Apple Sold 35.2 Million Iphones In The Second-Quarter Of The Year.

[psycopk]

Apple CEO Tim Cook says 'momentum is really strong' at Apple. Above, Mr. Cook speaks at a company event last month. AP

Apple Inc. AAPL +0.83% reported its second straight quarter of double-digit percentage growth in iPhone sales as the consumer electronics maker heads into a major refresh of its flagship product.

The Cupertino, Calif., company said it sold 35.2 million iPhones in the quarter ended June 28, up 12.7% from the 31.2 million units in the year-ago period. The latest figure was just shy of analysts' projections for sales of 35.9 million iPhones.

 

"We're thrilled with the results, and we're thrilled with where we are going. The momentum is really strong," Apple Chief Executive Tim Cook said in an interview with The Wall Street Journal.

Mr. Cook said the strong iPhone sales were driven by demand from Brazil, Russia, India, and China—collectively known as the BRIC countries.

"The BRIC countries were unbelievable," said Mr. Cook, noting that iPhone sales in those countries rose 55%, including a 48% increase in China alone.

However, sales of iPads dropped 9.2%, the second consecutive drop, suggesting that tablets are maturing and getting squeezed between more portable smartphones and more powerful computers. Mac computer sales, meanwhile, continued to show strength.

 

In the past few years, the June quarter has been the slowest for Apple as the company gears up with new products ahead of the year-end. The technology giant is banking on an expected new product push of larger iPhones and a series of smartwatches before year-end in an effort to reinvigorate earnings that have flattened after more than a decade of remarkable growth.

Apple has entered into a period of steady growth and efficient earnings, generating billions of dollars of cash every quarter, but it is hard to imagine a return to the spectacular gains of recent years without breaking into new product categories and refuting concerns that Apple is losing its innovative touch.

Apple said profit in its fiscal third quarter was $7.75 billion, up 12.3% from $6.9 billion in the year-ago period. Apple's earnings per share rose to $1.28 from $1.07, adjusted for the company's recent 7-for-1 stock split and lifted by the company's stock repurchase program, which decreased the pool of total shares compared with a year earlier.

Revenue increased 6% to $37.43 billion from $35.32 billion in the same period a year earlier.

Analysts, on average, estimated that Apple would post earnings of $7.49 billion, or $1.23 per share, on revenue of $37.99 billion, according to Thomson Reuters.

Apple shares were relatively flat in after-hours trading.

For the current quarter to September, Apple is forecasting a wide revenue range of $37 billion to $40 billion, below analysts' consensus projections of $40.44 billion.

The company's large $3 billion spread in its revenue forecast reflects a "lack of visibility," Mr. Cook said. He said it is hard to predict how rumors about upcoming products will affect "purchase delays" among consumers. It also reflects the growing portion of sales from emerging markets where it is more difficult to hedge against foreign exchange swings.

A bright spot is China. Revenue in greater China, which includes Hong Kong and Taiwan, grew 28% during the fiscal third quarter, compared with 1% growth in the Americas. The gains were underpinned by nearly 50% growth in iPhone revenue—which Apple says is double China's overall smartphone market growth rate—as well as a 61% increase in iPad sales.

Apple has gotten a boost from the deal it struck in January with China Mobile Ltd. CHL +1.89% , the world's largest carrier with more than 750 million subscribers, to offer the iPhone over its new higher-speed 4G networks.

Apple said its gross margin, a closely watched indicator measuring the percentage of revenue that remains after manufacturing costs, was 39.4% in the June quarter—higher than the company's estimated range of 37% to 38%, and above the 36.9% reported in the year-ago period.

For the September quarter, Apple forecast a gross margin of 37% to 38%, in line with the average analyst estimate of 37.5%.

The company reported about $164.5 billion in cash holdings as of June 28.

 

A continued trouble spot for Apple is iPad sales, which fell for the second straight quarter. Apple said it sold 13.28 million iPad units, down from 14.6 million units in the same period a year earlier and analysts' forecast of 14.4 million units.

Sales of Mac computers, meanwhile, rose 17.6% to 4.4 million units from 3.8 million units last year.

By preparing two new larger-screen iPhones for later this year, Apple is looking to revamp its most important product and reverse its steady market share decline against smartphones running on Google Inc. GOOGL +0.86% 's Android operating system. The bigger displays address one of the main consumer complaints of the iPhone: The screens are too small. However, it suggests that Apple isn't going to pursue the low-end of the smartphone market, which is growing rapidly in emerging markets.

Apple's smartphone rival, Samsung Electronics Co. 005930.SE -0.37% , has been pressured by competing in the market for inexpensive handsets. When the company reports earnings next week, Samsung is expected to report a third straight year-over-year decline in quarterly operating profit, hurt by price competition and a supply glut of smartphones.

[psycopk]

Apple has released its latest quarterly earnings report, and the hardware story is one that you might have heard before: For the most part, the company sold more devices year-over-year, with the notable exception of the iPad, which continues to see slight declines as it did last quarter.

By the numbers, Apple sold 35.20 million iPhones, 13.27 million iPads, 4.41 million Macs and 2.96 million iPods. During the same quarter last year, Apple sold 31.24 million iPhones, 14.62 million iPads, 3.75 million Macs, and 4.57 million iPods. Analysts had anticipated sales of 35.78 million iPhones, 14.43 million iPads, 3.93 million Macs and 2.34 million iPods for the quarter. It beat expectations for Macs and iPods, but everything else fell slightly below predictions. The 12 percent increase on iPhone sales beat last quarter’s 7 percent growth, however, and Macs grew nearly 20 percent year over year.

Apple has been riding high on iPhone gains, despite it being late in the refresh cycle for the smartphone, which generally gets a new version come fall. These results mean it’s still doing well despite rumors of a new device with a larger screen. The slight dip in the iPad numbers isn’t encouraging for the potential growth of that segment, but it’s also been a while now since the tablets were updated, and Apple still clearly rules the roost when it comes to slate devices. If this market is stalling as some suggest, it isn’t a problem unique to Apple.

 

The iPad earned Apple 8 percent less revenue compared to last year, while the iPhone revenue grew by 9 percent. Mac revenue was up 13 percent, while iPod units shipped were down 36 percent, resulting in a 40 percent revenue drop year-over-year.