Apple's earnings soar, but disappoint; stock plunges after hours
Shannon Cross, managing director at Cross Research said, "There’s a lot of hype built up into Apple’s earnings. Everything must go down at some point, I suppose. Clearly, there was pressure on the iPhone gross margins and the iPad," The Cupertino based company reported average gross margins of 36.9%, down from the year earlier's 41.8% The company expects a further slide in margins to 36% in the current quarter.
Apple CEO Steve Jobs attended the conference call, a rarity. Jobs said he attended to honor the company's record earnings. Also on his agenda was a chat to knock iPhone rivals, including Android handsets. Sales of phones using Google's open source OS outnumbered the sales of the Apple iPhone in the calendar third quarter. Jobs used the opportunity to knock Android's fragmentation because of the large number of handsets using different versions of the Android OS. The CEO said, "With iPhone, every handset works the same. We think Android is very fragmented and more fragmented every day."
While Apple's stock is currently taking a beating after hours, it did set a new all-time high earlier Monday at $319 as traders scrambled to get in to the stock before the earnings report. Unfortunately for those late buyers, it looks like the old axiom, "Buy on the rumors, sell on the news" will turn out to be appropriate in this case.