(MENAFN- Khaleej Times) Apple plunged in European trading after posting the slowest profit growth since 2003 and weakest sales increase in 14 quarters, as higher costs and rising competition make it harder to sustain revenue expansion.
The company dropped eight per cent to €352.34 in Germany after saying that profit rose less than one per cent to $13.1 billion, or $13.81 a share, in the period that ended on December 29. Sales rose 18 per cent to $54.5 billion, falling short of $54.9 billion, the average analyst estimate compiled by Bloomberg. Analysts had predicted profit of $13.53 a share.
Apple also fell as much as 11 per cent in late New York trading on Wednesday as the results underscored the rising costs of product overhauls amid competition from Samsung Electronics in the saturating smartphone market.
Even as chief executive officer Tim Cook guided Apple to record revenue and iPad and iPhone sales, investors worry about management's ability to keep producing hit products more than a year after the death of co- founder Steve Jobs. Apple suppliers also declined in Asia.
Assembler Hon Hai Precision Industry dropped 2.9 per cent in Taiwan and speak-maker AAC Technologies Holding plunged six per cent in Hong Kong. Samsung, which makes chips for Apple, fell 1.4 per cent in Seoul.
The company's share price decline has shaved about $175 billion from its market capitalisation since a September peak and means the company may lose its status as the world's most valuable company to Exxon Mobil. Apple fell in extended trading to as low as $457.30. The shares rose 1.8 per cent to $514.01 at the close in New York, leaving it with a market value of $482.7 billion, compared with Exxon's $413.5 billion.
For the fiscal second quarter, now under way, Apple forecast sales of $41 billion to $43 billion. That compares with predictions by analysts for revenue of $45.5 billion. Gross margin will be 37.5 per cent to 38.5 per cent, Apple said on Wednesday in a statement. Operating costs for equipment, retail stores and data centers will be $3.8 billion to $3.9 billion.
Cook and Oppenheimer defended the company's performance, saying iPhone, iPad mini and iMac sales were held back because the company couldn't manufacture enough keep up with demand.
Cook addressed reports suggesting iPhone demand is waning because the company cut orders for some components. "It would be impossible to interpret what it would mean for our entire business," Cook said.
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