Apple Down Over 10 percent to $450

Andrew Klips  |

Shares of tech giant Apple Inc. (AAPL) are nosediving in early trading on Thursday following the company’s fiscal first quarter earnings report. Shares traded as low as $450.66 after the iPhone and iPad maker failed to meet many of Wall Street's estimates. In the quarter ended December 31, 2012, the world’s biggest company posted record results in many categories, but failed to deliver the type of guidance that investors wanted to see.

Apple reported record revenue of $54.5 billion and net profit of $13.078 billion, or $13.81 per diluted share, for the quarter.  Revenue for the first quarter outpaced last years fiscal Q1 total $46.3 billion, but the earnings were basically flat to $13.064 billion, or $13.87 per share, in the year prior quarter.  The latest quarter only had 13 weeks in it, compared to 14 last year.

Analysts were expecting revenue of $54.7 billion and earnings per share of $13.44.

“We’re thrilled with record revenue of over $54 billion and sales of over 75 million iOS devices in a single quarter,” said Tim Cook, chief executive of Apple, in a statement.  “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world.”

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The company sold a record 47.8 million iPhones and 22.9 million iPads in the first quarter, compared to 37 million and 15.4 million, respectively, in the year prior quarter.  Mac computer sales slipped to 4.1 million units from 5.2 million in the year prior period.  iPod sales also dropped, from 15.4 million in fiscal Q1 2012 to 12.7 million in the latest quarter.

Gross margins faded to 38.6 percent in the recent quarter from 44.7 percent the year earlier quarter as the company continues to face stiff competition from competitors’ less-expensive devices.  Selling older models at cheaper prices as new ones, such as the iPhone 5, are released, creates a drag on margins.

The stats from the latest quarter were not far from estimates, but the guidance seemed to re-ignite concerns about Apple being able to sustain its dominance in the industry and growth pattern amidst consumers shifting away from home computers and laptops and ever increasing competition for mobile devices.

For the fiscal second quarter, Apple is forecasting revenue between $41 billion and $43 billion and gross margins between 37.5 percent and 38.5 percent.  No earnings per share was forecast by the company.  Analysts were calling-for sales of $45.6 billion.

Apple’s cult-like users may not let go of their products, but investors have been letting go of shares.  Apple has trimmed more than 26 percent from its market capitalization since its all-time highs of $701.86 in September.  Investors were surely expecting more from Apple’s earnings, with shares closing up by almost 2 percent in normal trading hours.

That company’s valuation is getting another haircut in after hours trading, with shares down about 9 percent at $460 each, the lowest level in nearly one year.

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