(Reuters) - Apple Inc sold fewer new iPhones than expected over the holidays, reflecting intense competition from arch-foe Samsung Electronics during the crucial period.
The company sold 51 million iPhones in the quarter, fewer than the 55 million or so expected by Wall Street analysts.
The company on Monday recorded sales of $57.6 billion in its fiscal first quarter, versus expectations for about $57.5 billion.
“The quarter itself was reasonably solid although the number of iPhones shipped was a slight disappointment to what people were looking for. The problem is with the guidance. The range of 42 billion to $44 billion at the mid-point implies no growth. So after showing modest signs of improvement, we’re back to a no-growth outlook. Given that we’re adding China mobile to the equation as a distribution channel. I think people were looking for more. That’s why we’re seeing pressure on the stock and it is a concern. It’s something Apple needs to find an answer to because even though this a great company, it has great products and it’s shareholder-friendly, paying a nice dividend and buying back shares, it’s not a growth story. If it can’t prove that it’s going to be a growth story again, the valuation is too high.”
“I think that’s (Icahn’s role is) all a sideshow and while the company does have at its disposal to return more cash to shareholders if it chooses that will be a small one-time event. The bigger issue for them is getting back to being a revenue and earnings growth story. That’s what they need to do on a consistent basis.”
“What we need to see from them is some sort of new product development and it would be likely in the area of software, mobile payments and advertisements that would get us thinking that there is an opportunity for accretion. I think hardware can only go in one direction and that’s flat or down. It has to be something in the innovation space and they have a lot of things they can do. They have Apple TV, there’s ”wearables,“ mobile payments and iBeacon. But the problem is so far we haven’t seen much in the way of business model diversification.”
“The report for the December quarter was fine but the real problem is the forecast for the March quarter. $42 billion to $44 billion is far below Street expectations. At the midpoint that’s a 25 percent sequential drop versus 20 percent last year. Although the gross margin guidance looks good for March, the revenue certainly appears to be a shortfall.”
“The March quarter was especially important because of the China Mobile deal and the initial launch in that region. So the lower-than-expected rev guidance is a troubling sign.”
“Part of the issue is that Apple sold into China a quarter early so they sold more iPhones in the December quarter and there’s less of a support from the Chinese New Year holiday.”
“Based on Apple’s pricing of its products like its iPhone 5C at $550 unsubsidized and some of the premium pricing, it has clearly taken a path of staying at the high end of the market that bodes well for gross margins but perhaps not for revenue growth and the forecast as a whole points to that. The after-market reaction is based on the guidance for March.”
“The key thing is iPhone units were lighter than expectations for the quarter and guidance was a little lighter than expectation; Ipad numbers looked strong.”
“But iPhone was (the) area of weakness. I think people were expecting mid 50 million units or higher.”
“Gross margins look fine, came at high end of their range. The guidance for gross margin was good also.”
“51 million phones, great average selling price -- It’s a good print. But unfortunately the market dynamics are shifting where the functionality gap with the competition is closing and the price gap is widening. Average selling prices are plummeting. You’ve got a segment of the market that’s willing to pay $650 dollars for a phone. But the average selling price is closing in on half that.”
“What they need to do to keep the train rolling, they need to sell new products to that existing base. Not just a tablet and a phone that’s refreshed. Wearable technology, the high-def TV.”
“The market is not rewarding Apple for what it’s done. If it wants to change the landscape, it needs to sell new products into its customer base.”
Reporting By Alexei Oreskovic and Malathi Nayak