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Apple beats earnings estimates, but faces slowing revenue

Apple can’t replicate the growth it once had, but it’s still an enormously profitable company.


While Apple defied expectations this quarter, with higher than expected revenue and a solid profit margin, the company did experience another quarter of decline in profit — something it hadn’t experienced since 2003.

This quarter Apple made $6.9 billion on $35.2 billion in sales. This amounted to per share earnings of $7.47. Analysts expected the company to have revenue of $35 billion, and per share earnings of $7.32.

Apple’s higher than expected earnings came from higher than expected sales of the iPhone. While analysts expected Apple to sell 26 million iPhones, the company sold 31.2 million this quarter.

However, sales of Apple’s other devices were lower than expected. Analysts were expecting Apple to sell 17 million iPads, 4 million desktops and laptops, 6.8 million iPods this quarter, but the company only managed to post sales of 14.6 million iPads, 3.8 million desktops and laptops, and 4.5 million iPods.

Apple continued a year-over-year decline in profit this quarter, a trend the company first reported last quarter. Apple hasn’t experienced such a decline since 2003, when a mild bout of economic downturn and restructuring change hit the company’s balance books hard.

This quarter Apple posted a profit margin of 36.9 percent, lower than last quarter’s 37.5 percent.

Apple reported that its tax rate was 26.5 percent. At a hearing in June, Apple CEO Tim Cook said “Apple pays 30.5 percent of its profits in taxes in the United States.” The income rate in the United States for corporations is 35 percent.

During the call, Chief Financial Officer Peter Oppenheimer broke down some of the numbers from this quarter. Here’s a highlight of some interesting figures from Oppenheimer:

  • 800,000 TV episodes and 350,000 movies are downloaded from the iTunes store worldwide per day.

  • Apple brought in $4 billion in revenue this quarter from the app store.

  • App Store developers have made over $11 billion over the course of the App store’s history.

  • Apple’s retail stores brought in 4.1 billion in revenue for the company. The per store average was $10.1

  • There have been approximately 900 billion iMessages sent. (that’s alot of lost SMS revenue)

  • Apple $146.6 billion in cash and securities on hand. $106 billion of it is offshore.

We won’t hear much from Apple until the fall, when the iOS7 is scheduled to be launched along with a new iPhone and likely other hardware.

Source: Apple


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