After two quarters of delivering better-than-expected results, Apple's (AAPL +0.00%) fiscal first-quarter revenue and iPhone sales figures came in well short of targets. An after-hours sell-off drove the stock down more than 5% in the minutes following the report's release.
But is the dumping merited? Let's review the numbers. Apple reported $14.50 a share in profits on $57.6 billion in revenue. Analysts were expecting $14.09 a share and $57.46 billion, respectively, according to Yahoo! Finance. The real challenge becomes clear when you look at Apple's product-by-product results:
| Product | Actual | Median Projected | Last Year | Y-o-Y Growth |
|
iPhones sold |
51.025 million |
55.39 million |
47.789 million |
6.8% |
|
iPads sold |
26.035 million |
24.87 million |
22.860 million |
13.9% |
|
Macs sold |
4.837 million |
4.61 million |
4.061 million |
19.1% |
Sources: Fortune, Apple SEC filings.
Analysts were looking for at least 4 million more iPhone handset sales. Not unreasonable when you consider the initial enthusiasm for the 5s, though, to be fair, some analysts (presciently, it seems) were cutting their estimates of iPhone sales ahead of this afternoon's report.
Could the iPhone 5c be part of the problem? As early as October, we began hearing reports that Apple was cutting production on the 5c after a series of retailers lowered prices on the device. Offering a cheapskate edition of its signature product may not have had the effect Apple CEO Tim Cook intended.
Unfortunately, the problems don't end there. Apple estimates just $42 billion to $44 billion in fiscal second-quarter revenue. That's essentially flat year-over-year growth at the midpoint, and well short of the $46.05 billion analysts had been calling for. Anyone else wondering if Apple isn't expecting nearly as much from the China Mobile (CHL +0.00%) deal as some would like to believe?
On the plus side, Apple appears to have two hits on its hands in the iPad Air and the iPad Mini With Retina Display. Surging Mac sales are also a good sign, as is the company's ever-improving cash position:
| Metric | Fiscal Q1 2014 | Fiscal Q4 2013 | Fiscal Q3 2013 | Fiscal Q2 2013 |
|
Cash and investments |
$158.842 billion |
$146.761 billion |
$146.620 billion |
$144.687 billion |
|
Debt |
$16.961 billion |
$16.960 billion |
$16.958 billion |
$0 |
|
Free Cash Flow |
$20.685 billion |
$7.853 billion |
$5.943 billion |
$10.496 billion |
Sources: Apple SEC filings, S&P Capital IQ.
Expect Carl Icahn to use those figures -- and the Mac maker's top-line miss and weak revenue estimate -- to further his argument in favor of having Apple return at least $50 billion to shareholders in the way of stock repurchases. Do you agree? What do you think of Apple's fiscal first-quarter report and disappointing iPhone sales? Leave a comment below to let us know where you stand.
