Apple relies on iPhone for strong performance

Apple relies on iPhone for strong performance

23 JUL 2014

Apple reported record revenue and profit for the quarter ended 28 June, as strong iPhone sales played a major part, while iPad sales continued to falter.

Revenue for the company’s fiscal third quarter was $37.4 billion, a 6 per cent year-on-year increase. Net profit was $7.7 billion, up 12 per cent from the equivalent quarter last year. International sales accounted for around 59 per cent of the revenue.

iPhone was the largest revenue generator with 35.2 million units contributing $19.8 billion in sales, a 9 per cent improvement.

“We generated healthy growth in our entry priced, mid-tier and lead iPhone categories. I’m especially happy about our progress in the BRIC countries, where iPhone sales were up a very strong 55 per cent year-over-year,” said Apple CEO Tim Cook.

Luca Maestri, Apple’s CFO, said iPhone sales were at the high end of the company’s expectations. However, tax increases and the regulatory environment in Japan affected smartphone sales in one of the fastest growing markets in recent quarters for the iPhone.

China’s contribution to Apple’s financial performance was considerably higher than a year ago. Revenue from the Greater China region was $5.9 billion, up 28 per cent year-on-year.

However, revenue was down 36 per cent compared to the prior quarter, after the initial impact of a deal signed with China Mobile to sell the iPhone at the end of last year became less pronounced.

iPad was the next biggest product unit, generating $5.9 billion from 13.3 million shipments but was actually down 8 per cent in terms of revenue and 9 per cent in terms of units sold.

Cook said iPad sales met the company’s expectations but possibly not those of investors. He explained sales were limited partly because channel inventory had been reduced, but also because of “market softness” in certain parts of the world.

Although sales increased in the Middle East, China and India, these were offset by a decline in more mature markets, according to Maestri.

Cook added that the recently-announced partnership with IBM, in which new enterprise applications will be developed for the iPad, will be a catalyst for future growth in sales of the tablet computer. He added that the IBM deal “opens up a large market opportunity” for the company by bringing big data capabilities to its devices.

Cook also referred to the $3 billion deal to acquire headphone and music streaming firm Beats, saying it fits with Apple’s DNA in terms of its history with innovation around music.

Cook touted the upcoming releases of iOS 8, as well as the CarPlay user interface, HealthKit and Home Kit, all announced during the period.

“We believe our new OS releases, combined with Swift, will result in a huge leap forward for the Apple ecosystem,” Cook said, adding that the company is putting “a huge effort” into delivering the best experience to our customers wherever they use iOS.

Elsewhere in the results, it was revealed that iTunes billing grew 25 per cent, reaching an all-time quarterly high, thanks in large part to a strong performance from the App Store.

Maestri noted that the company returned more than $8 billion in cash to shareholders through dividends and share repurchases during the most recent quarter. This means the company has taken action on more than $74 billion of its planned $130 billion capital return programme, with six quarters remaining for its completion.

For the current fiscal fourth quarter, Apple forecasts revenue of $37 billion to $40 billion with a gross margin of between 37 per cent and 38 per cent.

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Tim Ferguson

Tim joined Mobile World Live in August 2011 and works across all channels, with a particular focus on apps. He came to the GSMA with five years of tech journalism experience, having started his career as a reporter... More

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