Apple iPhone sales weaker than expected

(Reuters) - Apple Inc sold fewer iPhones than expected in the latest quarter, seeing its slowest ever-growth in shipments, as the company began to feel the effects of economic softness in the critical Chinese market. Apple said on Tuesday it sold 74.8 million iPhones in the three months ended Dec. 26, the first full quarter of sales of iPhone 6S and 6S Plus. The 0.4 percent growth in shipments was the lowest since the product was launched in 2007. Shares of the stock slipped 1.5 percent in after-hours trading. STORY: KEY POINTS: * The company's first-quarter net profit rose 1.9 percent to $18.36 billion, while sales increased 1.7 percent to $75.87 billion - both records. COMMENTS: J.J. KINAHAN, CHIEF STRATEGIST AT TD AMERITRADE, CHICAGO, ILLINOIS: “It’s disappointing to see them miss on an already downward adjusted sales number and the fact is that with their iPhone growth slowing what was needed was a product to be excited about. And there just hasn’t been a product to be that excited about recently. “Pressure on the shares will continue without a well defined plan to grow sales or a new product.” OPHIR GOTTLIEB, CHIEF EXECUTIVE, CAPITAL MARKET LABORATORIES, LOS ANGELES, CALIFORNIA: "Apple results were largely in line with expectations given the supply chain warnings. Wall Street is missing the forest for the trees as Apple has built a line of innovation coming that is breathtaking ranging from the seismically disruptive Apple TV, to the enormous promise of Apple Pay. "Apple’s further inroads into India make this company incredibly compelling as an investment, regardless of the news today." MICHAEL JAMES, MANAGING DIRECTOR OF EQUITY TRADING, WEDBUSH SECURITIES, LOS ANGELES: “Typically they guide conservatively to the following quarter, which they did. The big point in guidance was $51.5 billion; estimates were $55 billion. That might account for some of the selloff. “I think the direction of the stock tomorrow will be determined by Tim Cook’s commentary on the conference call in terms of his tone, color and guidance for China, given China accounts for a quarter of revenues.” ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT, CHICAGO: "It seems like they did a reasonably good job of setting expectations correctly. I don't think anybody was thinking that there was going to be a positive surprise, but I don't think there's anything here that's particularly negative. They're going through, as (CEO) Tim Cook said, a turbulent period coming off a fantastic run, so things are slowing down but this is no surprise to anybody. When you think of how close they came in on all of these estimates: they shipped 74.8 million iPhones versus estimates of 75.5 million. That's pretty good optics that people had. "The company basically is an iPhone company right now. That's where they make all of their money, so there's an enormous amount of attention on those numbers. "I think these numbers are going over reasonably well. I think this is probably the most followed stock maybe in the history of the world and analysts got this pretty close to right in terms of what the quarter was going to look like. "They didn't say anything that made it seem like there was anything wrong with the franchise. People wouldn't come away from it and say it's over for them." BRIAN BLAU, ANALYST, GARTNER, OAKLAND, CALIFORNIA: "While Apple had a relatively good quarter in terms of overall revenue performance, it's clear that weakening demand for iPhone will impact the company in the coming years. That weak demand will set expectations that Apple may not be as profitable or even as popular in the future, and that alone has many worried about what will happen if iPhone can no longer drive the revenue and profits. That said, it's important to note that Apple has a wide variety of products in market and we can assume there are many more planned, in addition to the large resource base they can tap for research and development and expansion efforts." DAVID MEIER, MOTLEY FOOL FUNDS, ALEXANDRIA, VIRGINIA: “Even though there was a miss and a guide lower, it seems as though the market was expecting this. The company’s slowing growth in iPhones is certainly enough to give you pause, however, the interim or ‘S’ upgrade of the iPhone has not always fared as well as the straight number upgrade. Apple got a big bump from the change in form factor for the 6 from pent-up demand for a larger screen, so being a little flat from that bigger bump is not that big of a deal to me. This doesn’t change my opinion about just how high-quality this company is and how strong the management team is.” (Americas Economics and Markets Desk; +1-646 223-6300)