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Despite Impressive Earnings, Investors Are Unimpressed With Apple’s Latest Numbers

Despite Impressive Earnings, Investors Are Unimpressed With Apple’s Latest Numbers

October 18, 2011
Apple today announced financial results for its fourth quarter of 2011, which ended September 24. Despite recording a 54 percent increase in profits, today's announcement upset investors. The Cupertino, California-based company announced quarterly revenues of $28.27 billion with a net profit of $6.62 billion, or $7.05 per diluted share. These results compare to revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. Gross margin was 40.3 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue. In total, Apple's profits climbed 54 percent versus the same period of time in 2010. During the quarter, Apple sold 17.07 million iPhones, representing an increase of 21 percent over the year-ago quarter. Apple sold 11.12 million iPads during the quarter, a 166 percent unit increase over the year-ago quarter. The Company sold 4.89 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 6.62 million iPods, a 27 percent unit decline from the year-ago quarter. According to Tim Cook, Apple’s CEO:
“We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion. Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline.”
These numbers, while impressive overall, fell below estimates, according to The Wall Street Journal.  Analysts were projecting earnings of $7.39 a share on revenue of $29.69. As a result, Apple's shares are down six percent in after hours trading. At this afternoon’s conference call with the media, Cook indicated that sales numbers might have been off because of persistent iPhone 5 rumors, according to MacRumors.
iPhone rumors had been at a fever pitch for many months as Apple missed its usual June introduction of new hardware. Compounding the effect were persistent rumors of a dramatically redesigned "iPhone 5" offering a larger but thinner design than the current iPhone. Whether those iPhone 5 design rumors were incorrect or based on a design still in the works for a future model remains unknown, but the iPhone 5 was ultimately not released during this product cycle as Apple elected to remain with the iPhone 4 design as it launched the iPhone 4S.
Still, Apple expects a huge holiday quarter thanks to the iPhone 4S, which just arrived last Friday. Through Sunday, four million units of the fifth iPhone were sold in just seven countries. The iPhone 4S launches in 22 additional countries on October 28.

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