Despite Brisk Sales, Apple Has Flat Sales

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Apple reported its sales rose 18 percent in the most recent quarter. But the gains failed to match expectations, adding to investor concern that the company may not be able to sustain its strong growth.


NPR's business news begins with a bite out of Apple.

It's still the largest tech company in the world - let's make no mistake about that. But Apple reported yesterday that its profits were flat - despite brisk sales of iPhones and iPads. In after-hours trading, Apple's stock plunged, reflecting fears that interest in Apple products may start waning as consumers seek more affordable options.

Here's NPR's Laura Sydell.

LAURA SYDELL, BYLINE: It's not that consumers didn't buy a lot of iPhones - 11 million more than last year. It also sold tons of iPads. But analysts were expecting more after such exceptional growth in recent years. Apple now faces competition from lower-cost products that comes in different shapes and sizes.

Speaking during a conference call, Apple CEO Tim Cook defended the size of the iPhone 5, which is smaller than some popular models from the competition.

TIM COOK CEO, APPLE: It also provides a larger screen size for iPhone customers without sacrificing the one-handed ease of use that our customers love. So we put a lot of thinking into screen size and believe we picked the right one.

SYDELL: Apple also saw a drop in Mac sales. Still, some analysts were not writing Apple off.

MIKE MCGUIRE: I don't know that I'm ready to call the end of the empire at this point.

SYDELL: Mike McGuire, an analyst at Gartner, says Apple also released a lot of product upgrades before the holiday.

MCGUIRE: They're growing, having to invest in that growth.

SYDELL: During yesterday's conference call, Apple's CEO, Cook, also made it clear that the company has new products in the pipeline, adding fire to rumors of an Apple TV set, or a cheaper iPhone. And that could be just what Wall Street needs to see.

Laura Sydell, NPR News, San Francisco.

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