Apple Q4: Strong quarter, beats estimates thanks to 'record' sales

Apple reported strong numbers for the last three-month period. And if you thought the PC market was anything to go by, you're wrong: the Mac is back.
Written by Zack Whittaker, Contributor
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Image: CNET/CBS Interactive

It's been a busy day for Apple already. And even after the markets closed, it had a little more good news to share.

Things look good for its fiscal fourth quarter — really good. 

A month after Apple announced and launched its latest smartphones, the iPhone 6 and iPhone 6 Plus — in which the unit draws in more than half of the company's revenue, it's little surprise that it powered much of the three-month period.

Apple reported on Monday fiscal fourth-quarter ending late September net income of $8.5 billion on earnings of $1.42 per share (statement). Revenue for the quarter was $42.1 billion.

Wall Street was expecting Apple to report earnings of $1.30 per share on revenue of $39.85 billion.

Not just a hit on both earnings and revenue, but it left Wall Street looking underwhelming by a mile.

Here's why: Apple saw a quarter that, it said, was "one for the record books," particularly in iPhone sales. But iPad continues to dwindle year-over-year, which could be a long-term problem for the company. It has its partnership with IBM on hand to help, but that won't come to financial fruition until the coming calendar year.  

Where Apple didn't quite nail down the iPad figures, Mac sales blew estimates out of the water, rising by 20 percent year-over-year. Just in time for the PC market's alleged rebirth, which research firms have pegged for the coming year.

By the numbers (which average analyst estimates compiled by Fortune):

  • iPhones: 39.3 million sold, up from 33.8 million from the same period a year ago. Analysts were expecting 37.5 million. 
  • iPads: 12.3 million sold, down from 14.08 million from the same period a year ago. Analysts were expecting 13.3 million.
  • Macs: 5.5 million sold, up from 4.57 million from the same period a year ago. Analysts were expecting 4.8 million. 
  • iTunes, Software & Services: $4.6 billion in revenue, up from $4.26 billion from the same period a year ago.

Apple said its gross margin grew by 1 percentage point to 38 percent. Wall Street was expecting 37.9 percent. Although it's a fraction of a difference, margin figures make Apple what it is — selling products at a premium.

In prepared remarks, Apple's chief executive Tim Cook hinted that even more products and services were to come next year. He said a similar thing earlier this year, in anticipation of the September and October events, where the company announced new iPhones, iPads, Macs, and debuted the Apple Watch.

Apple said for its often-lucrative fiscal first quarter outlook — landing shortly after the December holiday season — it expects to bring in between $63.5 billion and $66.5 billion in revenue

Wall Street analysts were looking for $63.5 billion in revenue.

Shares in Apple ($AAPL) closed up 2.1 percent on the Nasdaq in New York on Wednesday. In after-hours trading, shares were at the time of writing up by 1 percent.

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