Apple Inc. forecast gross margins that missed analysts’ projections, suggesting the world’s most valuable company is grappling with higher costs to revamp its product line for the holiday shopping season.
The Cupertino, Calif.-based company forecast gross margins will be 36.5 per cent to 37.5 per cent, compared with 38 per cent predicted by analysts. Revenue in the current period will also be $55 billion to $58 billion, Apple said Monday. While that topped the $55.5 billion average of analysts’ estimates compiled by Bloomberg, it’s up just 0.9 per cent to 6.4 per cent from a year earlier. Apple last reported a single-digit sales rise in the 2008 holiday quarter, when revenue rose six per cent.
Chief executive officer Tim Cook is rolling out new iPhones and iPads for the end-of-year shopping season, which is Apple’s most important quarter. The company, which is grappling with lower-priced products from Samsung Electronics Co. and others, is under pressure to reignite growth and maintain its margins with a new blockbuster product. Apple’s earnings jumped 61 per cent in its previous fiscal year ended September 2012, then fell this year for the first time in at least a decade.
“People aren’t going to be excited until they see a definitive return to growth,” said Daniel Ernst, an analyst at Hudson Square Research in New York.
Apple fell as much as 5.1 per cent in extended trading after the results were released. The shares advanced less than one per cent to $529.88 at the close in New York, leaving them down 25 per cent from a record in September 2012 following the debut of the iPhone 5.
Apple said sales for its fiscal fourth quarter ended in September rose 4.2 per cent to $37.5 billion. iPhone sales, including about a week of the new 5s and 5c models on store shelves, were 33.8 million, more than the 32.8 million predicted by analysts on average
in a Bloomberg survey. The company also sold 14.1 million iPads, compared with an estimated 14.3 million units. Back-to-school shopping helped push purchases of Mac computers to 4.6 million.
Profit for the just-ended quarter fell 8.6 per cent to $7.51 billion, or $8.26 a share, above the $7.92 projected by analysts on average and the third-consecutive period of declines.
Apple is exploring new product categories with “significant opportunities,” Cook said on a conference call Monday.
“This is a company that has routinely blown the doors off their estimates so meeting or just exceeding is probably a disappointment,” said Jack Ablin, chief investment officer at BMO Private Bank, which has $66 billion under management and owns Apple shares.
Apple has been busy updating its product lineup ahead of the holiday season. The company has said its new iPhones will be available in about 100 countries by the end of the year. The higher-end iPhone 5s costs $199 with a two-year wireless contract and includes a more powerful processor, improved camera and fingerprint-reading technology.
