significant investments in R&D. I'm long Apple big time. Look at the demographics of the customer base. Apple beat guidance across the board.
    27 Jan, 06:15 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (119) | Send Message
     
    Lost in all this gnashing of teeth over earnings is the mobile payments news from earlier in the week. The potential for APPL to upend yet another billion dollar industry should not be ignored. The expectation is for Apple to come out with a new hardware solution to drive future growth, but what if the iPhone , IPad and iTunes were just the Trojan horse for mobile payments ? There are literally tens of millions of iPhone and iPads out there that can use IBeacons. If you don't know what they are look into it!
    27 Jan, 06:15 PM Reply Like
  • milehr
    , contributor
    Comments (499) | Send Message
     
    Actually, the numbers are very good. Strong growth in China and Japan is very encouraging and the one-third R&D increase is even more. Nobody expected iPhone and iPad sales to grow as fast as when they were introduced, but those products will provide Apple with a stable revenue stream, as the company starts bringing up new products and flexes its ecosystem muscle. The stock should move higher in a month, compared to what it is today. If Google is worth 1K, Apple is worth twice as much.
    27 Jan, 06:32 PM Reply Like
  • Atkins
    , contributor
    Comments (1045) | Send Message
     
    Apple is my largest holding by far, milehr. However, even an unabashed Apple bull such as myself would have to disagree that the numbers were good. The numbers were decent and should have been sufficient to move the needle in the positive direction. However, the street only cares about growth, and Apple is simply not a growth story at this time. Perhaps it will be again someday, but that day is not upon us.

     

    As for Google, it's worth what the street says it's worth, and that's a lot more than Apple. Of course, the street also tells us that Amazon is worth more than Apple. We can look at it logically and reject the notion, but logic is irrelevant on the street. That's been proven ad nauseum during the past two decades. 
    27 Jan, 06:46 PM Reply Like
  • g3
    , contributor
    Comments (172) | Send Message
     
    Wrong. The market cap for Apple is greater than either Amazon or Google.
    27 Jan, 07:55 PM Reply Like
  • scott trader
    , contributor
    Comments (4895) | Send Message
     
    Five billion was spent on buy backs maybe Tuesday Tim will man up and buy back more...I plan on getting a few shares on sale...
    27 Jan, 06:39 PM Reply Like
  • psilhan
    , contributor
    Comments (3) | Send Message
     
    What exactly is not good? :-) Everything seems to rose up... No decline, no flat... Lets wait for details, while others do panic. :-)
    27 Jan, 08:03 PM Reply Like
  • Ted Bear
    , contributor
    Comments (607) | Send Message
     
    First of all, the analysts have never come within a country mile of getting the figures for this company correct. I mean, how difficult is it to count widgets coming off the assembly line, but apparently it is nigh on impossible.

     

    Secondly, it is a new game: the phone commodity business. Yes, we can be dazzled by certain bells and whistles, and some folks are. But for most, it is a commodity business, and AAPL has to shift gears to compete....which the declining margin figures suggest is not happening.

     

    No new products; inability to sustain margins; all that is left is financial engineering. Bring on Carl. He'll get his billions in a divvy or buyback, and the company can rot in hell. Not much to hang one's investment hat on, is it?
    27 Jan, 08:21 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (119) | Send Message
     
    Margins did not decline ( fail) and there were 4 new hardware launches.
    Mini Retina, Mac Pro, 5s , IPad Air.

     

    The automobile has had 4 wheels and an internal combustion engine for some time now yet every year we get " new" products. Apple is held to an absurdly higher standard.
    While I am on the car analogy Apple has once again proven the BMW model works.
    You can have premium pricing in a commodity space if you deliver the experience.
    As some one posted months ago the handbag has been around for a long time and yet M Kors, Burberry still charge premium prices far in excess of what an iPhone cost.
    27 Jan, 08:57 PM Reply Like
  • chopchop0
    , contributor
    Comments (3526) | Send Message
     
    let me know when BMW or Burberry becomes a megacap that rivals XOM based on that model
    27 Jan, 09:10 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (119) | Send Message
     
    Yeah because that was the point. You can lead a horse to water .....
    27 Jan, 09:15 PM Reply Like
  • dboy53
    , contributor
    Comments (6) | Send Message
     
    Apple needs a shake up...write to their Investor Relations Dept! Here's what I just wrote:

     

    I doubt that Apple reads emails from its shareholders but as a shareholder and 30 year Apple user, I am increasingly disappointed in Apple as an investment, and as things stand, I will be voting for Icahn's proposal, if only to shake up an organization that has lost its direction and panache. 1) The decision not to release a larger iPhone, when many in the market were clamoring for one, was not only a terrible market decision, but it also indicates incredible hubris -- that the company thinks it knows better than its customers. Maybe that was true under Steve Jobs, but certainly not under Tim Cook. This disaster of a decision ceded millions of potential phone sales to Samsung. I hope and trust that a variety of iPhone sizes will be released soon, but it's too little and too late from this investor's perspective. 2) Blaming the lack of sales in iPhone growth on a change in carriers' upgrade cycles is pathetic and embarrassing. Truly compelling and innovative products would compel customers to upgrade early. Again, this excuse is a sign of a company that is lacking leadership and vision. 3) As a CEO, Tim Cook is a lousy communicator who fails to inspire. Investors like me are losing faith in him. The general stock market is losing faith in him. We are weary of his anemic cheerleading and his vague assurances of new products in the pipeline. Sorry, but younger companies like GOOGL are increasingly seenn as hipper and more cool. Once Apple is viewed as jaded and old, it's toast -- and we're fast approaching that point. 4) Supply problems with the 5S? Absolutely unforgivable. If it's true... 5) As an investor, I'd like to know what Apple is thinking of doing with its large cash hoard. At least I'd like a general idea, and not the pure BS that we investors have been fed. Icahn at least offers an alternative. 6) I never thought I'd suggest it, but it's time to split AAPL 10:1 and make it seem affordable to small retail investors. Yes, some would deride this as a gimmick, which it is to some extent, but retail investors are fleeing this stock. Make 100 share lots affordable to the average retail buyer, who might then become Apple investors and might then be more loyal Apple retail buyers in the future...a virtuous circle. 7) Apple's Maps still suck compared to Google's, and its customer feedback mechanism is lacking compared to Google's. As an Apple user as well as an investor, the failure of Apple Maps to match the quality of Google's after all these months is incredibly alarming. Steve Jobs would NOT have tolerated this mediocrity.
    28 Jan, 01:02 AM Reply Like
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