Apple Profits Fall For First Time In A Decade
Computer and smartphone maker Apple has reported its first quarterly drop in profits in a decade, but said it will raise dividends for shareholders.
It made a net profit of $9.5bn (£6.2bn) in the January to March quarter, down from $11.6bn last year.
But the results were better than many had expected, as strong iPhone and iPad sales boosted revenues to $43.6bn.
Concerns over slowing demand for its products amid increased competition have hurt Apple’s share price recently.
“Though we’ve achieved a credible scale and financial success, we acknowledge that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012,” Tim Cook, chief executive of Apple said.
The company said it sold 37.4 million iPhones and 19.5 million iPads worldwide in the three-month period.
‘Very frustrating’
Although Apple continues to remain a dominant player in the tablet computer and smartphone markets, investors have been worried that its market share was being eroded by increasingly popular offerings from rivals such as Samsung.
There have also been concerns over the lack of new product launches.
Analysts have suggested the company needs to innovate and develop new products to stay ahead of the competition, rather than relying on updates to existing products.
“The market is tired of the same old thing at Apple,” said Lauren Balter, an analyst at Oracle Investment Research.
“Investors are looking for innovation. The reality is that people are looking at other products now and they are looking at other cool features from competitors.”
These concerns have seen investors ditch Apple shares over the past few months. It has lost around 40% of its stock market value since hitting an all-time high in September last year.
However, Apple’s chief executive tried to assure investors and shareholders that the firm was continuing to take measures to ensure that it maintained its dominance in the market.
“The decline in Apple’s stock price over the last couple of quarters has been very frustrating for all of us… but we’ll continue to do what we do best,” he said.
“The most important objective for Apple will always be creating innovative products.
“Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline,” he added.
Some analysts said that the lack of a new product did not mean that the firm was not developing one.
“What no investor can see is what is happening between closed doors in research and development,” said David Tan, assistant professor of strategy at Georgetown University.
“[Research and development] is always very secretive. It always takes a very long time between the inception of an idea and commercialising a product.”
Shares rise
Apple, which before the latest earnings had $137bn in cash, has been under pressure to share some of it with shareholders.
On Tuesday the company said it planned to buy back $60bn in shares, and raise its dividend to shareholders by 15%.
The move encouraged investors and Apple’s shares rose 5.5% in after-hours trading on Wall Street.
BBC
