Apple Fails to Meet Expectations Despite Selling 51 Million iPhones

Jan 28, 2014 09:18 AM EST | Matt Mercuro

Despite selling a record amount of iPhone devices last quarter, Apple still reported lower-than-expected holiday sales this week, according to Reuters.

The most valuable technology company in the world, sold 51 million iPhones last quarter, which was less than the 55 million analysts had expected.

Apple had sold 47.8 million iPhones during the same period in 2013, according to Reuters.

Sales declined in North America because Apple had a hard time keeping up with consumer demand.

Sales have also been lower-than-expected in China, which is probably more concerning than the numbers reported for North America.

It took years to work out a deal but in late 2013 Apple and China Mobile finally reached an agreement that would mean iPhones could be sold in China. The forecast for the March quarter now has investors wondering if they over-estimated how beneficial the deal could be for Apple.

"There's no doubt that shipments (to China Mobile) are lower than almost anybody expected," said Pacific Crest Securities' Andy Hargreaves, according to Reuters. "(Globally,) the high-end smartphone and tablet markets are saturated, and that's not going to grow."

In 2013, Apple introduced two new iPhones for the first time ever, along with two new iPads.

Apple forecast sales between $42 billion to $44 billion this quarter, mainly due to the new deal with China Mobile, the No. 1 carrier in China.

Wall Street projected even higher numbers, closer to the $46 billion range.

"After showing modest signs of improvement, we're back to a no-growth outlook," said JMP Securities' Alex Gauna, according to Reuters. "It's something Apple needs to find an answer to. If it can't prove that it's going to be a growth story again, the valuation is too high."

Company stock fell 8 percent, to $506.04, in after-hours trading, according to Reuters.

Apple CEO Tim Cook is remaining optimistic about the deal with China Mobile, saying that last week was the best week for iPhone activations in China ever. He also confirmed that China Mobile is selling iPhones in 15 cities, a number that he feels will grow to 300 before 2015 rolls around.

"China Mobile has more subscribers than anyone in the world," Mr. Cook said. "I do see it as a watershed moment for Apple."

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