Apple posted better than expected quarterly earnings for the fiscal third quarter on Tuesday that topped Wall St. estimates, alleviating fears among investors across the tech sector that the tech giant is losing its luster in smartphone market as the company reaches the tail end of its product cycle and prepares to launch a new round of products in the fall.
In a quarter that saw no new product releases, Apple managed to sell a higher volume of iPhones that was estimated with 31.2 million units sold for the quarter, up 20 percent, compared to 26 million units sold in the year ago quarter.
“We are especially proud of our record June quarter iPhone sales of over 31
million and the strong growth in revenue from iTunes, Software and Services,”
said Apple CEO Tim Cook.
“We are really excited about the upcoming releases of iOS 7 and OS X Mavericks, and we are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014” Cook added.
Due to the absence of new Apple products and millions of Apple users waiting for new product releases before opening up their wallets inside Apple stores, the historically weaker quarter that also saw lowered expectations for the company, took a toll on its sales growth which fell to 1 percent from 23 percent in the year ago quarter.
Earnings Beat With Lowered Expectations
Apple posted quarterly revenue of $35.3 billion, slightly beating estimates of $35 billion which was the same number that Apple posted in the year ago quarter.
Quarterly net profit tumbled 22 percent to $6.9 billion, or $7.47 per diluted share compared to net profit of $8.8 billion, or $9.32 per diluted share, in the year ago quarter.
Some of the reasons for Apple’s lower quarterly profit decline can be explained by growing competition in the smartphone industry from companies like Samsung along with the discounting of Apple’s iPhones, currency headwinds, and the impact of a lower price point for Apple’s iPad Mini.
Apple’s iPad sales saw a decline for the quarter with 14.6 million iPads being sold, compared to 17 million in the year ago quarter.
Since Apple’s release of the iPad Mini last year, the average price of the iPad has fallen sharply.
The price of the iPad for the quarter dropped to $436 from $538 in the year ago quarter.
Mac sales also contracted slightly with 3.8 million Macs being sold during the quarter, compared to 4 million in the year ago quarter
Apple’s international sales was 57 percent of quarterly revenue with strong sales growth coming from India and slower growth felt in China which saw a 43 percent year over year revenue decline with Apple products.
Apple returned $18.8 billion in cash to shareholders during the quarter through dividends and share repurchases.
Forward guidance for the next quarter includes revenue between $34 billion and $37 billion, gross margin between 36 percent and 37 percent, and operating expenses between $3.9 billion and $3.95 billion.
Apple is believed to release their new iPhone 5S later in September.
iRadio is expected to be released sometime in the fall along with a new lowered or “mid priced” iPhone.
A brand new version of Apple T.V. could be released towards the end of 2013 or else in 2014.
Apple’s iWatch- wristwatch is not believed to be released until at least mid-2014.