Wednesday, July 23, 2014

Apple’s profits beat expectations thanks to strong iPhone sales


Apple’s profits beat expectations thanks to strong iPhone sales


Apple topped analyst projections in the third quarter of its fiscal year with profits of $7.7 billion, the company disclosed in its quarterly earnings report Tuesday. That figure amounted to earnings per share of $1.28, beating analysts’ projections of $1.23 per share. Apple’s revenue for the quarter was $37.4 billion, below analysts’ expectations of $38 billion.


Apple’s profits were again driven by the iPhone, which moved 35.2 million units during the quarter, up from 31.2 million during the same quarter in 2013. At $19.8 billion in sales, the iPhone comprised nearly 53% of Apple’s total revenue.


iPhone sales were down compared to the second quarter, when the device sold 43.7 million units. The period between April and June has historically been a weak time for iPhone sales as consumers anticipate the launch of the latest device in the line, which typically occurs in September.


While the iPhone’s business continues to grow, the iPad is showing signs of slowing. The tablet sold 13.3 million units in the quarter, down 9% year-over-year and down 19% from the period between January and March of this year. This was the second straight quarter the iPad slipped in year-over-year sales, in the second fiscal quarter the device line was down 16%. In fact, the entire tablet market was down in the U.S. early this year because of increased competition from large-screen smartphones.


The results, mostly in line with Wall Street estimates, come as Apple gears up for some of its most anticipated product roll-outs in years. This fall, Apple is expected to debut iPhones with bigger screens, a smartwatch device, and an upgrade to its Apple TV set-top box.


“We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce,” chief executive officer Tim Cook said in a release issued after the close of stock markets on Tuesday.


Apple is poised to release new iPhones with 4.7-inch and 5.5-inch screens, people familiar with the plans have said. The question is, if Apple can come out with a groundbreaking phone and some new iterations of the iPad in the fall, “will they capture some of the excitement from the past?’” said Joe Compeau, lecturer, information systems, at the Ivey Business School of Western University.


“There’s a pretty good chance they can, but if it’s not quite enough, people might say, ‘I can get something else that’s just as good.’” “I think that will be the real test of Tim Cook’s ability to launch a new product that creates new markets,” Compeau said. “Steve Jobs did that right from iTunes to the first iPod, and then for iPhones and iPads.” Read more about the story here.


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