Apple Q3 earnings: beats on profit, revenue; sales mixed

Apple Q3 earnings: beats on profit, revenue; sales mixed

Summary: Third quarter sales of iPads and Macs fell short. The iPhone? A surprise blowout. Here's a look at the numbers.

SHARE:
TOPICS: Apple
88

Apple on Tuesday reported earnings of $7.47 on revenue of $35.3 billion for the third quarter ended June 29.

Analysts were expecting earnings of between $7.31 and $7.34 on revenue of between $35.02 billion to $35.18 billion, roughly on par, in terms of revenue, with the company's performance during the same period a year ago. Apple's own guidance specified quarterly revenue of $34.5 billion.

The company's stock (AAPL) was up more than five percent, to $441, in after-hours trading.

Looking ahead to the fourth quarter, the company offered a rather light outlook: revenue of $34 billion to $37 billion. Expectation was about $37 billion.

Apple said it 31.2 million iPhones, 14.6 million iPads and 3.8 million Macs during the third quarter. Analysts expected the company to sell 26 million iPhones, 18.3 million iPads and 3.9 million Macs.

The company's gross margin dropped, from 42.8 percent in 3Q12 to 36.9 percent this quarter.

Additionally:

  • Quarterly net profit came to $6.9 billion.
  • Quarterly cash flow came to $7.8 billion.
  • International sales accounted for 57 percent of the quarter's revenue.
  • Apple's board declared a cash dividend of $3.05 per share of common stock, payable on August 15.
apple-earnings-3q13-chart02

With no new product releases, Apple's year to date has been unusually quiet, and Wall Street expectations were rather restrained—flat revenue and sales at best—as demand for the company's products slows. (As Erica Ogg notes at GigaOm, Apple's peers Samsung, Intel, Microsoft and Google all ended the quarter with ho-hum financial results.) 

We sat in on Apple's conference call to find out more detail—here's what the company's executives said.

apple-earnings-3q13-chart01

Topic: Apple

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

88 comments
Log in or register to join the discussion
  • Writings on the wall...

    Apple's decline is gathering pace...
    OwlllllllNet
    • I see you can't be distracted by the facts, owlly.

      How's those WP's doin' for ya?
      Userama
      • @ Userama

        WP is doing fine and good. Last checked there were 7.2 million Lumias sold worldwide for Q4 2013. It looks you only sold 31 million iPhones in Q4 2013 down from 37 million in Q4 2012. On the other hand, Lumias grow from 4 million estimate in Q4 2012.

        It looks to me that the iPhone product is experencing sequential and yearly declines or stagnation in shipment # while Samsung and Nokia phones are experiencing some growth.

        How can you explain this discrepancy, iOS guru?
        calahan
        • @calahan

          actually according to the above summary, it's 31b, down from 37b last quarter, but up from 26b in the year ago quarter. so the growth in iphone sales over the year ago quarter is almost as high as the total sales of lumia you quoted, don't see a problem!
          mjpwall@...
          • @ mjpwall

            Appreciate the correction.

            Lumia phones have experienced quarterly growth rates though low for the past 4 quarters. That is not much better than Apple in reality except that Infrastructure division outshines the Mobile devices division, especially in the last 4 quarters leading to some revenue strengths.

            But iPhone growth rates have gone higher and then declined. The volatility is much higher than for Samsung or Nokia phones or so it appears. Though 37 million is not much bigger than 31 million, it has to be admitted that Apple appears to have a problem with sales in the most recent quarter. And the key reason appears to be the massive decline in revenue in Asia-Pacific and Europe regions in Q4 2013.
            calahan
          • Sorry but can you explain this statement?

            Though 37 million is not much bigger than 31 million, it has to be admitted that Apple appears to have a problem with sales in the most recent quarter.
            rfoto
          • Back Off

            Where I come from 6,000,000 and 20% are nothing.
            DannyO_0x98
          • @ rfoto

            A difference of 6+ million units going from Q2 2013 to Q3 2013 indicates some flaw in sales strategy and other factors. Selling older design iPhones may only help for sometime. It appears there is saturation in buying demand for older iPhones which have lower ASPs to start with.

            Ultimately the revenue statement is an indication of the near zero incremental differentiation in iPhone products. The newer iPhones do not differ much from older iPhones. And higher or same ASP can only be guaranteed if newer features keep piling up like they did between 2008 and 2012. This process is now almost at a stop.

            On top of it, the lack of a China strategy also hurts. Chinese economic headwinds with decline in projected macro GDP growth rate to 6% unofficially and 7% officially is actually a big cause for revenue decline. And the Chinese economy will remain in slumber mode for the rest of the year.

            Essentially, half of Apple's revenue which comes from iPhone product alone is in greater trouble than imagined due to above 3 factors. I may be too pessimistic here but I project annual revenue of iPhone business to decline to $65-$70 billion range from the current $75-$80 billion range for 2013.
            calahan
          • I understand.

            You were referring to Q2 and Q3 and I thought you were comparing Q3 2012 with Q3 2013.

            The problem is you are comparing different quarters in the same year. In 2012 Q2 was much higher than Q3 so I guess you would be making the same statement a year ago and you would have been wrong then.
            rfoto
          • iPhone is a settled product

            Not Nokia or WP phones, they are playing catch up.

            It's true that Lumia sales are growing quarter after quarter, but please take Nokia smartphone numbers.
            There is also profit and release cycles - how many new WP phones in the last 2 quarter compared with new iPhones?
            Lumia 520 is now (according to reports) the most common WP phone, it's also one of the cheapest ones.
            I admit I was expecting a bit less Nokia smartphones in the last quarter, but sales are far from good, unlike Apple, that kept sales without anything releasing anything new.
            AleMartin
          • @ AleMartin

            I would actually state that all of the smartphone makers including Apple have issues this year with smartphone growth rates.

            The Lumia series did not do really well enough for Nokia to start to grow again. But Nokia has more experience in delivering phones with very low ASPs than Apple ever did.

            I would bet for Asian phone OEMs like Huawei, Lenovo, ZTE, LG and Samsung and lastly Nokia before I would bet for Apple.
            calahan
          • Now isn't this a fascinating spin

            "iPhone_is_a_settled_product_

            Not_Nokia_or_WP_phones,_they_are_playing_catch_up."

            Yet_that_never_stopped_people_from_comparing_osx_growth_rates_to_Windows_growth_rate.

            Huh,_now_it_turns_out_those_people_were_idiots.

            PS Being able to copy, paste into Word, replace all spaces with underscores, and paste back into IE: priceless. And ONLY available on the Surface RT (and other fine Windows tablets).
            toddbottom3
          • This_spin_is_fascinating_too

            F_O_R_B_E_S_"If You Haven't Seen A Windows Phone Lately, It's Because They're Practically Disappearing"
            "Neither Microsoft MSFT -0.59% nor Nokia NOK +0.76% can hide from the very, very ugly truth. Windows Phone is failing miserably to gain any important traction despite tremendous marketing support. It’s true that globally, Nokia’s Lumia line set a record with 7.4 million units sold in the quarter. But those numbers mask the grim reality. First, North American sales actually fell to just 500,000 units. Second, average selling prices actually fell almost 20% from the prior quarter. To boost sales, Nokia has become a low-end smartphone maker."
            hahahahahahahahaha
            Ha_Ha_Ha
            *munch* *munch*
            Go.
            gregv2k
          • Yell and scream all you want

            iphone ASPs also falling but the difference is that Lumia sales are setting records. iphone sales aren't.

            *munch* *munch*

            Oh yeah, apple profits falling, Samsung now more profitable than apple.

            *munch* *munch* *munch* (that is worth 3 munches, delicious)
            toddbottom3
          • Oh_yeah_

            MobileBurn: "Verizon announced its earnings for the second quarter of 2013, and in addition to confirming that the company is making strong progress on the path to an LTE-only network, Verizon revealed that the Apple iPhone and iOS lead the smartphone drive at the carrier. How many iPhones did Verizon sell? About 3.8 million, which amounts to 50.6 percent of the total 7.5 million smartphones sold during the second quarter."

            *munch* *munch* Samsung's lunch *munch*

            Go.
            gregv2k
          • Let's follow the logic here

            Samsung being more profitable than apple doesn't count because Verizon had a good quarter.

            Uh huh.
            toddbottom3
          • And a PS

            Care to guess what percentage of Dell PC sales were Windows? Remember, Dell sells Linux PCs too.

            Oh, 99.9%? Right, that proves Windows is the best. Thanks for admitting that gregv2k.
            toddbottom3
          • You collect opinions of all kind of people

            to build your contradiction report with sarcasm.
            If you don't agree with my opinions you should provide your reasons.
            You can answer with yes or no to the following:
            Are iPhones world wide devices people know very well, with steady and solid sales with growth?
            Have Nokia smartphone sales reached the leveIl (units or share - you choose) they used to have with symbian?
            Do you believe Nokia and Microsoft are trying very hard to build market share?
            Can you find a post by me calling someone idiot?
            AleMartin
          • @calahan

            It can be expected that in the quarter before a new iphone launch there will be a dip in sales on the previous quarter, as most will wait for the launch of the new phone, apple is selling 31million phones, their newest phone was launched last year, samsung et al are releasing phones every week, yet iphone still out sells the latest offerings from these manufacturers and continues to show growth year over year, a jump from 26b in the year ago quarter to 31 in this quarter is portrayed as a failure by many here, desperation?
            mjpwall@...
        • Forbes

          "Don’t be surprised to see iPhone pricing continue to trend downward with the lower-priced iPhone expected in September, but unit sales are likely to trend up in the event that product materializes. The reason should be clear by now: Given a level playing field on price with Android competition, many people will choose iPhone. In fact, half of Verizon smartphone customers did just that this past quarter despite the launch of Samsung’s new Galaxy S4."
          gregv2k