This Apple Is a Disappointment

Make that two consecutive misses. After failing to meet Wall Street estimates for both revenue and profits in its fiscal third quarter, Apple (NAS: AAPL) failed on the bottom line in Q4.

The Mac maker reported $8.67 a share in profits on $35.97 billion in revenue. Analysts were expecting $8.75 a share of profit on $35.80 billion in revenue, according to Yahoo! Finance.

For the full year, Apple booked $44.15 in per-share earnings on $156.5 billion in revenue. Wall Street wanted $44.29 and $156.27 billion, respectively.

No one seems happy with the numbers. The Nasdaq halted trading in Apple stock, while the PowerShares QQQ (NAS: QQQ) , which generally mirrors the performance of the Nasdaq Composite, of which Apple is a member, fell more than 1% in after-hours action.

Worse than expected performances across the major hardware lines seems to be culprit. Here's where iPad, iPhone, and Mac sales came in during fiscal Q4 versus the median projections compiled by Fortune:



Median Projected

Last Year

Y-o-Y Growth

iPhones sold

26.910 million

28.05 million

17.07 million


iPads sold

14.036 million

16.50 million

11.12 million


Macs sold

4.923 million

4.60 million

4.89 million


Sources: Fortune Magazine, Apple press release.

Of all the numbers here, iPad sales have to be the most disappointing. At just a shade over 14 million, the iPad no longer looks like the PC destroyer that it seemed to be last week. Unit sales fell 18% sequentially -- even worse than my Foolish colleague Evan Niu predicted. Strong sales of the Nexus 7 tablet, and pent-up demand for Microsoft's (NAS: MSFT) surprising Surface tablet, might also have been a factor.

Mac sales also stalled, in line with what Foolish Apple analyst Eric Bleeker expected. Earlier, research firms Gartner and IDC said Apple's U.S. desktop and laptop sales slowed between 6% and 7% in fiscal Q4.

Finally, iPhones sales nudged ahead of Wall Street's lowered target of 25 to 26 million units but, at 26.91 million handsets sold, still fell short of the consensus median. Smartphone revenue increased 5% sequentially and 56% year over year.

What remains to be seen is how big Apple expects the iPhone 5 to contribute to the holiday quarter now under way. Should a weak opening weekend for the handset have investors curtailing expectations?

Either way, the stakes are high and the opportunity is huge, so to help investors understand this epic Apple event, we've just released an exclusive update dedicated to the iPhone 5 launch. By picking up a copy of our premium research report on Apple, you'll learn everything you need to know about the launch, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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