Talk about setting the bar high. Even though Apple sold 51 million iPhones during the last three months of 2013 their stock recently tumbled because of the fact that investors were expecting them to sell quite a few more. Indeed, Wall Street analysts were thinking that the number would be closer to 57 million iPhones, especially after Apple launched their new iPhone 5S and iPhone 5C smart phones simultaneously in the United States, Western Europe and China. (It was the first time they had done a launch of this magnitude.)
China wasn’t even the problem actually, as sales there climbed to 29% even though the landmark deal with China Mobile (CHL) hadn’t even been inked yet. While the impact of this deal should deliver a tremendous boost to the overall numbers for Apple in 2014, sales of their ubiquitous smart phone actually fell 1% during the same time.
CEO Tim Cook was quick to blame longer upgrade cycles on a recent conference call with investors. Another problem that he noted was that, since the demand for the new model iPhones were so high, Apple was having trouble keeping up with orders.
Another reason that shares fell by 7% was that Apple’s outlook, which was supposed to be between $42 billion and $44 billion in the current quarter, were lower than what analysts had forecasted at $46 billion.
While iPhone sales were “disappointing”, the fact that Apple sold 17% more Macs than a year ago (4.8 million) and also sold a record 26 million iPads shows that it wasn’t all bad news for the mobile device giant. CEO Cook also confirmed that Apple is still working on new product categories that consumers will see by the end of the year, although he wasn’t specific about those products. Predictions range from full TV to “wearables”, but again nothing has been confirmed.
Cook would also not confirm any plans that Apple has for mobile payments although the category is wide open for them, especially when you consider that their new iPhone 5S has Touch ID fingerprint sensor capabilities. Even more redesigned for them to embrace mobile payments is the fact that it was confirmed that consumers have embraced this new technology as purchases from Apple’s App Store and iTunes continue to be strong.
The concern among investors is that Apple has been riding the wave of its existing categories for quite a few years and they don’t see them being able to sustain their current growth levels on the back of smartphones and tablets alone, especially with consumers hungry for something new.
Just the fact that their stock fell is a telling reminder that investors and analysts expect much more out of Apple then they seem to be delivering. Still, with a rise in sales of 6% that went slightly higher than the $57.5 billion analysts had expected, Apple isn’t exactly ready to close its doors just yet.