Apple shares dipped Wednesday morning after the company issued a “disappointing” fourth quarter earnings report late Tuesday.
Although the company posted a record-high Q4 profit of $6.62 billion, Apple stock’s earnings per share value of $7.05 fell below analysts projections of $7.25.
The miss was precipitated in part by Apple’s and investors’ exceedingly high expectations for the company, which hasn’t missed an earnings projection since 2004.
Apple also sold fewer iPhones than expected — some 17.07 million, compared to the 20 million that analysts had hoped and under the 20.34 million iPhones that were sold in Q3. Of course, it’s safe to say that the sales were down in part because customers were holding off buying the existing models of the device as the rumor-mill churned up expectations of a new iPhone 5, which turned out, of course, actually to be an iPhone 4S.
As new CEO Tim Cook explained during the earnings call: “We can’t tell you with precision how many units we would have sold without the rumors, if people hadn’t been expecting a new iPhone. But I would say it’s substantial.”
In response, Apple stock plunged 6.7 percent in after-hours trading, wiping out a weeks-worth of gains and ceding its position as the most valuable company in the world to Exxon Mobil. On Wednesday, they opened 4.9 percent lower than Tuesday’s close, “potentially the start of one of their biggest single-day selloffs in recent years” according to the Wall Street Journal. At the time of this posting, shares are down 5.48 percent. Prior to Wednesday, Apple shares had only fallen more than 5 percent on one occasion since 2008.
Still, the company’s predictions for the future were far rosier:
“Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30,” said Peter Oppenheimer, Apple’s CFO, in an Apple press release.
Cook put it more bluntly. “I am confident we will set an all-time record for iPhone this quarter,” Cook said in the call, AFP reported. “In our wildest dreams we couldn’t have gotten off to as good a start as we did with the 4S.”
Indeed, on Monday, Apple announced that it had sold over 4 million iPhone 4S units in the first weekend it was available, putting it on track to be Apple’s best-selling product of all time.
There are other bright spots: as Apple noted in its earnings call, it sold a record number of iPads (11.2 million) and Mac computers (4.89 million).
For all of its Apple counterfeiting issues, China is shaping up to be the company’s second-most important market after the U.S. It only accounted for 2 percent of Apple’s full year revenue in 2009, but accounted for 12 percent of the 2011 revenue and a whopping 16 percent of the fourth quarter revenue.
Most importantly for the present, the company is still sitting on a staggering mound of cash, some $81.5 billion, $54 billion of it in offshore accounts. And Apple isn’t intent on hoarding it, as Cook made clear in the earnings call, saying “I’m not religious about holding it or not holding it. I’m religious about a lot of things, but not that.”
What might Apple spend it’s pile of dough on? The Next Web‘s Matthew Panzarino speculates that Apple could move to buy a wireless carrier of its own, a drum that The Next Web and other blogs, not to mention a former Apple executive, have been beating for a few months now.
Others have pointed out the sheer unlikeliness (and craziness) of that prospect, with The Business Insider memorably noting “Apple has never done a big acquisition and is likely never to do one because that would be too much of a culture clash and painful integration.” (There’s some nitpicking to be done on that point because Apple did purchase then-exiled Steve Job’s NeXT software company for $400 million in 1996, but given that Jobs was ultimately behind the culture of both companies, that union went smoother than others might.)
Still, there might be more stock to the rumors that Apple is mulling a purchase of its own social network…say Twitter. After all, Apple’s musical social network, Ping, hasn’t really clicked with consumers, and with Twitter’s recent market valuation pegged around $8 billion, it would be more than affordable for Apple right now.
