Apple put out its Q1 report and investors instantly spotted that the iPhone 5c, which replaced the iPhone 5, hasnt been selling as well as expected. CEO Tim Cook is optimistic about Apple's performance with the iPhone 5s and 5c combo, but acknowledges "the mix was something very different than we thought."
The iPhone 5c captured a smaller market than the previous phone in its position, the iPhone 4S. That's despite a strong Black Friday performance. We thought that the 5c might be an ugly duckling to make the iPhone 5s look better that it would have if the iPhone 5 was still available (both metal phones that look the same).
Tim Cook credits Touch ID with why the iPhone 5s was so much more desirable than the 5c. "I think that, associated with the other things that are unique to the 5s, got the 5s a significant amount more attention and a higher mix of sales," says Cook. No surprise the iPhone 5c didnt get Touch ID, huh?
Anyway, investors are not impressed with Apple's performance. They were expecting Apple to beat its own guidance (as it has done in the past), especially with the China Mobile deal in place and reports that, after only a week, the company saw its best activation numbers in China.
In pre-market trading Apple stock is down 6.70%, which knocks off $33 billion of the company's market cap. The drop was even bigger at one point, but AAPL is now slowly improving.
Apple's guidance for the next quarter isn't encouraging though, revenue is expected to be $42-44 billion. Last year Apple did $43.6 in Q2, which signals no growth and, with the margins falling, that may lead to a drop in profits.