Apple Inc Q1 FY 2014: Apple Shares Lose $50 Despite Record-Breaking iPhone, iPad Sales

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By Reissa Su | January 28, 2014 12:24 PM EST

Apple Inc has released its Q1 FY 2014 earnings and surpassed analysts' and its own expectations with $57.6 billion sales with earnings per share of $14.50. The Cupertino-based tech giant announced that the company sold 51 million iPhones, 26 million iPads and 4.8 million Macs. The iPhone and iPad sales for Q1 FY 2014 broke records as Apple claimed they were both quarterly and all-time highs.

Reuters
The gold colored version of the new iPhone 5S is seen after Apple Inc's media event in Cupertino, California September 10, 2013.

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Apple continues to enjoy strong demand outside of the United States with international sales accounting for 63 per cent of Apple's Q1 FY 2014 revenue.

According to Bloomberg's compilation of analyst estimates, Apple Inc's anticipated earnings per share may reach $14 or equal to $57.5 billion in revenues. If analysts turn out to be right, the Q1 FY2014 earnings would be higher than 2012's $54.5 billion. Apple has previously announced an earnings guidance of anywhere between $55 billion and $58 billion. A consensus from average analyst estimates predicted that Apple will sell 55 million iPhones, 25 million iPads and 4.6 million Macs.

Based on Apple's reported earnings, only the iPhone sales estimates fell short of analysts' expectations.

Despite beating the guidance and Wall Street predictions on quarterly revenues, Apple Inc's iPhone sales were a disappointment to investors as guidance for the current quarter is just between $42 and $44 billion. Apple investors were hoping Q2 earnings will be closer to analyst estimates of $46 billion.

Apple's Q1 FY 2014 earnings report is the first to include a full three months of sales of new devices like iPhone 5S, iPhone 5C and the revamped MacBooks. Sales from Apple's newly released products were expected to get a big boost from the holiday quarter.

Apple shares dive after iPhone sales disappointment

Compared to Apple's Q1 FY 2013 reported revenue of $54.5 billion, the holiday quarter gave the company a 5.7 per cent increase. Apple reported earnings per share for Q1 FY 2014 with $14.5 which is an increase from $13.8 or 5 per cent from figures a year ago.

Investor disappointment over weak iPhone sales based on Apple's guidance for Q2 reflected on the market as Apple stocks lost $50 or 8.8 per cent in after-hours trading on Jan 27, 5:42pm EST.

Piper Jiffray analyst Gene Munster noted that Apple's average selling price was higher than expected despite a disappointing number of iPhone units sold.

Tim Cook happy with all-time high iPhone and iPad sales

In a press release, Apple Inc CEO Tim Cook announced the company is "really happy" with record-breaking iPhone and iPad sales, including the strong performance of Macs in the world market. He also acknowledged the continued growth of iTunes, software and services. Mr Cook added that Apple loves having loyal, satisfied and engaged customers.

Chief Financial Officer Peter Oppenheimer stated that Apple was able to generate a cash flow of $22.7 billion from operations. The company returned $7.7 billion in cash to Apple's shareholders by offering dividends and share buybacks. Mr Oppenheimer said cumulative payments under the program have now reached more than $43 billion.

Apple Inc's Board of Directors has announced a cash dividend of $3.05 per share payable on Feb 13 to all shareholders as of Feb 10.

Q1 FY 2014 earnings conference call highlights

Mr Oppenheimer cites supply constraints of the iPhone 5S affected iPhone sales during the holiday quarter. He cited that the iPhone has a 96 per cent satisfaction rate based on reports from ChangeWave, comScore and Kantar. About 57 per cent of Chinese consumers use iPhones for browsing the Web. In some companies, as many as 50,000 iPhones are provided to employees.

The conference call also revealed that Apple sales have more than doubled in China. The company expects an increasing trend with the help of China Mobile which began offering iPhones to its subscribers earlier this month.

When asked why Apple's guidance is low for the current quarter, the Apple CFO cited changes in channel inventory and the 52 per cent decline in iPod sales in the December quarter.

More highlights of the conference call will be posted soon. 

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(Photo: Reuters / )
The gold colored version of the new iPhone 5S is seen after Apple Inc's media event in Cupertino, California September 10, 2013.
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