What Apple’s Bizarre Stock Tumble Really Means

22 Jul 2015 | Author: | No comments yet »

Apple profit jumps but shares slip.

Sure, it can do many useful, even delightful things, such as showing us incoming texts and email, tracking our heart rate during exercise or letting us send digital doodles to friends.SAN FRANCISCO — Apple’s latest quarterly profit leapt as people around the world snapped up big-screen iPhones but its shares slipped as analysts had expected even more. “We had an amazing quarter,” CE Tim Cook insisted, noting that iPhone revenue in the quarter that ended on June 27 was up 59% from the same period a year earlier.

The iPhone maker confirmed profits of US $10.7 billion and revenue of $49.6 billion – led by record third quarter sales of both the iPhone and its Mac computer lines. However, no specific numbers were offered for sales of the Apple Watch, which launched in April, with the technology giant referring to it only as a “successful launch”. He brushed aside any worry about iPhone sales growth, expressing confidence it has “lots of legs” that it will be running with for many years to come given market factors such as customer satisfaction rates and the booming overall global smartphone market. Early Apple Watch owners seem generally happy with it, but Apple’s bigger worry should be those on the sidelines — even hard-core Apple fans, not to mention the rest of us — who are waiting to take the plunge.

Apple did not detail specifics on sales of its newly launched smartwatch, instead folding the figure into an “other” category that rose 49% to $2.64bn. In total, the California-based firm sold more than 47 million iPhones between April and the end of June, as well as 10 million iPads – a further drop in sales for the tablet, which has been in steady decline. Apple hasn’t released sales figures, but its quarterly financial report Tuesday suggests that they were lower than many Wall Street analysts expected, even though they exceeded Apple’s internal projections. “It’s been cast as a want, not a need,” said Matt Quick, a Topeka, Kansas, engineer and Apple fan who is holding off on getting one. “I’m kind of waiting to see what next year’s model will bring.” Patrick Clayton, who has had Mac computers all his life and owns an iPhone and several iPads, returned his Apple Watch after three weeks.

It nagged the physically active New Yorker to stand up during a six-hour flight. “Apple is famous for telling us what we need before we need them,” Clayton said. “I thought this would be the case with the watch. A recent study by research firm Slice Intelligence suggested that, based on a large sampling of e-mail receipts in the US, orders for Apple Watch have plunged since the week that the wearable computing gadget made its debut.

Chief executive Satya Nadella said: “Our approach to investing in areas where we have differentiation and opportunity is paying off with Surface, Xbox, Bing, Office 365, Azure and Dynamics CRM Online all growing by at least double-digits.” A lot of hope will now be pinned on the upcoming launch of Windows 10 next week, with Microsoft aiming to draw in new customers with its re-designed desktop software. However, Cantor Fitzgerald experts believe Apple Watch will be a “go-to gift” during the year-end holiday season and become the best-selling new product in Apple’s history. Global Equities Research MD Trip Chowdhry has estimated Apple could sell 20-million to 25-million of the watches in the final three months of this year. “We are convinced the watch is going to be one of the top gifts of the holiday season,” Mr Cook said, while fielding questions from analysts on the earnings call. “I never go anywhere without the watch; not because I am the CEO but it’s because I am attached to it. Wristly, a research company created to study the watch, found that early buyers are overwhelmingly satisfied, more so than with the original iPad and iPhone. After all, early adopters of new technologies tend to understand that what they’re getting isn’t perfect. “I’d recommend it to people with an open mind,” said Dennis Falkenstein of Danville, California.

Chief Financial Officer Luca Maestri told The Associated Press that revenue from the watch amounted to “well over” that $952 million increase, as the category includes products whose sales fell. Apple has run television commercials showing the watch in everyday life, and it has devoted tables at its retail stores for people to try one on and learn more. David Lubarsky, a Fairfield, Connecticut, photographer, loves that he can get “basic information, quick” and avoid staring at Facebook on the phone all day.

The watch version of one transit app offers bus schedules for your saved locations — even if they are far away — rather than the stops closest to you at the moment, as the phone app does. Apps will get better when Apple updates the watch’s software this fall to permit more “native” apps — those that aren’t just extensions of phone apps.

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