Apple's results disappoint ahead of holiday quarter

Mon Oct 28, 2013 7:27pm EDT
 
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By Bill Rigby

(Reuters) - Apple Inc's profit and margins slid despite selling 33.8 million iPhones in its September quarter, prompting a brief but sharp selloff as disappointed investors cashed in some of the stock's recent strong gains.

Wall Street had hoped for a stronger beat on quarterly sales after the company predicted in September that its revenue and margins would come in at the high end of its own forecasts.

CEO Tim Cook predicted a "really great" holiday shopping season in a conference call with analysts, a crucial time for Apple as its new iPads go up against Amazon.com Inc's Kindle Fire and its new iPhones compete with lower-cost gadgets made by Samsung Electronics and other rivals using Google Inc's Android software.

Sources have said demand for Apple's cheaper, brightly hued iPhone 5C lagged demand for the top-tier iPhone 5S, spurring concerns about the iPhone's market positioning and its ability to compete with a growing profusion of lower-cost rivals.

Cook did not address the popularity of the 5C on his call with analysts but said there was "a very significant backlog" for the cutting edge 5S.

The world's most valuable tech company said on Monday it expected revenue of $55 billion to $58 billion this quarter, outpacing Wall Street's forecast for about $55.65 billion.

Gross profit margin for the fourth quarter was 37 percent, down from 40 percent a year ago as intense competition from the likes of Samsung Electronics took a toll. That was roughly level with analysts' average 36.9 percent forecast.

"We would have expected higher gross margins," said Morningstar analyst Brian Colello. "With the higher price phones and clear preference toward the 5S, we were all expecting more of a gross margin boost for the December quarter."   Continued...

 
Apple Inc CEO Tim Cook speaks on stage during an Apple event in San Francisco, California in this October 22, 2013, file photo. REUTERS/Robert Galbraith/Files