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Apple shares plummet 10% after reporting mixed holiday results

Thursday, 24 January 2013 | By Patrick Stafford

Apple shares have plummeted 10% in after-hours trading today, the biggest drop in years, after the company announced mixed results for the holiday quarter.

 

Despite a rise in revenue to $US54.5 billion, profit remained flat at $US13.1 billion. Disappointed analysts are now suggesting the company is entering a period of slower growth with no new products on the horizon.

 

Analysts are growing eager to see new technology from Apple, but some say it'll be a long wait – app maker Marc Edwards of Bjango says the gap between new technologies at Apple is typically long.

 

"If you look at the time between the Apple II, the next Macintosh, and the iMac, even the iPhone and the iPad, then I wouldn't be worried if it takes three years to get to their next big thing," he says.

 

"There's not anyone else really delivering anything anyway."

 

Some analysts were hoping for better results, considering the company has had a tough year.

 

Apple earned $US13.1 billion in profit during the holiday quarter, up from the previous quarter but flat from the same period in 2012. Revenue, on the other hand, jumped from $US46.3 billion in 2012 to $US54.5 billion – although it missed expectations by $US400 million.

 

The breakdown in sales serves as proof the company is entering a period of change. Mac sales were 4.1 billion, down from the 5.2 billion in the previous corresponding period. Analysts believe higher iOS device sales are dragging sales away from the desktop market – a problem chief Tim Cook has addressed in the past.

 

iPhone sales rose from 37 million units last year to 47.8 million, while sales of iPads rose from 15.4 million units to 22.9 million. The company's retail performance also improved, up from $US6.1 billion last year to $US6.4 billion.

 

The results also revealed a raft of significant details. The company now has 250 million iCloud users, and is carrying a huge amount of cash – to the tune of $US137 billion.

 

Interestingly, sales of the Apple TV device – something Cook has always referred to as a hobby – have risen 60% in the last year to more than two million during the quarter. The company is rumoured to be working on expanding its television platform.

 

Today's announcement has also been strange for Apple executives. Cook himself talked about a recent rumour about lower iPhone 5 production figures. The company never usually addresses these types of rumours head-on, suggesting there may be something to the hype.

 

"I'd recommend questioning the accuracy of any kind of rumour about build plans," Cook said. "I'd also stress that even if a particular data point were to be factual it would be impossible to interpret what it really means to our business."

 

"Our supply chain is very complex and we have multiple sources for our components. Yields can vary, supplier performance can vary. There's just a long list of things that would make any single data point not a great proxy for what's going on."

 

The results come after a disappointing period for Apple's share price, as analysts awaited what they thought would be poor results. Those fears have been proven correct, with the company's shares falling 10% in after-hours trading to $US458.78.

 

But Marc Edwards says apart from the fact Apple's results are still above expectations, it's unrealistic to expect new technology to be appearing every year.

 

"I wouldn't be worried if Apple takes a while to get something new," he says.

 

He also points out the company has spent about $US12 billion on capital expenditure in the past year – a huge amount that for any other company would signal a dramatic project in the works.

 

"We've given Apple all this secrecy, but they're working. It could be taking more stuff in-house, or potentially new component deals that don't involve Samsung."

 

"But I don't think all of that applies to acquiring parts – it could be for something much bigger."

 

This story first appeared on SmartCompany.