Asia Pacific

Apple misses earnings. Stock punished in after-hours trading

October 18, 2011: 4:57 PM ET

Mac and iPad sales set new records, but iPhone sales disappoint

Apple (AAPL) reported disappointing results for its fourth fiscal quarter on Tuesday. Although the company handily beat its own guidance, it fell far short of the expectations of analysts and investors, who punished the stock in after-hours trading

Apple shares, which had closed the day at a record $422.24 amid hopes for an upside surprise, fell at one point more than $33 (7.9%) in after-hours trading.

iPhones, in particular, came in considerably lower than expected. In a conference call with analysts, CEO Tim Cook and CFO Peter Oppenheimer attributed this to two factors: 1) The draw down in their retail partners' iPhone 4 inventory that had been built-up in the previous quarters and 2) the effect of "pervasive rumors" of a new iPhone, particularly in the second half of the quarter, which slowed sales.

As for how the analysts' expectations could have been so ahead of the company's performance, Bullish Cross' Andy Zaky attributes it to the fact that Apple beat its guidance by 22% in the June quarter -- far more than the usual 15%-18% beat. This quarter, the company beat its guidance by only 13%, leaving most analysts -- and especially the more bullish independents -- out on a limb.

The numbers:

Sales: $28.27 billion, up 39% year over year
Profits: $6.62 billion, up 53.7%
EPS: $7.05, up 52%
iPhone: 17.07 million units, up 21%.
iPhone sales declined in 2nd part of quarter as customers anticipated the iPhone 4S
iPhone sales more than doubled in Asia-Pacific
iPad: 11.12 million units, up 166%, a new quarterly record
Mac: 4.89 million units, up 26%, a new all-time quarterly record
Mac units up 61% in Asia-Pacific.
iPod: 6.62 million units, down 27%. iPod touch more than 1/2 of sales
Retail: Ended quarter with 365 Apple stores
Revenue per store: $10.7 million per store, down from $11.8 million
Gross margin: 40.3%
Cash and marketable securities: $81.6 billion
Cash generation: $5.4 billion in the quarter
Revenue guidance: $37 billion
EPS guidance: $9.30
Gross margin guidance: 40%

CEO Tim Cook pronounced himself "thrilled" and COO Peter Oppenheimer "extremely pleased," with revenue that was, after all, a record for September. But Wall Street had been looking for an all-time record, and that they did not get. It was a rare setback from a company that usually beats expectations.

Press release here.

Notes from earnings call below the fold.

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