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Apple stock slides on smartwatch vagueness

Customers and staff stand in the entrance of an Apple store May 22 in New York’s Grand Central Terminal. (Associated Press)
Customers and staff stand in the entrance of an Apple store May 22 in New York’s Grand Central Terminal. (Associated Press)
Brandon Bailey Associated Press

SAN FRANCISCO – Apple’s stock slid sharply Tuesday after the company reported strong iPhone sales but remained coy about the performance of its new smartwatch.

While not releasing specific figures for the Apple Watch, Apple reported total results for several products, including the watch, that suggest sales were lower than many Wall Street analysts expected. The company also issued a revenue forecast for the current quarter that suggested sales could fall below analysts’ prior estimates.

Apple’s latest financial report shows the iPhone is still the key engine of the company’s success. The California tech giant said it sold more than 47.5 million iPhones during the three months ending in June, or 35 percent more than a year ago.

But top executives stood by their decision not to disclose results for the Apple Watch, saying the information could be used by competitors. Many analysts and investors see the watch as an important indicator of the company’s ability to produce successful new products.

In one tantalizing clue, Apple reported $2.6 billion in revenue from the segment that includes the watch and several other products, or about $952 million more than the previous quarter, when the watch had not yet gone on sale. That’s significantly less than the $1.8 billion in watch sales that analysts surveyed by FactSet were expecting.

Apple’s stock fell nearly 6 percent in late trading, indicating investors weren’t satisfied with the report.

Chief Financial Officer Luca Maestri told the Associated Press that revenue from the watch amounted to “well over” that $952 million increase. He said the category also includes revenue from iPods and accessories, whose sales fell in the quarter.

“We beat our internal expectations” for the watch, Maestri said, adding that the number of watches sold in the first nine weeks was greater than the number of iPhones or iPads that the company sold in a comparable period after those products launched.

Apple has previously said it sold 1 million iPhones in the first 74 days, or more than 10 weeks, after sales began in 2007. Apple has said it sold 2 million iPads in the first 60 days, with iPad sales hitting 3 million in 80 days after the iPad was launched in 2010.

The iPhone’s performance was especially notable because it’s been nine months since Apple introduced its latest iPhone 6 and 6 Plus models. Consumer demand for new models usually wanes as time passes, but Apple’s sales are continuing to grow faster than they did in a comparable period after the iPhone 5 went on the market in 2012.

Meanwhile, analysts and investors were eager to learn more about the Apple Watch, which went on sale in April.

“When you look at the next big wave of innovation, in coming years, it’s not going to come from smartphones,” said analyst Angelo Zino of S&P Capital Markets, who said phones are already becoming “commodity” items. “So a lot of people want to see if Apple can roll out a new product that’s very successful and innovative.”

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