Apple announced a drop in profit for the first time in a decade, with Tim Cook, its CEO, acknowledging in a conference call that “our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012”.
But the company went some way to appease investor concern by announcing it intends to return $100 billion to shareholders by the end of 2015, in the form of share buybacks and increased dividends.
For the period, the company reported a profit of $9.55 billion, down from $11.62 billion in the same quarter last year, on revenue of $43.6 billion, up from $39.19 billion. Gross margin was 37.5 per cent, compared to 47.4 per cent in the year-ago quarter.
Due to the relatively limited nature of Apple’s product portfolio, its numbers are more cyclical than many of its rivals. With the company updating its iPhone and iPad lines late last year, and the last quarter being the bumper Q4 holiday sales period, it was always likely to struggle in its comparison with prior periods.
The company shipped 37.43 million iPhones during the quarter, up 7 per cent from 35.06 million in the same period in 2012 – but, unsurprisingly, down from the 47.79 million recorded in the last calendar quarter of the year. iPhone revenue was $22.95 billion, up 3 per cent from $22.28 billion year-on-year.
iPad volumes were 19.48 million units, up 65 per cent from 11.8 million in the prior-year period, but again down from 22.86 million in the prior period. Revenue from this business was $8.75 billion, up 40 per cent year on year from $6.26 billion.
The company noted that in the tablet line, the iPad mini – which was “strategically priced at a lower margin” – is still a relatively new product, and therefore its effect was not in place for the earlier year periods.
Cook said that the company “continues to be very different in our future product plans”.
While as usual Apple would not be drawn on its future product plans, Cook did play down criticism of the screen size on the iPhone, arguing that a larger display would lead to quality trade-offs in areas such as resolution, colour quality, white balance, brightness, reflectivity, screen longevity, power consumption and compatibility with apps.
“Our competitors have made some significant trade-offs in many of these areas in order to ship a larger display. We would not ship a larger display iPhone while these trade-offs exist,” the executive said.