The electronics giant's projections for Q2 revenue fell short of analysts' estimates, and it also reported a slight decline in net income, causing shares to fall in after-hours trading.
(Credit: Kent German/CNET)
Apple reported record revenue for the fiscal first quarter as it sold more iPhones and iPads than ever, but the company also provided weak projections for the current period.
The Cupertino, Calif., electronics giant on Monday reported fiscal first-quarter earnings of $13.07 billion, or $14.50 a share, compared with $13.08 billion, or $13.81 a share, in the year-earlier period. Sales for the period ended Dec. 28 rose 5.7 percent to $57.6 billion.
The revenue was in line with what Apple and analysts had estimated. Apple in October projected first-quarter revenue of $55 billion to $58 billion. Analysts, meanwhile, estimated earnings of $14.09 a share on revenue of $57.5 billion.
Apple said it sold a record 51 million iPhones and a record 26 million iPads, as well as 4.8 million Macs during the quarter. Wall Street was expecting sales of about 55 million iPhones, 25 million iPads, and 4.6 million Macs.
For its next quarter, which runs through March, Apple expects to generate $42 billion to $44 billion in sales, with a gross margin between 37 percent and 38 percent. The revenue is lower than the $46 billion Wall Street expected ahead of the report. Analysts also expected a gross margin of 37.3 percent.
As for the first quarter, Apple reported a gross margin of 37.9 percent, slightly better than its estimate of 36.5 percent to 37.5 percent. Apple's gross margin, a measure of sales after removing costs like manufacturing, has fallen since its high of 47.4 percent in early 2012 as customers opt for lower-cost devices.
Apple's results have been fueled by the iPhone for the past several years, but the company is facing more competition than ever before. Samsung and others are pressuring the company at the high end, while Apple is largely missing out on the low end of the market. That's a big concern as more and more mobile sales come from emerging markets like China, where inexpensive phones from companies such as Huawei and ZTE are popular.
To help better address those new markets, Apple earlier this month started selling the iPhone through China Mobile, the world's biggest wireless carrier. And in September, it introduced two new versions of the iPhone for the first time ever, including the less expensive but more colorful iPhone 5C. Apple also rolled out the new iPad Air and iPad Mini with retina display the following month. The company hopes the new products will keep momentum going, despite concerns that the iPhone 5C isn't selling well and that China Mobile demand may be sluggish.
Apple isn't the only company facing a tougher smartphone market. Rival Samsung last week reported its first quarterly operating profit decline in two years. Perhaps most troubling was the slowdown in Samsung's mobile business and a warning that the first half of 2014 would remain weak.
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