Apple’s profit decline is its first in a decade

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Posted: Wednesday, April 24, 2013 12:00 am

Apple Inc. reported its first profit decline since 2003 on Tuesday and forecast revenue that missed analysts’ estimates amid slowing iPhone sales growth and accelerating competition from Samsung Electronics Co. The iPhone maker boosted its dividend and share-buyback program.

Fiscal second-quarter net income fell 18 percent to $9.55billion, or $10.09 a share, Apple said. Sales in the current period will be $33.5billion to $35.5 billion, compared with an average prediction of $38.4 billion, according to data compiled by Bloomberg.

Growth is slackening for the iPhone, Apple’s biggest source of sales, as some customers opt for devices from Samsung and other device makers using Google Inc.’s software. The disappointing third-quarter forecast indicates a dearth of new products before June, months later than the company typically debuts fresh gadgets, and it may weigh on a stock that has slumped 42 percent since September.

“Slowing growth, competition and margin compression — people are worried about all of them,” said Shaw Wu, an analyst at Sterne Agee & Leach Inc. in San Francisco. “They’ve made the fears look justified.”

Apple also raised its quarterly dividend 15 percent to $3.05 a share, from $2.65, and boosted its share-repurchase program to $60 billion from $10 billion. The company has faced pressure from investors including hedge fund manager David Einhorn of Greenlight Capital Inc. to return more of its $137.1 billion in cash and investments as of the end of 2012. This was the first increase since Apple reinstated dividends last year.

The iPhone, which made up 56 percent of sales in the December quarter, lost some of its luster in the most recent period. Apple sold 37.4 million units of the device, compared with 35.1 million a year earlier — when iPhone revenue surged 85 percent. The company also is spending more to make its products, weighing on gross profit margins, which narrowed to 37.5 percent from 47.4 percent a year earlier. — Bloomberg News

AT&T

DALLAS — AT&T Inc. says that it added a net 296,000 devices to its contract-based plans in the first quarter, but the gain was due entirely to tablets, which carry lower monthly fees.

Excluding tablets, the carrier lost a net 69,000 devices from its contract-based plans, the first such loss.

The figures were announced Tuesday as the company reported a 3 percent gain in net income to $3.7 billion, or 67 cents per share.

Excluding the sale of an advertising business, adjusted earnings came to 64 cents per share, matching the expectation of analysts polled by FactSet.

Revenue fell nearly 2 percent to $31.36 billion, below the $31.74billion that analysts had forecast. — AP

US Airways

Full planes were good to US Airways in the first quarter.

The nation’s fifth-largest airline posted a bigger adjusted profit as it carried more passengers, and collected more from them.

The airline earned $44 million, or 26 cents per share. Its adjusted profit was 31 cents per share, topping the expectations of analysts polled by FactSet.

Revenue rose 3.5 percent to $3.38 billion. — AP

Delta Air Lines

MINNEAPOLIS — Delta Air Lines reported a small first-quarter profit Tuesday, as passengers paid more to fly.

The world’s second-biggest airline said revenue rose even though it cut flying slightly.

Delta earned $7 million, or a penny per share. Not counting special items, it would have earned $85 million, or 10 cents per share — better than analysts had been expecting.

Revenue rose 1 percent to $8.5billion. — AP

Yum Brands

Yum Brands Inc., owner of the KFC and Pizza Hut dining chains, posted first-quarter profit that topped analysts’ estimates as new menu items helped Taco Bell’s domestic sales.

Net income fell 26 percent to $337 million, or 72 cents a share, from $458 million, or 96 cents a share, a year earlier, the Louisville, Ky.-based company said Tuesday. Excluding certain items, profit was 70 cents a share. Analysts estimated 60 cents.

Chief Executive Officer David Novak is trying to lure U.S. consumers with new food at Taco Bell as the company’s China business struggles to recover from concerns about chicken quality. Sales at U.S. stores open at least 12 months rose 2 percent in the quarter. Analysts projected a 1.9 percent gain. U.S. comparable-store sales for Taco Bell climbed 6 percent. — Bloomberg News

DuPont

DOVER, Del. — The DuPont Co. said Tuesday that its net income more than doubled in the first quarter on a gain from the sale of its performance coatings unit and strong continuing results in its agricultural unit.

CEO Ellen Jamison Kullman said DuPont’s efforts to boost long-term growth are working, despite continued tough economic conditions in Europe and some other markets, pointing to strong demand for the company’s agriculture products both in the U.S. and overseas.

“Growth fundamentals and agriculture markets remain solid and we expect our product lines to perform very well,” Kullman told analysts on a conference call.

The company expects full-year sales growth in the “low teens” at the agriculture business, she said. Sales rose 14 percent in that business in the first quarter. — AP

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