Apple Inc.’s roster of devices is hitting a sales ceiling, underscoring why it’s crucial for Chief Executive Officer Tim Cook to deliver the company’s first new products since 2010 to revive growth.
Apple shares dropped after the Cupertino, California-based company reported iPhone sales for the holiday season that missed analysts’ estimates, in what is typically the most lucrative period of the year for the device maker. Apple also projected revenue in the current period may fall from a year earlier, in what would be the first quarterly sales decline since 2003. Last year, Apple posted its first profit drop in more than a decade.
The figures indicate that demand may be ebbing for Apple’s devices -- which were once reliable growth engines -- as competitors flood in with their own smartphones and tablets. Cook said sales in North America were weaker than the company expected, partly because the less-expensive iPhone 5c released last year wasn’t as popular as the higher-end iPhone 5s. The stagnating growth is adding pressure for the company to release new hit products, be it a wearable computer or a way for paying for things with an iPhone or a television.
“What we have gotten over the last year or so is impressive products, but they are really enhancements of current products and not necessarily the next new thing,” said Jack Ablin, chief investment officer with BMO Private Bank. “Apple investors want the next new thing -- that’s the catalyst that people are waiting for.”
Apple fell 8.7% to $502.20 at 9:30 a.m. in New York.
For its fiscal first quarter ended Dec. 28, Apple said it sold a record 51 million iPhones, missing analysts’ estimates of 54.7 million handsets. Even after releasing the iPhone through the world’s largest carrier, China Mobile Ltd., this month, Apple also said revenue will be $42 billion to $44 billion in the current quarter, compared with analysts’ estimates of $46.1 billion. Anything short of $43.6 billion would amount to a sales decline from a year earlier.
Apple’s quarterly profit and revenue still beat projections. Profit last quarter was $13.1 billion, or $14.50 a share, little changed from $13.1 billion, or $13.81, a year earlier. Sales rose 5.7% to $57.6 billion. Analysts had predicted profit of $14.07 a share on sales of $57.5 billion, according to the average of estimates compiled by Bloomberg.
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