Why Apple sold only 17.1 million iPhones

Apple (s aapl) sold a lot of iPhones, iPads and Macs during the most recent quarter, yet Wall Street is very displeased. Since Apple announced its fourth quarter 2011 fiscal earnings of $6.6 billion in profit and $28.7 billion in revenue earlier Tuesday the stock has been pummeled by investors, sending it down $28 or about 6.5 percent. While Apple’s numbers were slightly below what those analysts had expected, it’s still above what Apple had forecast. So what gives? Based on the questions from analysts during the company’s investor call Tuesday, concern seems to center on the number of iPhones Apple sold during the quarter: 17.1 million versus the 20.1 million the previous quarter.

Here’s why that number concerns them and why it’s likely just a minor blip:

  • Apple says that this was a “record” September quarter for them. You would think that would mean record iPhone sales too. Sure, 17.1 million is a lot, but it’s still fewer than the 20.1 million iPhones Apple sold in the previous quarter, and perhaps more importantly to those keeping score on Wall Street, below the 18-21 million smartphones Samsung is believed to have sold last quarter. Samsung is Apple’s chief competitor, in many ways, and any sign of a slip is going to resonate with the investors who are closely watching Apple and its competition.
  • Apple, not surprisingly, said they saw this dip in iPhone sales coming. On the earnings call, CEO Tim Cook, looking on the bright side, said people were holding out for the iPhone 4S:
[It was] much less of a reduction than what we were expecting and that was a large factor in our revenue exceeding our guidance…We knew that there was great anticipation of a June or July new iPhone because that was the pace we had been on for the last several years. As we predicted, that sell-through decline did occur, but not really to the extent that we thought. So we significantly beat our guidance.
  • But besides the established schedule for a new iPhone, Cook, along with CFO Peter Oppenheimer also lay some of the blame at the feet of Apple rumor bloggers. “The reduction [in sales] happened largely in the back half of the quarter as speculation hit extreme highs,” said Cook. Oppenheimer later added, “The biggest impact was the rumors, which were very pervasive, especially at the end of the quarter.” In other words, it seems that the crush of Apple rumors and speculation recorded by blogs that drive up intense and frenzied interest in the company’s products are a double-edged sword for the company.
  • No matter who’s to blame, are lower-than-expected iPhone sales a harbinger of Apple being off its game? Very unlikely. Some things to remember: The company sold 4 million iPhone 4S units alone in the first three days it was available last week. So there’s clearly a demand for the new iPhone. About 25 million iOS devices were updated in the first five days the iOS 5 update hit Apple’s servers, which means older model device owners are keeping their products up to date with the latest software. And really, we’re talking about the slowing of sales of a 13- to 15-month old phone. Things could be worse.