Apple stays highly optimistic on iPhone sales as earnings beat estimates

AppleThe more positive outlook comes despite an 11% drop in full-year net profits and after a year when Apple’s share price fell heavily after hitting an all-time high.

The iPhone maker reported a 5% year-on-year decline in earnings to $8.26 per share in its fiscal fourth quarter, beating consensus forecasts at $7.93 per share. Revenues were up 4% to $37.5 billion while net income fell to $7.5 billion.

Apple said sales for its fiscal fourth quarter ended in September added 4.2% to $37.5 billion. IPhone sales, including about a week of the new 5s and 5c models on store shelves, were 33.8 million, more than the 32.8 million predicted by analysts. The company also sold 14.1 million iPads, compared with an estimated 14.3 million. Apple sold 4.6 million Mac computers.

Profit for the quarter fell 8.6% to $7.51 billion, or $8.26 a share, above the $7.92 projected by analysts on average and the third-consecutive period of declines.

CEO Cook said the quarter represented a “strong finish” to its financial year and again hinted at the prospect of “new product categories with significant opportunities” in the coming year. A stronger push into television and a new wearable “iWatch” are believed to be presented for 2014 launches.

New products would expand Apple’s sales as the smartphone and tablet markets have become more crowded. Apple had about 13.4% of the global smartphone market last quarter, down from 15.6% last year, according to market researcher Strategy Analytics. Samsung’s share rose to 35.2% from 32.9%. Apple’s share of the tablet market has also declined, as rivals such as Samsung introduce new products and lure customers with lower-cost alternatives.

Apple also is being pressured to return more money to shareholders. Billionaire activist investor Carl Icahn who holds Apple shares has been pushing Apple to initiate a $150 billion buyback to boost the company’s stock price.

Without addressing Icahn directly, Cook said on the conference call that the board discusses what to do with cash on an “ongoing basis.” Apple will seek input from shareholders and announce any change to the existing dividend and buyback plan in early 2014, he said. Apple paid out $36 billion in dividends and buybacks in the past five quarters, he said.

Apple stock is still trading below its all-time high of $702.10 but has seen a 20% rally in the past three months. It closed at $529.88 on Monday, up less than 1% for the day. The current consensus among 55 polled investment analysts is to buy stock in Apple Inc.

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