Apple shares slide 8.8% as iPhone shipments disappoint

Apple's iPhone shipments for the fiscal third quarter and the company's revenue forecast for the current period missed analysts' projections, raising questions over whether demand for the device has peaked.

Shares fell as much as 8.8 per cent in extended trading.

Apple sold 47.5 million iPhones, a 35 per cent gain, in the period that ended in June, the company said in a statement Tuesday. Analysts had anticipated 48.8 million shipments.

The company forecast revenue of $49 billion to $51 billion in its fiscal fourth quarter, which ends in September, short of the average estimate for $51.1 billion.

Any indication of slowing demand for iPhones could spark concern that Apple is going to have a hard time selling more smartphones in the final months of the year, after the September debut of the latest version fuelled record profits. A new model is expected to be released later this year.

“It’s going to be running up against really hard comparisons,” said Abhey Lamba, an analyst at Mizuho Securities USA.

Net income in the fiscal third quarter, which ended in June, was $10.7 billion, or $1.85 a share, while revenue rose 33 per cent to $49.6 billion, the company said. Analysts on average had forecast third-quarter profit of $1.81 a share on sales of $49.4 billion.

The gross margin was 39.7 per cent, topping the company’s outlook for 38.5 per cent to 39.5 per cent.

Total revenue from greater China more than doubled to $13.2 billion, even as the Chinese economy weakened.

Apple didn't release unit sales of the Apple Watch, which was introduced in April. It included the results for the smartwatch in a broad category called "Other," along with items such as Beats headphones and iPod sales.

Revenue in the category rose 49 per cent to $2.64 billion, the company said.

Analysts predicted on average 3.4 million sales of the Watch with an average selling price of $499, according to the Bloomberg survey.

IPad sales continued to suffer, with tablet shipments falling 18 per cent to 10.9 million, marking the sixth straight quarter of declines. – Bloomberg