Apple (NASDAQ:AAPL) profit fell in the first quarter of 2013 by 18% to $9.55 billion, the first negative trend of the past 10 years, in an increasingly crowded mobile electronics market with a nearly saturated smartphone segment. Estimates provided by the company for the next three months are lower than Wall Street analysts’ projections.
Apple announced, with the financial report presented on Wednesday, that it will transfer to shareholders $55 billion in cash to offset the sharp decline in the price of shares in the last seven months amid signals of sales slowdown.
Shareholders will be rewarded both by increasing dividend and repurchase of shares. The company indicated that it would borrow to fund the largest share repurchase program in history, after which shareholders would have gained by 2015, including similar initiatives in the past, a total of $100 billion.
Apple has accumulated cash reserves of $145 billion and now is trying to use some of this money to reverse the steep decline in the shares, which reduced the company’s market value to $280 billion in the last seven months.
Apple shares were briefly over $410 Wednesday on NASDAQ, only to drop to $400 for a market capitalization of $375.6 billion.
Apple shares are down by 25% since the beginning of this year because of fears of a smartphone market downturn, increased competition in the mobile electronics and a lower margin with increasing costs.
Apple’s net profit declined in January-March 2013 – the second quarter of the 2012-2013 fiscal year – by 18% to $9.55 billion from $11.62 billion in the same period last year.
The company also invested more in marketing, as the profit margin decreased from 47.4% to 37.5%.
The sales rose by 11.2%, from $39.2 billion to $43.6 billion.
Apple expects sales for the current quarter from $33.5 billion to $35.5 billion, while the average estimates of business analysts indicate $38.4 billion.
Estimated gross profit margin of the company for the current quarter is 36-37% compared to the figure of 38.7% advanced by analysts.
Apple has increased the quarterly dividend by 15% to $3.05 per share, and raised funds allocated to the redemption of shares to $60 billion from $10 billion.
The company sold 37.4 million iPhones in the first three months of this year, compared to 35.1 million units in the corresponding period in 2012. IPad sales rose from 11.8 to 19.5 million units, more than analysts’ estimates. The number of Mac computers sold by the company stagnated in the same period – 4 million units.
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