Apple posts solid quarter but Stock plunges on modest Outlook

A strong quarter was weighed down by conservative future prospects, as Apple Inc. shares fell more than 11 percent in after-hours trading despite the company’s solid earnings report that beat Wall Street expectations.

Driven by the popularity of Macs, iPods and iPhones, Apple Inc. earned $1.58 billion, or $1.76 per share, in the quarter ended Dec. 29, up 58 per cent from $1 billion, or $1.14 a share, in the same period a year ago. Analysts had predicted the earnings to be $1.64 per share.

Revenue was $9.6 billion, up from $7.1 billion.

Mac sales were 44 per cent higher than last year while the iPod could only gain 5 per cent in its growth. The iPhone has also recorded strong sales as CEO Steve Jobs noted at Macworld 2008 that the company had already sold 4 million units of its revolutionary handset.

However, the stock plunged when the company divulged its expectations of modest sales in the upcoming quarter. According to the company’s forecast, the revenue may hit $6.8 billion (94 cents). Analysts had expected sales of $7 billion ($1.09).

Chief Financial Officer Peter Oppenheimer said Apple, while projecting a conservative outlook, was considering seasonal downturns and lower sales of software. "We gave you guidance we have reasonable confidence in achieving," he said in a conference call.
"I am very confident in our business strategy and our products. We have fantastic products that are available to customers today."

On being questioned about the effect of clumsy economy in Apple’s earnings outlook, Mr. Oppenheimer said, “We’ll leave the economic forecasting to others.” Instead, he said, “our focus is on managing our business.”

Apple shares fell $5.72, or 3.5 percent, to close at $155.64. They were down more than $17 in after-hours trading.