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Apple profits fall for the first time in a decade

Apple stock

Apple’s shares opened on the stock exchange down by 3 percent on Wednesday, the news of Apple’s $60bn share buyback programme some way to calming the share holders down from the news of the dropped share price. News from Tim Cook CEO of Apple that there will be no June iPhone has taken it’s toll on the stock price, currently Apple’s stock is around the 401.30 mark and is very volatile at the moment.

The buyback programme has taken $60bn of Apples’s $137bn cash pile and the dividend will increase by 15 pc to $3.05 from $2.65. Apple’s profit fell 18 percent or $2.1bn to $9.5bn on sales of $43.6bn, the technology goliath released the figures that it sold 37.4m iPhones and 19.5m iPads in the first three months of this year. The margins dropped to 37.5 percent from 47 percent this time last year.

New Products

Also Tim Cook refuses to give investors any hints as to what future products are in the pipe line, he said “we have some great stuff coming in the fall and across all of 2014” Cook also highlighted that Apple’s strength came from their existing customer base and their impressive library of apps.

Tim Cook went on to say “We have the best ecosystem by far, and we’re just going to keep augmenting it and making it better and better, that shows up in our loyalty and ratings.”

There won’t be any new products of big products in the September fiscal quarter. Tim Cook said that Apple is not willing to trade off battery  life and screen quality for a larger screen at this time, this eliminates the possibility of a larger screen on the iPhone in 2014.

What the analysts say 

Analysts has predicted that Apple would be launching the iPhone 5s along with a cheaper iPhone to maximise their market penetration and reaching more demographics, but sources from inside the company say that implementing a larger screen on their flagship device would require too many compromises.

“Some customers value a large screen size. Others value other factors. Our competitors have made some significant trade-offs in many of these areas in order to ship a larger display. We would not ship a larger display iPhone while these trade-offs exist” said Tim Cook.

Apples point of view 

Tim Cook also dashed any hope of the integration of NFC (Near Field Communication) as a payment method, Tim Cook said that the technology had already been adopted by Samsung and remained in its infancy. Some customers would value the integration of NFC whereas others would value a larger screen size, there would be too many compromises to add all of the features that the customers want at the same time and still keep the sleek famous design and usability.

Historically Apple dominates when marketing their new products, but Cook has indicated that he plans to continually price the older iPhones aggressively to attract more cost conscious shoppers. Inspite of Apple taking the aggressive stance to marketing their older phones their stock has tumbled by 24 percent this year.

Apple is seeing very vicious competition from Samsung with their incredibly popular Galaxy S3 and since they unveiled the Galaxy S4 in March this year, Samsung released a lot of product every month whereas Apple has a finite amount of product they refresh or release each year.

Source – Telegraph