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  (Source: Reuters)
Apple still logs record profit, but sees shareholder confidence shaken by miss

The good news Apple, Inc. (AAPL) fans is that Apple is forecast to be the most profitable American company for 2012 [source].

The company's calendar Q2 2012 (fiscal Q3) results, just reported, revealed a 20 percent spike in profits on a year-to-year basis, soaring to $8.8B USD on a revenue of $35B USD, a profit of about $9.32 USD/diluted share.

The bad news is that Apple's iPhone sales slumped, moving only 26 million units versus an analyst consensus of 28.4 million units.  Analysts had already scaled back their expectations earlier in the month from 30.5 million units.

Apple's arch-rival, Android phonemaker Samsung Electronics Comp., Ltd. (KSC:005930) is believed to have sold around 50 million smartphones for the quarter.  In other words, it is out-selling Apple -- by itself -- approximately 2-to-1 in unit sales.  In fact, Samsung's flagship Galaxy S III smartphone reportedly alone moved 19 million units.  That means that Samsung's sales of just its top model are already approaching Apple's total sales.

Analysts had expected $2.2B USD more in profit (revenue of $37.2B USD).

iPhone 4S
Samsung left Apple's iPhone in the dust in Q2. [Image Source: The Tech Journal]

The remaining good news for Apple is that it moved 17 million iPads, versus the analyst expectation of 15.4 million.

Mac sales fell slightly short of the expectation -- 4 million units versus the consensus of 4.3 million.  iPods -- largely marketed today as "kiddie iPhones" -- settled in at 6.8 million units, just above the 6.6 million unit consensus.

The good news regarding iPods and iPads was not enough to convince investors to overlook the profits and iPhone sales miss.  Stock was down $27 USD in after-hours trading and is expected to open lower tomorrow.

The sixth generation iPhone is expected to follow a pretty straight-forward formula -- larger HD screen, LTE, and faster processor.  The iPhone's current screen, processor, and modem are quite dated compared to those found in the Galaxy S III International Edition [source].  The iPhone does manage a draw on battery life, though, besting its Android rival in web-browsing life, but getting beat in talk time [source].

But the phone was a no-show in June, indicating Apple likely would continue to release handsets in October, following the slipped iPhone 4S launch.  Some analysts had hoped Apple would "catch up" with an accelerated sixth generation launch, returning to June product announcements and late June/early July product launches.

There's background noise to the investor fear as well -- some worry that the death of iconic CEO and visionary Steven P. Jobs may make Apple unable to stay ahead of the curve.  Indeed, Apple remains untested, in a sense, in that it has not released a major new product line since the death of Mr. Jobs.

Apple is relatively desperate to try to stop Samsung in court, seemingly unable to stop Samsung on the market.  It has seen some success scoring sales bans on the Samsung Nexus smartphone and Samsung Galaxy Tab 10.1 tablet.  But it failed to secure its most hoped for ban -- a kill shot on the Galaxy S III.

Apple attorney Josh Krevitt sums up his company's plight, remarking, "Samsung is always one step ahead, launching another product and another product."

Indeed, Apple looked a step behind in Q2.

Sources: Apple, Bloomberg, Reuters



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$27 drop
By neothe0ne on 7/24/2012 7:03:49 PM , Rating: 2
quote:
Stock was down $27 USD in after-hours trading


yikes that's a huge loss say it isn't so




RE: $27 drop
By Cheesew1z69 on 7/24/2012 7:27:39 PM , Rating: 2
Actually, it's now down 31...


RE: $27 drop
By Lonyo on 7/24/2012 7:32:56 PM , Rating: 5
Losses are usually presented in % form for a reason.
$27 or $31 is still "only" around 5%, and you can easily get 3% or more swings in a single day even from a blue chip stock like MS or Apple, even when it's not an earnings report day.

When you consider it dropped over 10% from April to May/June, then bounced back up to the same level (~600->~540->~600), it doesn't really mean much to lose $30, especially since the earnings were below expectations. It's all about the pipeline anyway. Stocks will care more about any announcement of the iPhone 5 Apple TV and smaller iPad than missing earnings in this quarter.


RE: $27 drop
By xti on 7/25/2012 12:14:14 PM , Rating: 2
rumors have moved the IPhone5 up to sept, but why would Mick say report the news.

This just in, he still hates being Job's illegitimate child.


RE: $27 drop
By Ytsejamer1 on 7/24/2012 7:33:32 PM , Rating: 2
agreed...seems a little too knee-jerk considering Apple makes an obscene amount of profit per device sold.


RE: $27 drop
By TakinYourPoints on 7/24/2012 8:59:49 PM , Rating: 1
It is a reasonable response given that the stock ran up bigtime into earnings.

If a stock runs up into earnings, high profit is already being baked into the price. If a stock goes down into earnings, it is potentially being undervalued. This is why you often see companies go down on "good news" (ie - 20% growth and tons sold) and companies go up on "bad news".

Context and the big picture is important.

On the plus side, the AAPL August 650/655 call option spread I opened to sell on Friday is going to do VERY well for me. >:)


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