Apple posts disappointing fourth quarter

The electronics giant fell short of expectations on holiday season results

Topics: Apple, iPhone, iPad, Samsung, Consumerism, ,

Apple posted fourth quarter results that disappointed investors, further denting the “reality distortion field” that surrounded the company under former CEO Steve Jobs.

It reported revenue of $54.5 billion, almost exactly what analysts had predicted. Sales of its famous iPhone and iPad products were slightly below expectations at 47.8 million and 22.9 million, respectively. It reported gross margin of 38.6 percent below the expected 39.5 percent.

The world’s most valuable company has seen its stock slide almost 30 percent since September. Apple, which changed the world with its iPhone and iPad products, appears increasingly vulnerable to competition, especially from the South Korean behemoth Samsung.

While Apple offers a relatively small number of products for a company of its type and size, and a famously controlled tech “ecosystem,” Samsung sells a more diverse, almost anarchic, product line. And its products typically run on Google’s more open Android operating system.

Last spring, Farhad Manjoo wrote in Slate that the iPad is an “unbeatable” product, but after last Christmas season with Amazon, Google, Samsung and others selling cheaper tablets Apple’s dominance no longer looks like a foregone conclusion. Samsung also scored big by selling more than 10 million units of its Galaxy Note, more or less inventing the “phablet” category of touchscreen devices, which are bigger than phones but smaller than standard tablets.

Samsung now sells more mobile phones than any other company. Today CNET reported that it is also the largest buyer of the chips used in smartphones, tablets and other mobile devices, another sign of strength.



Perhaps due to Samsung’s influence, there have been many rumors about Apple diversifying into products such as a cheaper iPhone for developing markets. The approach suggests that a kitchen sink product line might be more valuable than being the industry’s leading innovator or most glamorous brand. However, a broad diversification of Apple products could potentially threaten the company’s longtime business model of charging premium prices for a limited number of premium products.

Today’s report came after a lackluster third quarter in 2012. Mashable described it as follows:

Though the company beat expectations for iPhone sales by a decent margin, it fell short on iPad sales and perhaps more importantly, Apple projected that it would report a significantly lower profit margin in the following quarter than analysts had expected. Apple’s stock fell below $600 the next day for the first time in three months and has continued to decline, falling to as low as $483 a share in intraday trading last week.

Apple shares closed before today’s announcement at $514.01, down from its all-time high of $705 in September. The Cupertino, Calif.-based company is the most valuable company in the world with a market capitalization of $483.5 billion. ExxonMobil is the second most valuable at $413.5 billion.

Alex Halperin is news editor at Salon. You can follow him on Twitter @alexhalperin.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 7
  • Close
  • Fullscreen
  • Thumbnails
    AP/Jae C. Hong

    Your summer in extreme weather

    California drought

    Since May, California has faced a historic drought, resulting in the loss of 63 trillion gallons of water. 95.4 percent of the state is now experiencing "severe" drought conditions, which is only a marginal improvement from 97.5 percent last week.

    A recent study published in the journal Science found that the Earth has actually risen about 0.16 inches in the past 18 months because of the extreme loss of groundwater. The drought is particularly devastating for California's enormous agriculture industry and will cost the state $2.2 billion this year, cutting over 17,000 jobs in the process.

       

    Meteorologists blame the drought on a large zone (almost 4 miles high and 2,000 miles long) of high pressure in the atmosphere off the West Coast which blocks Pacific winter storms from reaching land. High pressure zones come and go, but this one has been stationary since December 2012.

    Darin Epperly

    Your summer in extreme weather

    Great Plains tornadoes

    From June 16-18 this year, the Midwest was slammed by a series of four tornadoes, all ranking as category EF4--meaning the winds reached up to 200 miles per hour. An unlucky town called Pilger in Nebraska was hit especially hard, suffering through twin tornadoes, an extreme event that may only occur every few decades. The two that swept through the town killed two people, injured 16 and demolished as many as 50 homes.   

    "It was terribly wide," local resident Marianne Pesotta said to CNN affiliate KETV-TV. "I drove east [to escape]. I could see how bad it was. I had to get out of there."   

    But atmospheric scientist Jeff Weber cautions against connecting these events with climate change. "This is not a climate signal," he said in an interview with NBC News. "This is a meteorological signal."

    AP/Detroit News, David Coates

    Your summer in extreme weather

    Michigan flooding

    On Aug. 11, Detroit's wettest day in 89 years -- with rainfall at 4.57 inches -- resulted in the flooding of at least five major freeways, leading to three deaths, more than 1,000 cars being abandoned on the road and thousands of ruined basements. Gov. Rick Snyder declared it a disaster. It took officials two full days to clear the roads. Weeks later, FEMA is finally set to begin assessing damage.   

    Heavy rainfall events are becoming more and more common, and some scientists have attributed the trend to climate change, since the atmosphere can hold more moisture at higher temperatures. Mashable's Andrew Freedman wrote on the increasing incidence of this type of weather: "This means that storms, from localized thunderstorms to massive hurricanes, have more energy to work with, and are able to wring out greater amounts of rain or snow in heavy bursts. In general, more precipitation is now coming in shorter, heavier bursts compared to a few decades ago, and this is putting strain on urban infrastructure such as sewer systems that are unable to handle such sudden influxes of water."

    AP/The Fresno Bee, Eric Paul Zamora

    Your summer in extreme weather

    Yosemite wildfires

    An extreme wildfire burning near Yosemite National Park forced authorities to evacuate 13,000 nearby residents, while the Madera County sheriff declared a local emergency. The summer has been marked by several wildfires due to California's extreme drought, which causes vegetation to become perfect kindling.   

    Surprisingly, however, firefighters have done an admirable job containing the blazes. According to the L.A. Times, firefighters with the state's Department of Forestry and Fire Protection have fought over 4,000 fires so far in 2014 -- an increase of over 500 fires from the same time in 2013.

    Reuters/Eugene Tanner

    Your summer in extreme weather

    Hawaii hurricanes

    Hurricane Iselle was set to be the first hurricane to make landfall in Hawaii in 22 years. It was downgraded to a tropical storm and didn't end up being nearly as disastrous as it could have been, but it still managed to essentially shut down the entire state for a day, as businesses and residents hunkered down in preparation, with many boarding up their windows to guard against strong gusts. The storm resulted in downed trees, 21,000 people out of power and a number of damaged homes.

    Debbie Arita, a local from the Big Island described her experience: "We could hear the wind howling through the doors. The light poles in the parking lot were bobbing up and down with all the wind and rain."

    Reuters/NASA

    Your summer in extreme weather

    Florida red tide

    A major red tide bloom can reach more than 100 miles along the coast and around 30 miles offshore. Although you can't really see it in the above photo, the effects are devastating for wildlife. This summer, Florida was hit by an enormous, lingering red tide, also known as a harmful algae bloom (HAB), which occurs when algae grow out of control. HABs are toxic to fish, crabs, octopuses and other sea creatures, and this one resulted in the death of thousands of fish. When the HAB gets close enough to shore, it can also have an effect on air quality, making it harder for people to breathe.   

    The HAB is currently closest to land near Pinellas County in the Gulf of Mexico, where it is 5-10 miles offshore.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>