A customer checks out the new Apple iPhone 4Gs in San Francisco.Justin Sullivan/Getty Images
Shares of Apple Inc. stabilized on Wednesday, following a drop of more than 5 per cent in after-hours trading on Tuesday evening when the company reported a rare miss in quarterly results.
The shares briefly dipped below $399 (U.S.) during the first hour of trading Wednesday, on volumes slightly higher than average, before rebounding to more than $406. In the run up to Apple's fiscal fourth-quarter results, the shares were trading above $420, hitting an all-time closing high of $426.70 on Monday.
Although the Cupertino, Calif.-based company posted a 54 per cent jump in profit ($6.6-billion) on revenue that rose 39 per cent ($28.3-billion), results fell short of the Street's expectations due to lower-than-expected sales of iPhones, iPads, and iPods. It was the first time that Apple disappointed in at least 26 quarters, according to Bloomberg.
Apple sold 17.1 million iPhones in the three months ended Sept. 24. Mike Abramsky, an analyst with RBC Dominion Securities, had expected sales of 19.5 million, while some other forecasts were even higher. Similarly, Apple said it sold 11.1 million iPads in the quarter, compared with 12.5 million estimated by Mr. Abramsky and even higher forecasts of other analysts.
Investors appeared to be more concerned about last quarter's numbers than impressed with Apple's forecast for the current quarter, which the company said should deliver record share profit of about $9.30 on record sales of about $37-billion.
Apple's strong guidance, which is above expectations, "may suggest this miss is transitional," Mr. Abramsky noted. "They see strong catalysts ahead, and expectations were unusually high for the [fourth]quarter."
Tuesday's financial report was the first since the death on October 5 of Apple co-founder Steve Jobs.
"His spirit will forever be the foundation of Apple, and we are dedicated to continuing the amazing work that he loved so much," Tim Cook, the new chief executive officer, said on a conference call Tuesday.
The shortfall in iPhone sales may have been caused by customers holding off purchases until the company rolled out its latest handset, the iPhone 4S this month. On the call, Mr. Cook said sales of the new device are red hot. "In our wildest dreams, we couldn't have gotten off to as great a start as we did with the iPhone 4S," he said.
Mr. Abramsky says Apple shares may face short-term volatility because of the miss until investors see data supporting the next leg of growth. His rating of "outperform" and $500 price target remain unchanged.