Apple sells record number of iPhones, but Q1 profit remains flat

Apple (NASDAQ: AAPL) released its fiscal first-quarter numbers late Monday, and although the company sold more iPhones and iPads than in any previous quarter, investors were expecting a larger holiday revenue boost and more sales of newly-released devices.

Apple sold 51 million iPhones during the quarter, up from 47.8 million a year earlier, but investors had predicted closer to 57 million iPhones, after the launch of its new iPhone 5S and 5C smartphones in September. Apple released the phones in China simultaneously with the United States and Western Europe for the first time, which also led Wall Street to believe sales would be much higher.

With iPhone sales missing expectations, analysts say that Apple is now mostly selling its mobile devices to repeat customers who are upgrading to the next generation in the product line, instead of attracting new customers. Cell phone companies typically offer phone upgrades every two years, which could be partially to blame for weak iPhone sales. Apple CEO Tim Cook also noted that orders for the iPhone 5S were stronger than expected, and the company experienced production delays while making more devices to meet customer demand.

Sales in Apple's other product categories also rose year-over-year. The company sold 26 million iPads, up from 22.9 million last year, bolstered by the release of the iPad Air and iPad mini with Retina Display. Apple also sold 4.8 million Mac computers, up 17 percent from 4.1 million last year.

Apple on Monday said it earned $57.6 billion in its fiscal first quarter, up 6 percent from last year and just slightly above expectations for $57.5 billion. Net profit was flat from a year earlier at $13.1 billion, or $14.50 a share, and beating Wall Street estimates of $14.07.

Looking ahead, Apple says it plans to release a new product category this year. Analysts are hoping for larger iPhones, a smart watch, and possibly a new Apple TV product. Mobile payments is also a category ripe for Apple, especially with the addition of the Touch ID fingerprint sensor to the iPhone 5S. Apple recently struck a deal with China Mobile, the world's largest wireless network by customers, to offer iPhones in that country, which is also expected to strengthen sales for Q2.

For the fiscal second quarter, Apple forecast revenue of between $42 billion and $44 billion. Wall Street was calling for sales of $46 billion in the period, which is the first full quarter to include results from the China Mobile partnership.

Apple's stock fell 8 percent, to $506.04, in after-hours trading following the earnings announcement.

For more:
-See this Apple press release
-See this FierceWireless article

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