Apple profits fall for first time in a decade

TECHNOLOGY giant Apple has reported its first profit slide in a decade, as the battle with rival Samsung takes its toll.
Apple posts slide of £1.38bn, the first fall in decade. Picture: GettyApple posts slide of £1.38bn, the first fall in decade. Picture: Getty
Apple posts slide of £1.38bn, the first fall in decade. Picture: Getty

In its second quarter results, Apple, the world’s largest technology company, posted profits of £6.27 billion ($9.5bn), down £1.38bn ($2.1 bn) from the same time last year.

However, the Californian firm’s results were better than many investors had expected, with 37.4 million iPhones being sold that quarter, compared with 35.1 million for the same period a year ago.

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For iPads, the figure was 19.5 million compared with 11.8 million last year.

Industry experts have cited the launch of the larger-screened Samsung Galaxy S4 this Saturday, along with the South Korean firm’s larger range of devices, such as the Samsung Note model, as among the reasons for the drop.

Competition from low-cost rivals in Asia, including China, the world’s largest smartphone market, has also impacted on sales, commentators say.

Apple has lost about 40 per cent of its stock market value since hitting an all-time high in September last year, driven by concerns from investors.

Tim Cook, Apple’s chief executive officer, however, said sales continued to remain strong.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad”, he said after the results were posted last night.

“Our teams are hard at work on some amazing new hardware, software, and services and we are very excited about the products in our pipeline.”

Apple has enjoyed huge success during the past decade, with its innovation, groundbreaking branding and customer loyalty.

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But it suffered a bruising winter after its growth began to stall. This led to speculation that demand for its phones was shrinking and accusations that Apple was running out of ideas.

Analysts reacted to the figures by saying the tech giant needed to rediscover its innovative touch to arrest the slide in profits.

However, other experts pointed out the results reflected the fact that there were no major launches during the most recent quarter and that it had been a quiet period.

Max Wolff, senior analyst at Greencrest Capital, said ahead of the results that a drop was inevitable, but that shares remained a “very reasonable price”.

Philip Elmer-DeWitt, editor of Apple 2.0, told BBC News: “Apple as a money-making machine doesn’t actually have to do anything but continue to put out the products it has and improve them a little each year. It will continue to make money for a long, long time.”

But Andrew Milroy from Frost & Sullivan told BBC World News that Apple could struggle in Asia if it did not cut retail prices in the region. “Apple will need to consider, very seriously, offering devices at lower price points if it wants to remain a strong player in Asian markets.”

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