Apple Set for a Strong Holiday, But Can’t Rest on Laurels

Apple may be gearing up for a big holiday sales quarter, but in the recent quarter, performance has been short of market projections. Apple is also losing ground, albeit slowly, to some of its competitors. In a recent report by researcher Strategy Analytics, Android tablets now account for 41% of the tablet market worldwide. Although Apple’s iPads may still have the lead in the market with a 57% market share, Android-based devices are catching up.

Apple’s Financials
Apple’s (Nasdaq:AAPL) Q4 revenues grew 27% over the year to $34.96 billion, falling short of the market’s projected revenues of $35.08 billion. EPS of $8.67 grew 23% over previous year’s $7.05, but missed the Street’s targeted EPS of $8.75 for the quarter.

During the quarter, Apple sold 26.9 million iPhones, beating market expectations of sales of 25 million-26 million iPhones. iPhone sales grew 58% over the year compared with the 45% growth of the smartphone market during the quarter. The iPhone 5 launch was also received well by the market despite problems with the new OS and the debacle of the company’a Maps app, which led to the ouster of Apple’s heir apparent, Scott Forstall. iPhone’s Map was not up to their trademark quality level and had several errors such as incorrect images, locations, and directions. Management had to issue a public apology, and users were expected to resort to other maps websites, including competitor’s Google Maps. Apple had launched the phone in nine countries last month. Since then, the phone has been launched in more countries. Analysts estimate that Apple sold more than 5 million iPhone 5s within the first three days of the launch. The number was short of market projections of sales of 6 million-8 million units during the period.

iPhone handsets and accessories sales grew 56% over the year to $17.1 billion. However, sales of 14 million iPads were below market projections as consumers were waiting for the latest release of the tablet. Apple sold 1.3 million Apple TV set-top boxes during the quarter. It reported sales of 4.9 million iMacs and 5.3 million iPods. iTunes revenues also grew to $2.1 billion for the quarter.

For the current quarter, Apple projected revenues of $52.0 billion in holiday sales, with EPS of $11.75. The Street had targeted revenues of $55.02 billion with EPS of $15.43.

Apple’s New Product Line-up
Apple is preparing for a big holiday season and has a series of new products available for shipping in the holidays. Over the past few months, it has launched the iPhone 5, iPad mini, iPod Touch, fourth-generation iPad, iMac, 13-inch MacBook Pro, and Mac Mini. Apple estimates more than 80% of the current quarter’s revenues to be generated from sales of these new products.

Earlier this month, the company revealed the new design for iMac that boasts of high performance technology and uses a new display that ensures reduced reflection by using an aluminum and glass enclosure. It also launched a thinner and a lighter Mac, the 13-inch MacBook Pro. The new Mac features improved display as well by using Apple’s retina display technology with more than 4 million pixels. The Mac comes with all-Flash storage. Their new iPod, launched this month is the thinnest version of their iPods. It comes in five colors and features a 4-inch retina display, a 5-megapixel iSight camera, and Siri.

The latest launch was that of the iPad mini, which is a 7.9-inch version of the iPad. The 16GB mini tablet starts at $329 each and is one of the more expensive tablets in the market. Amazon’s Kindle Fire retails for a lot less at $199 each. However, Apple claims that the high price is justified as the mini promises the iPad experience at a lower price. The product has received strong reviews, and the 16GB white mini pre-orders were all sold out within 20 minutes of Apple’s releasing the product for sale. The 16GB Black iPad minis were exhausted within 35 hours of the product going on sale.

Apple is hoping to catch up some of its lost ground through these new products. For now, the stock is trading at $595.32 with a market capitalization of $559.13 billion. It touched a 52-week high of $705.07 last month.