Apple's net income for the most recent financial quarter fell 18% year-on-year to $9.5 billion, the first time its profit has fallen in a decade.
Sales grew 11% to $43.6 billion during the quarter – $600 million higher than its forecast – but according to Apple CFO Peter Oppenheimer, customers opted for lower-margin products such as the iPad Mini.
"We have priced [the iPad mini] aggressively and its margins are significantly below the corporate average," Oppenheimer said on a conference all with investment analysts.
Apple's share price currently stands at $406.13, a 38.4% decline from the $659.39 on 1 October last year.
"The decline in Apple’s stock price over the last couple of quarters has been very frustrating to all of us," said CEO Tim Cook on the earnings call. "But Apple remains very strong and we will continue to do what we do best."
On the call, Cook said that the company "acknowledges that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012".
He insisted, though, that last year had been an exceptional year, thanks to "both high growth and demand for products and a corresponding growth in channel inventories along with a richer mix of higher gross margin products, a more favorable foreign currency environment, and historically low costs."
Apple's historical success has led investors to expect constant sales and margin growth, said Jan Dawson, chief telecoms analyst at Ovum.
“In some ways, beating guidance was the worst thing Apple could have done, after it had said last quarter that it would provide more realistic guidance and aim to hit rather than beat it," Dawson said today. "A large part of the problem with Apple's share price is that it has trained analysts to expect two things: ever-increasing revenues and profits, and that it will beat its own guidance consistently.
"This quarter illustrated that expecting revenues and margins to continue to grow is unrealistic, but also undermined its promise to provide more realistic guidance," Dawson said. "While beating guidance is a positive thing in its own right, it is likely to lead to continued overheated estimates from analysts, which is not in Apple's longer-term interest."