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Although iPad sales have sagged lately, don’t worry about an iPad recession.
Sales of Apple’s blockbuster tablet device totaled 14 million units in the three months ended Sept. 30, missing Wall Street expectations and falling short of the previous quarter’s tally of 17 million.
The iPad sales disappointment — which may have been the result of some Apple fanatics’ putting off a purchase in anticipation of the iPad Mini — coupled with higher-than-expected costs brought on by Apple’s all-out sprint to bring new products to stores in time for the holiday season, led the tech titan to forecast lower-than-expected profits in the current quarter.
For the current quarter, Apple warned it expects earnings of about $11.75 a share — sharply below the Street’s forecast of $15.41 a share.
“Clearly there are supply-chain costs and start-up costs that are impacting gross margin, which is ultimately driving down earnings,” analyst Shannon Cross told Bloomberg.
Apple shares — which have lost 13 percent over the past month on fears that demand for iPads and iPhones may be losing momentum — were little changed in after-hours trades, hovering near yesterday’s close of $609.54.
Still, CEO Tim Cook brushed off the recent iPad slowdown, saying he remained optimistic about a holiday frenzy for the iPad Mini announced on Tuesday.
That’s despite the iPad Mini’s $329 price tag, which has raised fears that the new device will be too costly to compete against Amazon’s Kindle tablet, which retails for $199.
“We’ve seen low-cost challengers before,” Cook told analysts, pooh-poohing such pricing concerns.
However, CFO Peter Oppenheimer also revealed yesterday that the iPad Mini, which is about two-thirds the size of a regular iPad and weighs less than a pound, is “priced aggressively” given how much it costs to make.
“Its gross margin is significantly below the corporate average,” Oppenheimer said.
Apple noted that iPhone sales rose more than expected in the September quarter despite the fact that the iPhone 5 was only released nine days before the close of the quarter — a signal that shoppers were buying older iPhone models in larger numbers.
Asked about Microsoft’s new Surface tablet, Cook dismissed it as a “very confused and compromised product,” referring to reports that the Surface is meant to function as both a tablet and a laptop.
“I suppose you could design a car that flies and floats, but I don’t think it would do all of those things very well,” Cook said.
Fiscal fourth-quarter profit was $8.2 billion, or $8.67 per share, up from $6.6 billion, or $7.05 per share, a year ago.
The company’s cash hoard stood at more than $121.2 billion, up from $117.2 billion in June. The 3.4 percent increase marked a slowdown from the pace seen in recent quarters.
That dampened Apple’s fiscal fourth-quarter earnings, whose 24-percent rise also fell short of analysts’ forecasts — despite better-than-expected revenue of $36 billion, fueled partly by iPhone sales that rose to nearly 26 million.