Apple Inc. shares fell Tuesday after the world's most-valuable company reported sliding prices for its smartphones and forecast lower-than-expected profitability.
In its latest fiscal quarter, which ended Sept. 24, Apple said it sold 45.5 million iPhones, with an average price of $618.72. That was down from $670 a year earlier and below analysts' estimates of $625.
The company said gross margins, a closely watched measure of profitability, will be between 38 percent and 38.5 percent in the three months through December. That compares with analysts' forecasts of 38.9 percent.
Apple shares fell 2.7 percent Tuesday in extended trading. The stock closed earlier at $118.25 in New York trading. It had rallied 22 percent in the past three months.
Apple, which gets two-thirds of revenue from the iPhone, experienced its first annual sales decline since 2001, as smartphone demand waned. Global handset shipments will rise 1.6 percent this year, down from 10 percent growth in 2015, IDC estimated last month. That's increased pressure on Apple to find its next blockbuster product to drive growth.
Revenue in the three months through December will be between $76 billion and $78 billion, Apple said Tuesday. Analysts estimated $75.38 billion, according to data compiled by Bloomberg.
While the iPhone 7 was similar to its predecessor, Apple executives expect the device to help revive sales ahead of a more substantial upgrade in 2017.
"We are confident that we can return to growth because we see that the response from customers to the 7 and 7 Plus is really positive," Apple Chief Financial Officer Luca Maestri said in a telephone interview.
Chief Executive Officer Tim Cook said the company was "thrilled with the customer response" to the new iPhones. He also highlighted growth of Apple's services business.
For its fiscal fourth quarter, Apple reported a profit of $9.01 billion, or $1.67 per share, down from $1.96 a share a year ago. Revenue fell 9 percent to $46.9 billion. Analysts expected profit of $1.66 a share on sales of $46.9 billion, according to data compiled by Bloomberg.
Competitor Samsung Electronics Co. recently ended production of its flagship Galaxy Note 7 handset after some of the smartphones caught fire. That may create an opportunity for Apple, even as the introduction last month of a competing phone from Alphabet Inc.'s Google presents a greater competitive threat in future years.
Business on 10/26/2016