Apple products have been getting cheaper. That's good news for consumers but not for investors, who thought the company would keep boosting profits and revenues at its previous breakneck pace.
Apple Inc. revealed Tuesday that its growth slowed in the most recent quarter. In both revenue and net income, the company posted the smallest increases in years, and failed to meet analyst expectations.
It wasn't so much the volume of sales: Apple sold 17 million iPads in the April to June period, beating expectations, and 26 million iPhones, at the low end of expectations.
But Apple's average selling prices for both gadgets declined to levels last seen in 2010 for the iPhone and the lowest levels ever in the case of the iPad. Apple introduced a new iPad in March but kept the older model in stores while cutting its price.
Net income in Apple's fiscal third quarter was $8.8 billion, or $9.32 per share. That was up 21 percent from $7.3 billion, or $7.79 per share, a year ago. Revenue at the Cupertino, Calif., company was $35 billion, up 23 percent. Analysts were expecting $37.5 billion. Apple shares fell $30.93, or 5.19 percent, to $569.75 in after-hours trading, after the release of the results.
In other earnings news:
UPS expects the global economy to get worse before it gets better. Again. The world's largest package delivery company is more pessimistic about U.S. growth than many economists. It predicts global trade will grow even slower than the world's economies -- a trend not seen since the recession. UPS cut its full-year earnings forecast by 25 cents per share to $4.50 to $4.75. Wall Street had been expecting earnings of $4.82, according to FactSet. For the three months ended in June, UPS said net income rose 2 percent to $1.12 billion, or $1.15 per share, compared with $1.09 billion, or $1.09 per share, a year earlier. Revenue rose 1.2 percent to $13.35 billion.
Netflix's second-quarter earnings plunged 91 percent amid a slowdown in its subscriber growth. The financial deterioration reported Tuesday follows a rare loss for the video subscription service during the opening three months of the year. Although earnings were better than analysts anticipated, the disappointing subscriber growth and a muddied outlook for the rest of the year unnerved investors. Netflix's stock plummeted 14 percent after the results came out. Netflix earned $6.2 million in the latest quarter compared with $68 million a year ago. Revenue for the period rose 13 percent from last year to $889 million.