Apple's iPhone sales and outlook lag targets, shares slide

Mon Jan 27, 2014 6:48pm EST
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By Bill Rigby

(Reuters) - Apple Inc missed Wall Street's lofty target for iPhone sales over the crucial holiday shopping season and offered a weaker-than-expected forecast for this quarter, sending its shares down 8 percent on Monday.

The world's most valuable technology company sold a record 51 million iPhones in the quarter, but that was shy of the 55 million or so analysts had expected, reflecting intense competition from arch-foe Samsung Electronics during the crucial period.

The company forecast sales of $42 billion to $44 billion this quarter, which investors anticipate will be brisker than usual because of its recently sealed deal to sell iPhones through China Mobile Ltd, the country's No. 1 carrier. Wall Street was expecting $46 billion, on average.

The March quarter is especially important because of the China Mobile deal and the initial launch in that region. So the lower-than-expected revenue guidance was a troubling sign.

"The report for the December quarter was fine, but the real problem is the forecast for the March quarter," said Brian Colello, an analyst at Morningstar, Inc. "The revenue certainly appears to be a shortfall."

That long-awaited China deal had been expected by analysts to tack on more than 11 million units of new iPhone sales in fiscal 2014, starting with the typically sedate March quarter.

The company on Monday recorded sales of $57.6 billion in its December or fiscal first quarter, versus expectations for about $57.5 billion. First fiscal quarter earnings were $14.50 a share, compared to Thomson Reuters I/B/E/S estimate of $14.07.

Chief Financial Officer Peter Oppenheimer told analysts on a conference call the March-quarter revenue outlook reflected negative effects from currency rates with a stronger U.S. dollar and more balanced levels of demand and supply for iPhones at the start of 2014 than a year earlier, when demand outstripped available inventory.   Continued...

A sign advertising the 30th anniversary of the Macintosh computer is shown at the Apple flagship retail store in San Francisco, California January 27, 2014. REUTERS/Robert Galbraith