Apple has reported its first quarterly drop in profits in a decade, but said it will raise dividends for shareholders.
Apple made a net profit of $9.5 billion in the first quarter of 2013, down from $11.6 billion last year.
However, the results were better than many had expected, as strong iPhone and iPad sales boosted revenues to $43.6 billion.
Concerns over slowing demand for Apple products amid increased competition have hurt its share price recently.
“Though we’ve achieved a credible scale and financial success, we acknowledge that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012,” Tim Cook, Apple CEO, said.
Apple said it sold 37.4 million iPhones and 19.5 million iPads worldwide in Q1 2013.
Although Apple continues to remain a dominant player in the tablet computer and smartphone markets, investors have been worried that its market share was being eroded by increasingly popular offerings from rivals such as Samsung.
Apple has reported its first quarterly drop in profits in a decade, but said it will raise dividends for shareholders
There have also been concerns over the lack of new product launches.
Analysts have suggested the company needs to innovate and develop new products to stay ahead of the competition, rather than relying on updates to existing products.
“The market is tired of the same old thing at Apple,” said Lauren Balter, an analyst at Oracle Investment Research.
“Investors are looking for innovation. The reality is that people are looking at other products now and they are looking at other cool features from competitors.”
These concerns have seen investors ditch Apple shares over the past few months. It has lost around 40% of its stock market value since hitting an all-time high in September last year.
However, Tim Cook tried to assure investors and shareholders that the firm was continuing to take measures to ensure that it maintained its dominance in the market.
“The decline in Apple’s stock price over the last couple of quarters has been very frustrating for all of us… but we’ll continue to do what we do best,” he said.
“The most important objective for Apple will always be creating innovative products.
“Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline,” he added.
Some analysts said that the lack of a new product did not mean that Apple was not developing one.
“What no investor can see is what is happening between closed doors in research and development,” said David Tan, assistant professor of strategy at Georgetown University.
“[Research and development] is always very secretive. It always takes a very long time between the inception of an idea and commercializing a product.”
Apple, which before the latest earnings had $137 billion in cash, has been under pressure to share some of it with shareholders.
On Tuesday Apple said it planned to buy back $60 billion in shares, and raise its dividend to shareholders by 15%.
The move encouraged investors and Apple’s shares rose 5.5% in after-hours trading on Wall Street.
Facebook’s stock plunged to an all-time low today as the market braced for the company’s insiders to dump their stock after the expiration of a lock-up period.
Investors ranging from Accel Partners to Goldman Sachs, Zynga CEO Mark Pincus and Facebook board members James Breyer, Peter Thiel and Reid Hoffman are among those free to sell stock they own now.
By 10:30 a.m., the price was down 7% to $19.69 a share. By noon, it had climbed back to $19.95 a share. In May, the initial public offering of the stock was $38.
If the stock hits $19, it will have lost half its value since Facebook went public in May.
Before noon, the company lost $4 billion in market value, due to the plunging prices.
Facebook's stock plunged to an all-time low today as the market braced for the company's insiders to dump their stock after the expiration of a lock-up period
Mark Zuckerberg himself lost an estimated $1 billion Thursday morning alone.
It’s not yet known whether anyone had sold shares. The stock price decline could reflect investors’ anticipation of such a move.
More than 270 million shares have been unlocked – more than one-half of the 421 million shares sold in the May initial public offering of the social networking company.
Roughly 64 million shares of Facebook traded hands in the first hour of trading, more than double its 50-day daily average of just under 30 million shares.
“Pressure will be back on the shares now that liquidity is back in the market,” said Frank Davis, director of sales and trading at LEK Securities in New York.
“If (the value of) your holdings has been cut in half, are you going to sit around and risk the rest of that?”
It’s conceivable no one would sell those extra shares, but if too many do, Facebook’s stock would decline even more because the market would be flooded with additional shares.
It’s been a rough run for Facebook. After one of the most-anticipated IPOs in history, Facebook suffered what may be the most-botched public offering as trading glitches marred its first day.
Facebook, the world’s No. 1 Internet social network with 955 million users, has seen its shares pummeled since the market debut in May that put its value at more than $100 billion.
Investors have been concerned about Facebook’s ability to keep increasing revenue and make money from its growing mobile audience, even as many analysts hold positive long-term views.
Those eligible to sell additional shares Thursday were the investors and directors who had participated in the May IPO. The exception was CEO Mark Zuckerberg, who will be ineligible until November.
Other shareholders, including many Facebook employees, will be able to sell beginning in October. The last lockup period expires next May, a year after the IPO.
In all, up to 1.91 billion more shares could flood the stock market over the next several months – more than four times the 421 million shares that have been trading since Facebook’s IPO. Of the 1.91 billion, 271 million shares became eligible for sale Thursday.
What are lock-ups?
Lock-ups prevent company insiders from selling their shares in a newly-floated firm.
They usually start to expire 90 days from the initial public offering (IPO).
They are designed to prevent the share price from fluctuating wildly if too many investors decide to sell their shares all at once.
The lockup expired for initial investors on Thursday. It expires for Facebook employees in October.
CEO Mark Zuckerberg must keep his shares until November.
Wall Street analysts have predicted that Apple will become the world’s first trillion-dollar company when its shares top $1,000 each.
Apple’s shares were worth $633.38 last week as its stock price rose above Google’s for the first time.
Brian White, of Topeka Capital Markets, then claimed Apple’s sky-high share price will hit four figures within 12 months – making the company worth $1trillion.
He said in his report: “Apple fever is spreading like a wildfire around the world.”
Gene Munster, of Piper Jaffray, followed that up by claiming Apple stock will hit $1,000 – but by 2014.
Apple, based in Cupertino, California, is already the most valuable company in the world currently valued at $590.82 billion.
Wall Street analysts have predicted that Apple will become the world's first trillion-dollar company when its shares top $1,000 each
Just a year ago the shares were changing hands at $341. In January Apple revealed it had more than doubled its profits to $13.06billion, compared with $6billion for the same quarter in 2010.
That was driven by record sales of 37.04 million iPhones in the final quarter of 2011, 128% up on the previous year.
Tim Cook, Apple’s CEO who took over from the late co-founder Steve Jobs, said: “We could have sold more if we’d had more supply. We could not be happier.”
Apple also sold a record 15.43 million iPads over the quarter, more than double the number of a year ago.
Research group Gartner also said the company overtook Samsung as the world’s top smartphone maker last quarter.
Apple’s growth is expected to be driven by sales in China, where January’s launch of the iPhone 4S triggered a near riot in Beijing.
Earlier this year Morgan Stanley analyst Katy Huberty predicted Apple could sell 40 million iPhones in China this year.
Apple is also expected to move into the TV market after the launch of its set-top box Apple TV.
In his report, Gene Muster said: “The key risk to the Apple story is pace of innovation.
“While we have not seen anything to make us believe innovation will slow, it is the fundamental barrier that stands between shares at $600 and at $1,000.
“Apple has won the ecosystem and interface war, and must continue to innovate around its leadership position to grow the business.
“Going forward, consumer interest in owning future Apple products is a key metric to measuring Apple’s pace of innovation.”