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Earnings up but profit down at Apple during fourth quarter
Question of the Day
Investors expressed mixed reactions Monday to Apple’s fourth-quarter earnings report, as revenues ticked up, but profit fell sharply by 8 percent for the technology giant that once ruled Silicon Valley
Apple’s stock closed up slightly at $529.88, but fell in after-hours trading.
“We’re pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34 million iPhones,” Mr. Cook said in a statement. “We’re excited to go into the holidays with our new iPhone 5c and iPhone 5s.”
Apple reported earnings after the markets closed Monday. Profit fell to $7.5 billion in the fourth quarter, which ended Sept. 28, from $8.2 billion in the same quarter of the previous year. On a per-share basis, profit dipped to $8.26 from $8.67. This is better than the $7.93 that analysts expected, but even though Apple turned a profit, the diminishing returns concerned some investors.
Apple also announced it will be giving about one-third of that profit back to investors, who will receive a $3.05 dividend per share Nov. 14.
Revenues ticked up, but not by much. Apple reported $37.5 billion in revenue, up 4 percent from $36 billion in the same quarter during the previous year. This figure beat the $36.8 billion estimate from analysts.
Sales of iPhones grew dramatically, but iPad and Mac sales may be tapering off. Apple sold 33.8 million iPhones in the fourth quarter, up from 26.9 million iPhones in the same period during the previous year. But iPad sales didn’t move much, ticking up to 14.1 million from 14 million a year ago, while sales of Mac computers dipped to 4.6 million from 4.9 million.
“The smartphone category is expected to grow significantly over the next few years,” Mr. Cook told investors during an earnings call.
Wall Street had mixed reactions to the earnings figures. Apple’s stock immediately fell by $16 to $513 in after-hours trading, but eventually climbed back up to about $534, before settling in at $528.
But for a company that once traded above $700, that’s not much.
Not too long ago, Apple owned the most valuable stock in the world. Bolstered by hip new technologies like the iPhone and iPad, Apple’s stock shot to the top of Wall Street. In August 2012, the Silicon Valley giant set a new record for the highest share price in history at $665.15, passing Microsoft’s 1999 mark. At the time, Apple was worth just shy of $625 billion.
Then, things started to go wrong. By the end of the year, Apple’s stock was trading at just $527, down nearly 25 percent from its peak of $700 in September 2012. But the bleeding didn’t stop there. Apple bottomed out at $390 this past April — about half as much as it was worth just seven months earlier.
Since then, Apple has begun to rebuild and make up the ground that it lost on Wall Street. Share prices are up 33 percent since June, but remain more than $170 below the company’s all-time high.
Nevertheless, Apple remains confident in the ability of its products to reach consumers’ interest.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at firstname.lastname@example.org.
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