By Poornima Gupta, Reuters
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SAN FRANCISCO -- ?Apple Inc's results fell short of Wall Street's expectations as global economic growth slumped and consumers held off on buying its flagship iPhone ahead of a new version expected in the fall, hitting its stock price.?
Shares of the world's most valuable technology company shed more than 5 percent after it reported its second quarterly results miss in less than a year.?
During the latest quarter, Apple shipped 26 million iPhones, well below the 28 million to 29 million that Wall Street analysts had predicted, even taking into account a pause in buying ahead of the iPhone 5.?
In contrast, the company sold 35.1 million iPhones in the March quarter. Sales of the iPad, the tablet that accounts for well over half the world's market, came in at 17 million in the fiscal third quarter, above expectations.
Apple, notorious for its conservative forecasts, estimated earnings for the September quarter of $7.65 a share on revenue of $34 billion, well below the average estimate of $10.23 a share on revenue of $38.03 billion, according to Thomson Reuters I/B/E/S.
"It's a big miss. The guidance for next quarter was very low. I'll be very interested to know if it was a product transition or the economic" turbulence," said David Rolfe, chief investment officer for Wedgewood Partners.
"What is key is the mixture between iPhone and iPad. The iPhone has higher margins. iPhone sales were lower than expected - meaningfully lower - and that translates into a big hit on the bottom line."
Also, Apple has seen Samsung Electronics - now the world's largest seller of smartphones - and other handset manufacturers using Google Inc's Android software chip eat away at its market share.
In coming months, Apple is expected to roll out a new iPhone, which is likely to again pose a stiff challenge to rivals such as Samsung.
This was a reason why few investors were not expecting a blowout third-quarter as they remembered how chatter over a new iPhone last year caused Apple to miss quarterly expectations for the first time in years. The economic slowdown in Europe and China also made many investors nervous.
"We expected a lot of consumers will probably delay their upgrade and their purchases until the iPhone 5 comes out," Channing Smith, co-manager of Capital Advisors Growth Fund, said. "We saw a similar trend occur last year with the iPhone 4S."
Apple's fiscal third-quarter revenue rose to $35 billion, much lower than the average analyst estimate of $37.22 billion. It reported net income of $8.8 billion or $9.32 a share, compared to $7.3 billion or $7.79 a share a year earlier.
That lagged the $10.37 Wall Street had forecast. Its shares slid to $570.81 in after hours. They closed at $600.92 on the Nasdaq.
"Apple is in that rarest of all positions where the Street will punish them for anything less than an excess of success," CCS Insight analyst John Jackson said. "If there's a positive spin on the iPhone story, it is one of latent demand."
Revenue in the Asia Pacific region -- which excludes Japan - shrank 22 percent from the previous quarter, far outstripping the 3 percent to 6 percent fall in revenue in the Americas and Europe.
Gross margin for the quarter was 42.8 percent, also lower than the expected 43.68 percent. Apple's hoard of cash and other securities now amounted to $117.2 billion.?
CNBC's Gary Kaminsky, and Peter Boockvar, Miller Tabak weigh in on Apple's earnings miss.
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