After a series of blockbuster earnings that blew past even the most optimistic of Wall Street expectations, Apple Inc. felt the pain of falling short of elevated expectations.
Apple said Tuesday its profit surged 38%, aided again by strong demand for the company’s latest iPhones and robust growth in China where sales more than doubled. The gains lifted Apple’s cash reserves to a record $203 billion.
But while Apple sold 35% more iPhones in the fiscal third quarter compared with a year earlier, those sales missed some analysts’ estimates. Apple also indicated its revenue in the current quarter could come in below Wall Street projections.
Within minutes of the earnings report, Apple’s shares fell as much as 7% in after-hours trading Tuesday, erasing about $60 billion in market value. Shares fell 5.2% in early trading Wednesday.
The iPhone is Apple’s most important product, accounting for nearly two-thirds of Apple’s revenue in the quarter ended June 27 versus less than half three years ago. Any signs that iPhone growth is reaching a peak is a major cause of concern for investors.Swings in Apple’s shares can spark big moves in the U.S. stock indexes. As the largest company by market capitalization in the S&P 500 and Nasdaq, Apple has an outsize impact on the two market-cap weighted indexes. Apple is among the companies with the highest stock prices in the Dow, which gives it major sway over the price-weighted blue-chip index. In an interview with The Wall Street Journal, Apple Chief Executive Tim Cook said he has heard repeatedly that the company can’t sustain its growth rates, but it has proved doubters wrong in the past.
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