Apple sales fall short of Wall Street expectations

By PERRY GOURLEY
Published on 24/01/2013 19:21

SHARES in Apple suffered their biggest fall in more than four years yesterday, as investors continued to digest disappointing fourth-quarter results.

As much as 12 per cent – more than $50 billion (£32bn) – was wiped off the company’s value at one stage as weaker-than-expected Christmas period iPhone sales fuelled fears it is losing out to rivals.

Eighteen brokerages, including Barclays Capital, Credit Suisse, Mizuho Securities and Raymond James, cut their price targets on the stock of the world’s biggest publicly-traded company.

Shares hit a peak of $702.10 on 19 September, valuing the company at $658bn. Since then, it has lost about $225bn, or 35 per cent, of its market value, equivalent to the entire worth of Chevron, the second-biggest US oil company.

Jefferies analyst Peter Misek, who has previously raised red flags about Apple cutting orders to suppliers, said the iPhone slowdown, which was reported late on Wednesday, was “real and material” and here to stay.

“We think Apple is losing the screen-size wars,” 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 HTC, Nokia and Samsung.

Samsung, which is both Apple’s chief rival and biggest component supplier, overtook Apple as the biggest seller of smartphones in the third quarter, selling close to 500 handsets a minute.

Apple said it shipped a record 47.8 million iPhones in the December quarter, but this was well below the average analyst forecast of 50 million units.

The company’s margins were also hit, sliding to 38.6 per cent from 44.7 per cent a year earlier, partly because its iPad is cannibalising its high-margin Macintosh computers.

Expectations heading into the results had been subdued by news of possible production cutbacks, putting pressure on chief executive Tim Cook to keep up the company’s momentum.

Analysts said Apple’s growth would hinge on new products, but added that a launch was not on the horizon.

“To re-accelerate growth, Apple likely needs to launch new products, yet few seem likely before June,” Nomura’s Stuart Jeffrey said.