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Apple, Amazon earnings miss Wall Street expectations

NEW YORK (AP) — Apple and Amazon posted earnings Thursday that fell short of Wall Street's expectations. Apple's fourth-quarter earnings missed expectations for the second straight quarter as iPad sales fell short of analyst forecasts.

Amazon's third-quarter results included a large loss that was weighed by its stake in online deals service LivingSocial and spending on its Kindle business and distribution centers to grow its business.

Apple's slowdown

The slowdown in the growth of Apple's iPad sales was not unexpected, as the rumor mill correctly predicted that Apple Inc. would launch a smaller, cheaper iPad. It announced that device, the iPad Mini, on Tuesday.

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Sales were also hurt by slowing growth in China. Apple's sales in China more than doubled in fiscal 2010 and in 2011. Growth in the July- September quarter was also slow in economically troubled Europe.

Net income in the fiscal fourth quarter was $8.2 billion, or $8.67 per share. That was up 24 percent from $6.6 billion, or $7.05 per share, a year ago.

Analysts polled by FactSet were expecting earnings of $8.84 per share.

Revenue was $36 billion, up 27 percent from a year ago. Analysts were expecting $35.8 billion.

The Cupertino, Calif., company sold 26.9 million iPhones in the quarter, at the high end of expectations, and 14 million iPads.

Apple shares fell $6.33, or 1 percent, to $603.47, extending a downward trend for the stock, which hit an all-time high of $705.07 a month ago, on the day the iPhone 5 went on sale in the US and eight countries.

Apple said it expects earnings of $11.75 per share and sales of $52 billion in the current quarter, usually the year's strongest. The sales forecast is in line with analyst expectations of $56 billion, considering that Apple routinely lowballs its forecasts. However, the earnings forecast is so far below analyst expectations at $15.59 that it ''makes no sense,'' according to Brian White at Topeka Capital Markets.

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Amazon's slide

The world's largest online retailer posted a loss of $274 million, or 60 cents per share, in the July-September period. That's down from earnings of $63 million, or 14 cents per share, a year earlier.

The latest quarter's results include a loss of 37 cents per share related to Amazon's minority stake in LivingSocial. Without this charge, it still would have lost 23 cents per share, worse than what analysts were expecting.

Revenue grew 27 percent to $13.81 billion, from $10.88 billion, falling short of analysts' expectations.

Analysts surveyed by FactSet, on average, were expecting a loss of 7 cents per share on revenue of $13.91 billion.

Beyond LivingSocial, Chief Financial Officer Tom Szkutak attributed the quarter's loss to Amazon's heavy investments in its Kindle e-reader and tablet business, as well as in new geographic locations such as China and in video content. Amazon is also spending money on centers for fulfilling orders. It said this month that it's hiring 50,000 temporary workers at its distribution centers across the U.S. during the holiday season.

The quarter's operating expenses rose 28 percent to $13.8 billion from $10.8 billion.

Amazon.com Inc. said its $199 Kindle Fire HD tablet is its best-selling product worldwide, but as usual, it did not give specific sales figures.

''Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point,'' founder and CEO Jeff Bezos said in a statement.

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Amazon has a larger version of the Kindle Fire HD out next month.

Amazon's results come two days after Apple Inc. introduced a smaller iPad, the Mini, for $329. In its press release announcing the results, Amazon included a list trumpeting its high-definition Kindle Fires as cheaper than the iPad Mini and with more features. However, Apple's iPad has a much wider selection of third-party apps.

For the current quarter, which includes the important holiday shopping period, Amazon forecast revenue of $20.25 billion to $22.75 billion. Analysts were expecting a bit more at $22.82 billion.

Seattle-based Amazon's stock slid $2.60, or 1.2 percent, to $220.32 in after-hours trading after initially falling sharply. The stock had closed down $5.57, or 2.4 percent, at $222.92 in the regular trading session.