Apple shares fall despite rise in profits

The shares opened 5.8% lower at $123.21, cutting $50bn off Apple’s market value, with investors unimpressed with its revenue forecasts.

The fall comes in spite of what boss Tim Cook called “an amazing quarter” in the three months to 27 June.

Apple’s profit for the quarter rose by 38% from a year earlier to $10.7bn, while revenue was up 33% to $49.6bn.

The company sold 47.5 million iPhones in the period, up 35% on a year ago, withMac computer sales rising 9% to 4.8 million.

Analysts blamed the share fall on disappointment about the company’s revenue forecasts for the fourth quarter, which were slightly lower than expected, as well as the firm’s profits being too heavily dependent on the iPhone.

Apple is forecasting revenue to be between $49bn and $51bn in the fourth quarter.

They also said the firm had failed to provide a clear indication of how its first bit of wearable technology – the Apple Watch – was faring since it went on sale on 24 April.

Mr Cook said watch had enjoyed a “great start”, but has said he does not want to give more detailed figures to avoid giving competitors inside information.

Colin Gillis, an analyst for BGC Partners, told the BBC that investors should put the results into perspective.

“Overall the results are stunning, it’s made $10bn in profit. But Apple is an outlier in many metrics, so you need to look at the performance relative to expectations,” he said.

But he said that the firm’s “complete dependence” on iPhone sales and growth in China was concerning.

Apple said that sales in the China market – which it defines as China, Hong Kong and Taiwan – doubled year-on-year, accounting for more than a quarter of the company’s total third quarter sales..

But William Blair analyst Anile Doral said this position gave Apple an advantage.

“We believe the company is positioned to exploit the rise of the middle class in these geographies over the next several years,” he said.

FBR analyst Daniel Ives said the firm was a victim of expectations that had become too high, noting that it had become the “gold standard” of tech firms, meaning investors expect more.

He said the quarter was “good but not great”.

Overall, the majority of analysts said Apple shares were still good value for investors.

NBC’s Mark Mahoney said he expected iPhone sales to continue to drive growth, noting that so far just 27% of users had upgraded to iPhone 6, leaving scope for much higher sales.

Cantor Fitzgerald analyst Brian White was particularly upbeat, saying “Apple’s future prospects have never been brighter.”

 



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