Sales of Apple’s (NASDAQ: AAPL) iPhone disappointed analyst expectations by four million units, causing the tech giant’s shares to plummet more than seven percent yesterday; their largest loss in more than a year. After-hours trading on monday saw the stock price dip to around $507 dollars per share, a far cry from Apple’s closing price of $550.50.
Apple introduced two new models of their iPhone in September, the 5s and a cheaper model, the 5c. Aimed at placating demands in emerging markets for a less expensive model, the 5c was priced just $100 cheaper than the 5s, leading many to stomach the added costs in favor of the amenities offered by the more expensive model. Perhaps the most alarming figure to emerge from the company’s first-quarter earnings report is that Apple’s share of the global Smartphone market fell from the prior year.
Apple Maintains Profitability Levels Despite Negative Report
Amid the doom and gloom that surrounded the share price plummet, Apple’s net income in the first fiscal quarter remained constant around 13 billion. Perhaps overlooked by disappointing data regarding market share and sales levels, Apple’s recent partnership with China Mobile Ltd (NYSE: CHL) offers much needed optimism to investors who have taken a hit on the stock’s decline. China Mobile Ltd. Is the world’s largest wireless carrier, servicing more than 750 million and Apple CEO Tim Cook believes it will take until the end of 2014 for the true value of the partnership to be felt. In line with their vision of dominating the Chinese market, Apple’s Chinese sales rose by 29% in the fiscal first-quarter. As alarming as the trend of retreating market share on the global stage may be, Apple’s growth in China presents a silver lining.
Second-Quarter Revenue Estimates May Disappoint Again
Competitors Samsung Electronics Co. and LG Electronics Inc. (NYSE: LPL) both acknowledged losses in profit due to increased marketing costs, which are necessary if they are to make headway against competitors. The competitive Smartphone landscape has raised the question of how Apple will improve market share if the tech giant remains steadfast in its refusal to cut prices. Apple’s revenue projection, between 42 and 44 billion, will see the company fail to meet analyst estimates for a second consecutive quarter.