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    Hint of iPhone Sales Slowdown Tarnishes Otherwise Strong Apple Earnings Report

    Written by

    Chris Preimesberger
    Published July 24, 2012
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      Apple reported in its fiscal third-quarter earnings statement July 24 that it brought in a record $35 billion and profited $8.8 billion, but hints of a sales slowdown of its iPhones next quarter raised red flags among Wall Street analysts.

      The quarterly profit worked out to a healthy $9.32 a share, but another fly in the ointment was that Wall Street was expecting a dollar more per share in net earnings ($10.37) based on revenue of $37.2 billion.

      Apple lowered its guidance for next quarter, projecting $7.34 a share on revenue of $34 billion. Wall Street analysts, who often complain that Apple is too conservative in its projections based on previous performance metrics, are expecting a lot more: fourth-quarter earnings of $10.23 a share on revenue of $38.02 billion.

      Analysts cited an anticipated iPhone sales drop-off as the reason for the scaled-back expectation.

      Apple CFO Peter Oppenheimer acknowledged on the conference call to analysts that a potential sales slowdown of iPhones may be connected to continuing rumors of an iPhone 5 to be introduced later this year, and that potential buyers may be holding off until that model becomes available.

      Apple has made no such announcement about a new iPhone coming this fall.

      Meanwhile, the Cupertino, Calif.-based company recorded excellent iPhone sales in Q3, selling 26 million units worldwide during the quarter — a solid 28 percent improvement over Q3 a year ago.

      Cook: ‘There’s Incredible Anticipation Out There’

      Asked if he could quantify how much the anticipation of an iPhone 5 might cut into current iPhone 4 and 4S sales, CEO Tim Cook said that “it’s difficult to sort this out. There’s incredible anticipation out there for future products, given what we’ve been able to deliver in the past.

      “I think it’s a reasonable amount (of non-sales, due to waiting for the new product).”

      Oppenheimer said “given what’s going on around us, we are happy with the quarter. Sales of each of our products exceeded what we had factored into the guidance; that was especially true of the iPad, which set a new sales record. The $35 billion revenue in the quarter grew by $6.5 billion year over year.”

      Oppenheimer cited the economy in Europe as being a factor in a possible future drop in iPhone sales, in addition to some problems in the natural resource-based economies of Australia, Brazil and Canada.

      “Regarding the iPhone, we’re reading the same rumors and speculation that you are about a new iPhone, and we think this has caused some pause in customers purchasing them,” Oppenheimer said.

      17 Million iPads Sold

      Apple said it sold a record 17 million iPads during the quarter, up a whopping 84 percent over Q3 2011. It also reported moving 4 million Macs, up 2 percent year-over-year, and 6.8 million iPods, a 10 percent unit decline from the year-ago quarter.

      Apple also declared a quarterly dividend of $2.65 a share.

      Chris Preimesberger
      Chris Preimesberger
      https://www.eweek.com/author/cpreimesberger/
      Chris J. Preimesberger is Editor Emeritus of eWEEK. In his 16 years and more than 5,000 articles at eWEEK, he distinguished himself in reporting and analysis of the business use of new-gen IT in a variety of sectors, including cloud computing, data center systems, storage, edge systems, security and others. In February 2017 and September 2018, Chris was named among the 250 most influential business journalists in the world (https://richtopia.com/inspirational-people/top-250-business-journalists/) by Richtopia, a UK research firm that used analytics to compile the ranking. He has won several national and regional awards for his work, including a 2011 Folio Award for a profile (https://www.eweek.com/cloud/marc-benioff-trend-seer-and-business-socialist/) of Salesforce founder/CEO Marc Benioff--the only time he has entered the competition. Previously, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. He has been a stringer for the Associated Press since 1983 and resides in Silicon Valley.
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