Five reasons Apple’s report wasn’t so bad

At first blush, Apple’s (AAPL) earnings looked to be a glass-half-empty situation, as the stock initially faced selling pressure in after-hours trading. The company missed earnings expectations, although revenue was better than expected.

iPad sales were only about 14 million units in the quarter, less than the 17 million analysts had been expecting.

The biggest negative was the margin pressure: Margins missed expectations and are now expected to fall to 36% in the current quarter, the lowest level in more than four years.

Also, the results did not help prevent the Technology Select SPDR ETF (XLF) from sliding further below its 200-day moving average. That could set the stage for the tech-heavy Nasdaq Composite to do so, as well.

Yet here are 5 reasons why Apple’s quarter wasn’t all that bad:

  • Higher costs come with the territory when releasing new tech products, and Apple is in the midst of one of its most aggressive launches in his history, which includes this week’s debut of the iPad Mini.
  • In past holiday seasons, one of the things that has held Apple back has been component shortages. CEO Tim Cook said he expects supply constraints for the company’s newly released iMac, but not for iPhone or iPad products. The company may be able to make up for the lower margins with higher sales.
  • Lower iPad shipments might have been due to public anticipation of the iPad mini; as Abhey Lamba, analyst with Mizuho Securities noted, its debut had been rumored months ahead of time.
  • Apple continues to make global sales inroads. The company says it is still on track to reach its goal of making the iPhone available in 100 countries by December.
  • The company continues to seek new market opportunities, including streaming music.

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