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Apple's quarterly earnings miss the mark

Apple releases quarterly earnings short of projection, creating fears about the firm's longevity.

Tim cook apple quarterly loss 2012 10 26Enlarge
Apple CEO Tim Cook speaks with Apple products displayed on a large screen during an Apple special event at the historic California Theater on October 23, 2012 in San Jose, California. (Kevork Djansezian/AFP/Getty Images)

With Apple revealing quarterly earnings that missed forecasts, some analysts have told CNBC that they have concerns for the technology firm’s future.

“My feeling is that we are seeing the real consequences of not having Steve Jobs around anymore. He was a visionary and he knew exactly what he wanted to do with Apple,” Peter Bo Kiaer, senior equity analyst at Saxo Bank told CNBC Friday, adding that he was worried that the management at the company was becoming just like any other.

“The launch of the maps just recently shows that they’re not really up to being in the same camp as Apple has been before, and it’s going to be looking too much like Microsoft,” he said.

Apple released a new mapping system on Sept. 19, as part of its new operating system iOS. However, users quickly slammed the app, claiming its maps were inaccurate. Analysts have also been left underwhelmed with the new iPad mini, which will go on sale on Nov. 2, after it was given a price tag that was higher than expected.

The tech giant announced fourth-quarter earnings on Thursday showing a 27 percent rise in revenue and a 24 percent increase in earnings, with the earnings number missing estimates and iPad sales falling short of forecasts.

“People tend to think the app store and music is really an important part of Apple, but it’s 90 percent hardware and any hardware company will at some stage encounter margin pressure and that's what we’re seeing,” Bo Kiaer said. “You see the prices on iPad for example, it’s declining because there’s a huge competition going on in that space and they’re not able to keep up the margins. And they put in new screens, new and better batteries, whatever, and you just ask Nokia how that feels to put in better and better components at a declining price — that hurts.”

Bo Kaier’s fear that Apple could be becoming more like Microsoft comes after Microsoft CEO Steve Ballmer signaled last month that his company is trying to become more like Apple.

Also on Tuesday, Ballmer published his annual letter to shareholders, which highlighted a shift towards hardware and online services, mimicking changes made by Apple.

Bob Parker, senior advisor at Credit Suisse, believes the technology sector is dangerously close to reaching a saturation point after a year of continuous hardware and software releases.

Analyzing Apple’s results, he underlined two key themes that he feels the firm needs to address.

“The first theme is actually the cost and the hit to profitability of rolling out new products and that’s clearly been an issue with Apple’s results,” he told CNBC Friday. “I think the second theme is actually the rising costs of production and in their statement Apple said they have got to address their production costs and they’ve got to address widening (of their profit) margin which clearly they regard the margin as unsatisfactory.”

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