Consumer behemoth Apple reported its first quarter financial results yesterday and while it posted revenues of $54.5 billion and a net profit of $13.1 billion, compared to revenues of $46.3 billion and profits of $13.1 billion in the same financial quarter last year, profits were flat.
Gross margin fell to 38.6 percent compared to 44.7 percent in the same quarter last year. Apple is forecasting gross margins between 37.5 percent and 38.5 percent for its second quarter, with estimated revenues between $41 billion and $43 billion.
So, what’s the problem? CEO Tim Cook said that supply problems were a matter to be concerned about, despite media reports. And Apple has got a stash of cash in its corporate coffers – not far short of $137 billion in both liquid ashes and in cash. That gives it a pot of gold that would let it buy other companies to make a splash in new or other developing markets.
A bigger problem is its existing slew of products, including the wildly successful iPad and the solidly popular iPhone. It does face a challenge on the tablet front – particularly so from Google and Amazon devices. Microsoft Windows 8 using Intel chips may not be so much of a challenge. Intel cannot necessarily lower the price of its microprocessors, given its business model and Microsoft appears to believe that tablet devices running the touch version of Windows 8 should command the same prices as Apple iPads, or be even more expensive.
Apple’s share price (AAPL: Nasdaq), stood at $460.15 at press time.