Despite setting records and offering plenty of profits, Apple's fourth quarter disappointed Wall Street. Apple announced the results of its fiscal 2011 fourth quarter on Tuesday even as the company continued to grieve the loss of its co-founder Steve Jobs.
Apple posted quarterly revenue of $28.27 billion and quarterly net profit of $6.62 billion, or $7.05 per diluted share. That compares with revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. International sales accounted for 63 percent of the quarter's revenue.
"We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion," said Tim Cook, Apple's CEO. "Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline."
Wall Street Not Thrilled
Apple sold 17.07 million iPhones in the quarter, a 21 percent boost over the year-ago quarter. Apple sold 11.12 million iPads during the quarter, a 166 percent increase over the year-ago quarter. The company also sold 4.89 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter, and 6.62 million iPods, a 27 percent unit decline from the year-ago quarter. The totals represent all-time record Mac and iPad sales in a single quarter.
"We are extremely pleased with our record September quarter revenue and earnings and with cash generation of $5.4 billion during the quarter," said Peter Oppenheimer, Apple's CFO. "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."
But Wall Street wasn't altogether thrilled. It was the first time Apple failed to meet earnings estimates since September 2004. Part of the problem rested with the iconic iPhone. J.P. Morgan expected Apple to sell 20.6 million iPhones in the quarter. Still, Wall Street analysts expect iPhone sales to set a record in the fourth quarter.
Microscope on Apple
"Apple's past success became the basis for some of the inflated analyst expectations on display this week," said Greg Sterling, principal analyst at Sterling Market Intelligence. "People believe that Apple chronically 'low balls' its guidance, and so the financial analysts typically go well beyond that in their projections."
Sterling noted that Apple grew at a very healthy $28 billion in revenue and posted more than $6 billion in profit -- significant year over year growth but lower than in the past. So Apple beat its own forecasts but not the market's higher consensus expectations.
"Because it's Apple, the market wanted more and nervous investors in the post-Steve Jobs era are looking for any indication of a slow-down in Apple's momentum," Sterling said. "But this cat-and-mouse game of Apple guidance and analyst forecasts shows, in a way, what a circus and ridiculous place the U.S. stock market is today."
But the next quarter looks impressive. With Apple projecting revenue at $37 billion, Sterling figures Wall Street will project more than $40 billion. The more Apple succeeds, he said, the more pressure there is to top itself at ever-higher levels of financial performance.
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