Apple’s profits down despite rising iPhone sales

Apple's quarterly earnings continue to decline even as sales of its iPhones surge, a worrying phenomenon for investors who fear stiffer competition in the mobile device market would continue to negatively impact the company's financial health.

The fiscal fourth-quarter results announced yesterday rung down the curtains on a  downbeat year that saw Apple's market value slide about 25 per cent, or about $160 billion.

The downturn notwithstanding, Apple Inc remained the world's most valuable company.

Apple's earnings have been shrinking along with its smartphone market share and tablet computer market that Apple redefined with the first iPhone release in 2007, followed by the 2010 introduction of the iPad.

Apple is yet to come up with another breakthrough product in a new category since then, as questions are asked about the company's ability to innovate following the death of co-founder and chief visionary Steve Jobs two years ago.

The company's earnings are now down against the last year in three consecutive quarters after growing steadily over a decade.

The Cupertino, California-based company earned $7.5 billion, or $8.26 per share, during the three months ending 28 September as against an income of $8.2 billion, or $8.67 per share, last year.

According to commentators, rivals are catching up fast with Apple in most areas. They give the Kindle Fire HDX the highest score for the best tablet buy this holiday season with the The Galaxy S4 and LG following close behind.

But, the most valuable company in the world with $140 billion in cash is now under pressure from investors to borrow some money against all the cash abroad and give it to shareholders

According to commentators it was the Twilight Zone for Apple where all it could do would still not be good enough.

Cark Icahn, chairman Icahn Enterprises who along with his affiliates owns 4,730, 739 shares of Apple has in a letter to Tim Cook, CEO, Apple called for an immediate share buyback in order to increase shareholder value (See: Icahn asks Apple board to raise share buy back to $150-bn).

He wrote, ''commencing this buyback immediately would ultimately result in further stock appreciation of 140% for the shareholders who choose not to sell into the proposed tender offer.''

According to commentators, Icahn and others like him have sensed the weakness in Apple and are circling the company for the cash.

Apple, they say could end up becoming a victim of its own success.