Light Reading

Apple Earnings: Strong iPhone Sales, iPad Sales Slump, $7.8B Profit

Mitch Wagner
7/22/2014
0%
100%

iPhone sales drove a strong third quarter for Apple, but iPad sales cast a shadow, with sales down year-over-year for another consecutive quarter, the company reported Tuesday.

Quarterly revenue was $37.4 billion and profit $7.8 billion or $1.28 per diluted share. That compares with $35.4 billion and net profit $6.9 billion or $1.07 per diluted share in the year-ago quarter. The gross margin was 39.4%, up from 36.9%, Apple Inc. (Nasdaq: AAPL) said.

The record June quarterly revenue was driven by strong sales in the iPhone and Mac and growing revenue from the Apple ecosystem, driving highest EPS growth rate in seven quarters, Apple CEO Tim Cook said in a statement.

But despite the record EPS, Apple did not meet analyst estimates of $38.31 billion for the quarter.

Apple traded at $94.18 at about 7:30 p.m. EDT, down $0.52 in after-hours trading.

For its fiscal fourth quarter, Apple expects revenue between $37 billion and $40 billion, and gross margin 37-38%.

Apple sold over 35 million iPhones, for a new third-quarter record, with "healthy growth" in entry level, mid-tier and lead iPhone categories, Cook said in a conference call with analysts after market close on Tuesday. iPhone sales were up a "very strong" 55% year-over-year in the BRIC countries.

Mac sales saw strong growth, 18% year-over-year in a market that shrunk by 2% according to IDC, Cook said.

The App Store and other Apple ecosystem services were strong performers as well. For the first nine months of the fiscal year, the iTunes software and services line items were the fastest-growing part of Apple's business, Cook said. iTunes billings grew 20% year-over-year in the June quarter, and reached an all-time quarterly high driven by App Store results.


Want to know more about mobile? Check out our dedicated mobile content channel here on Light Reading.


The 35.2 million iPhones sold in the third quarter was an increase of 4 million year-over-year, for 13% growth, Apple CFO Luca Maestri said. iPhones account for 41.9% of the smartphone subscriber base, according to ComScore, Maestri said.

Maestri bragged about iPhone business usage: Medtronic has developed 175 internal iOS apps for more than 16,500 iPhones used by employees to facilitate sales, improve productivity, and keep marketing materials up-to-date. Nestlé uses more than 25,000 iPhones, and NASA uses more than 26,000.

iPhone 5C sales were strong compared with last year's mid-tier model, the 4S, growing the highest year-over-year for any third quarter for mid-tier iPhones, Cook said.

But iPad sales were bad news. Apple sold 13.3 million iPads, compared with 14.6 million in the June 2013 quarter. "iPad sales grew overall in developing markets, with particularly strong year-over-year growth in the Middle East, where iPad sales were up 64%, in China, where they grew 51%, and in India, where they were up 45%," Maestri said. "This growth was more than offset by lower growth in more mature markets."

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to wagner@lightreading.com.

(16)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/31/2014 | 2:45:53 PM
Re: iPAD, less frequently
Kruz - A company with a 10-point lead over its nearest competitor is by definition by far the market leader. 

Which is not to say that position is secure. 

The tablet story is an intersting one. It's possible the whole thing was a bubble. That doesn't make sense to me -- the tablet seems to me to be a terrific device. But perhaps I'm just in a minority on that.
briandnewby
50%
50%
briandnewby,
User Rank: Light Sabre
7/25/2014 | 8:38:01 AM
Re: iPAD, less frequently
Mitch, I still think it would be fun to play second base for the Yankees, but wishing it will happen will not make it so.  I do think Apple wants to be a player in any market and Apple probably wanted that in the days it wasn't, also (contrary to what the company said).

I think the tablet story is far from told, mostly because it hasn't even been 5 years since the first iPad.  We know tablets have revolutionized so many things but the question is, I guess, is the tablet a commodity already?  Will it soon be akin to the caculator and someday you'll pull a tablet off the endcap before checking out of Walmart?

Then, where does that leave Apple?  I really think storage is the key strategic lever for the mobile device industry.  Back-up storage is a huge barrier to exit from one provider to another, yet Apple is pricing it ridiculously high.  If they are making any misstep right now, I think it's in this area and that iCloud should be free or at least priced in a way that it is free, unlimited, for a year each time you buy a device.  I have three "i" devices bought within a year, yet only 25g of free storage, the same as if I'd only bought one.

Wearables will be more of a thing if they are the same technology as the user's phone and tablet, and I really think storage will be the glue there.
futurephil
50%
50%
futurephil,
User Rank: Light Sabre
7/23/2014 | 3:08:55 PM
Re: explain, please
:)

Meanwhile, we're crushing today's comment quota. I mean, just crushing it.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/23/2014 | 2:55:44 PM
Re: explain, please
First off, Phil, you should remember that most journalists can't afford to own stocks. That aside, collectively we've fallen into the trap of feeling compelled to over-analyze every number that gets spit out at us. And thanks to people like Malcolm Gladwell, we now all want to prove that we can examine data points out of context to find a greater truth. Add in the fact that even "expert" analysis tends to be lazy and self-serving, and it's pretty easy to see why quantitative "analysis" is so lacking. Good thing the analytics machines will straighten us out.
futurephil
50%
50%
futurephil,
User Rank: Light Sabre
7/23/2014 | 2:35:11 PM
Re: explain, please
Fair point. I sometimes still dodge your questions purely out of habit.

Anyway, to clarify, if you're still selling 6,200+ devices an hour a mere four years after inventing a product category -- and your stock is up 300 percent in five years (3% today) -- sorry, that's bad news. Wall Street said so.

I wish reporters could own stocks.

-ph 
Kruz
50%
50%
Kruz,
User Rank: Light Sabre
7/23/2014 | 2:17:17 PM
Re: iPAD, less frequently
Apple is not "by far" the market leader when it comes to pads. It had a 40.2% market share last year but is at 32.5% this year. Samsung grew from 17.5 to 22.3%, an increase it grabbed directly from iPad's share. iPad consumers are looking for a decent offering at a cheaper price, and this is where Samsung is doing best.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/23/2014 | 2:00:46 PM
Re: explain, please
 

Phil,

 

Stop asking reporters for thoughtful commentary.  I have yet to get a straight answer from an LR editor (current or former!).

:)

seven

 
futurephil
50%
50%
futurephil,
User Rank: Light Sabre
7/23/2014 | 1:38:10 PM
Re: explain, please
I wanted to see if you were using your own judgement or acting like CNBC.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/23/2014 | 1:23:47 PM
Re: iPAD, less frequently
Kruz - "Other players (namely Samy) are aggressively enhancing their tablet giving it a competitive price tag."

Apple is by far the market share leader. It's selling far more tablets than its competitors. Following competitor strategy does not seem to be the way for Apple to go here. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/23/2014 | 1:22:13 PM
Re: Google Employee use of Iphone
chuckj - Google is aggressive about developing its apps onto iPhones. I wouldn't be surprised to see iPhones in a good number of Googlers' hands. 
Page 1 / 2   >   >>
Flash Poll
From The Founder
Ericsson's Hyperscale Datacenter System (HDS) 8000, featuring Intel's Rack Scale Architecture, caused a stir when it was announced at MWC 2015. For more on this revolutionary product, join me on Thursday, April 30 at 12:00 p.m. EST for a Super Webinar event, A New Hardware Paradigm for the Telco Data Center.
Between the CEOs
Ciena CEO: The Web-Scale Revolution

4|28|15   |   10:32   |   (1) comment


Light Reading CEO and founder Steve Saunders goes head-to-head with long-time Ciena CEO Gary Smith to discuss the impact of the web-scale players, the New IP and 'white box' networks.
LRTV Documentaries
Cox Eyes Cloud-Based Home Networks

4|27|15   |   05:30   |   (0) comments


Cox's Jeff Finkelstein explains how moving services to the cloud will let cable deliver services faster and eliminate constant hardware replacements.
LRTV Documentaries
CableLabs' Clarke Updates Cable Virtualization

4|23|15   |   05:41   |   (1) comment


Former BT exec now leading CableLabs' NFV and SDN efforts explains key role of open source and updates efforts to virtualize the home network.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. II

4|23|15   |   08:19   |   (1) comment


In the second installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about cultural change, network slicing and technology advances.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. I

4|23|15   |   09:27   |   (3) comments


In the first installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about the incredible transformation underway in the communications networking industry.
LRTV Documentaries
LTE Paves the Way for the 5G Revolution

4|20|15   |   4:20   |   (0) comments


Håkan Andersson, head of 5G product strategy of the Radio Business Unit at Ericsson, discusses the role of LTE, the US and other industry verticals in building a true 5G ecosystem.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
Upcoming Live Events
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
In its latest survey covering network operators' plans and strategies for ICT transformation, Heavy Reading asked telecom operators worldwide to identify the most important goals and objectives for their ICT transformation initiatives. Heavy Reading also asked operators about the importance of a "digital first" strategy, which enables customers to complete an interaction across different digital channels, such as web and mobile self-service and social media.
Hot Topics
Comcast Formally Ends Its Bid for TWC
Mari Silbey, Independent Technology Editor, 4/24/2015
Comcast Reportedly Dropping $45B TWC Bid
Sarah Thomas, Editorial Operations Director, 4/23/2015
Adtran Is Developing White Box GPON Tech
Ray Le Maistre, Editor-in-chief, 4/24/2015
Google's WiFi-First Mobile Service 'Fi' Is Here
Dan Jones, Mobile Editor, 4/22/2015
Amazon Earnings: What to Watch For
Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/23/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders goes head-to-head with long-time Ciena CEO Gary Smith to discuss the impact of the web-scale players, the New IP and 'white box' networks.
Many leading communications companies can claim to have undergone significant periods of reinvention during their histories, but none have been through more major ...
Cats with Phones
Cats Using Technology for Good, for Once Click Here