Markets underwhelmed by Apple's quarterly profits fall

Apple shares today rose less than 0.5% in Germany as European traders gave a lukewarm response to the iPhone maker’s latest results, focusing on its first fall in quarterly profits in a decade rather than the fact the decline was not as bad as expected.

“There’s clearly a law of large numbers,” said Benedict Evans, analyst at London-based Enders Analysis. “If you’ve been growing at over 50% every quarter for the last two years, you reach a point where you can’t do this any more.

“In the short term, there is a big cyclical-timing-product clash going on here,” he added, referring to how it released new products at a different time than in previous years and now there is no new device expected until autumn.

Both the iPhone5 and iPad Mini were launched by Apple in autumn 2012, which would have pushed up costs, he suggested.

iPad sales jumped from 11.8 million to 19.5 million a year ago but iPhones only rose from 35 million to  37.4 million, amid speculation that the iPhone5 has failed to capture the imagination of consumers.

Evans said some analysts were worried iPhone sales may have peaked as would-be buyers at the premium end of the market have already “converted” to a smartphone.

“If you’re a bear, the concern is this is a BlackBerry-Nokia moment and it will never come out of it,” he said.

Profits fell to $9.5 billion (£6.2 billion) against $11.6 billion a year ago, with sales up $43.6 billion against $39.2 billion. The company also announced a $60 billion share buyback.

Five banks cut their target price for Apple shares, which have already tumbled 40% from their peak. Nomura was particularly disappointed after Apple chief executive Tim Cook appeared to indicate there would be no new launch until the autumn.

“We had anticipated a late July to August launch of the iPhone 5S and mid-range iPhone,” said analysts  at Nomura. Apple shares in Germany rose €1.45 to €312.70.