Business Devices iPhone 5C News, , , , , — October 29, 2013 11:50 — 0 Comments

Apple profits and shares fall amid fears over iPhone 5C sales

iphone 5C, apple, camera

The iPhone 5C, from Apple, sales have been slow

Apple sold 33.8m iPhones last quarter, roughly in line with analysts’ expectations and a record for the quarter

Powered by article titled “Apple profits and shares fall amid fears over iPhone 5C sales” was written by Dominic Rushe in New York, for The Guardian on Tuesday 29th October 2013 08.44 UTC

Apple sold 33.8m iPhones last quarter, 26% more than the same time last year and a record for the quarter, the company said Monday. But the tech giant’s shares wobbled as it announced a third consecutive quarterly decline in earnings.

The company reported fiscal fourth-quarter revenue of $37.5bn, ahead of Wall Street’s average forecast of $36.8bn, according to a poll of analysts by Thomson Reuters. Net income for the fourth fiscal quarter ended September 28 was $7.51bn, down from $8.22bn a year earlier. Shares initially fell over 3% in after-hours trading and continued to dip in and out of the red during a press conference with chief executive Tim Cook.

The company said it sold 14.1m iPads during the quarter, up from 14m in the year-ago quarter, and sold 4.6m of its Mac computers, down from 4.9m a year ago. The company has just refreshed its iPad and Mac computer lines ahead of the Christmas sales season.

Apple said it expected revenues of between $55bn and $58bn and gross margin between 36.5% and 37.5% in the all important quarter including Christmas. Cook said: “I think it’s going to be an iPad Christmas.”

Colin Gillis, analyst at BGC Partners, said: “The market is hard to satisfy, especially when it comes to Apple. The company has been trying to give realistic guidance and this is a bit better than that, and that’s not enough for some people.”

“We’re pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34m iPhones,” said Cook. On a call with investors Cook said the results were a “strong finish to an amazing year.”

The results came amid fears of disappointing sales for iPhone’s new 5C. In September Apple launched a high-end 5S iPhone aimed at its core customers and a cheaper, plastic-backed 5C that many supposed was meant to lure in new, more price-sensitive consumers.

Just a month later The Wall Street Journal reported that Apple suppliers had been asked to cut production of the 5C. Localytics, a marketing platform for mobile apps, calculates that the 5S comfortably outsold the 5C in every single market since launch. Online Apple says there is a three-week wait for the 5S – the 5C ships in 24 hours.

Cook told analysts that it was “never our intent” for the 5C to be Apple’s entry-level iPhone. He said the iPhone 4S was now Apple’s entry-level iPhone. Cook was quizzed about the price of the 4S, which was more expensive than the 5C in some markets. “Generally we see the 4S as our entry level iPhone offer,” he said. “We clearly see that there is elasticity in that market and we will move accordingly.”

Barclays Research estimates that the iPhone accounted for 53% of Apple’s revenue for the fiscal year that ended 30 September, compared with 19% for the iPad. “They are extraordinarily dependent on that product,” said Gartner’s Carolina Milanesi.

Before the new iPhone launched International Data Corporation said Apple’s posted a year-over-year decline in global market share during the second quarter of 2013. Android and Microsoft’s Windows phone managed slight increases.

As yet the 5C doesn’t seem to be winning back sales. In the US, its best performing market, the 5S accounted for 67% of sales in the first month compared to the 5C. Localytics has found some evidence that the 5C is now gaining sales in the US over the 5S. In the rest of the world, however, 5S sales remain strongest. In the UK the 5S took 71% of sales, in Germany 87% and, perhaps most worrying of all, in China the more expensive phone took 83% of sales relative to the 5C.

Apple’s 5C with its colourful plastic back arrived after investors had pressured the company to offer a cheaper phone that might attract less wealthy buyers, particularly in China. The 5C is basically an iPhone 5 with a cheaper case – but it is still not cheap. At launch the device retailed in the US for $549, but can be had for $99 with a two-year contract. In China an unsubsidized iPhone 5S costs about $866, while an iPhone 5C costs $735.

In a note to investors after the launch Toni Sacconaghi, tech analyst at Bernstein, expressed his frustration. “We worry that Apple’s inability/unwillingness to come out with a low priced offering for emerging markets nearly ensures that the company will continue to be an overall share loser in the smartphone market until it chooses to address the low end,” he wrote. “In essence, Apple continues to risk being relegated to a high-end niche player.”

Yankee Group analyst Carl Howe said it was too early to write off the 5C. “The truth is we don’t know. They don’t break out sales for different models, so it’s a guessing game.” But he said the 5C was likely to pick up sales after launch with more price sensitive shoppers. “The 5C buyer isn’t the sort of buyer who stands in line. Once the 5S frenzy has died down, the 5C will be more popular,” he predicted. © Guardian News & Media Limited 2010

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Tony Myers has written 866 articles for Smart Movie Making

Fooling around with the iPhone since 2010. Taking it to the next web by writing about new media, new technology, new wave cinema and the digital revolution.

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