Home > Uncategorized > Apple Profits Surge iPhone + Mac Sales Up As iPad Sales Slump

Apple Profits Surge iPhone + Mac Sales Up As iPad Sales Slump

Apple Profits Surge iPhone + Mac Sales Up As iPad Sales Slump

Pent up demand for a new iPhone has seen a massive 38% surge in Apple profits for the last quarter, sales of iPads have slumped while Mac sales have climbed 14%.

The demand for a new iPhone, has been a big driver of traffic into retailers such as JB Hi Fi and Harvey Norman was driven by the launch of a new iPhone 6 and iPhone 6 Plus that was released in September.

Apple’s net income for the quarter went from $13.1 billion to $18.0 billion compared to the same quarter period in 2013. Earnings per share rose 48%.

During the period Apple sold 74.5 million iPhones, this was up 46% from a year ago.

Strong iPhone sales helped Apple claw back market share that it gave up to Samsung Electronics who are now under pressure in the smartphone and tablet markets. 

Another big plus for Apple is that the Company has managed to lift the margin on their expensive new iPhones. The average selling price of the iPhone was $687 in the quarter compared with $637 in the year-ago period.

 The iPhone 6 Plus costs $100 more than Apple’s previous high-end model. Plus Apple is also enticing consumers to upgrade to more expensive models with greater memory.

Apple’s performance was especially impressive in China, where it surged to become the top smartphone manufacturer during the quarter, according to research firm Canalys. It also gained market share against phones using Google Android smartphones. 

Sales also grew in Australia and Spain for the three months ended November, said Kantar Worldpanel ComTech earlier this month.

Apple had predicted that the new iPhones would spark a huge upgrade cycle among its existing consumers, but Chief Executive Tim Cook said in an interview that it is luring customers from rival smartphone manufacturers running the Android operating system.

“We brought on more new people to iPhone than ever before,” Mr. Cook said. “Many of those are switching from Android, and we couldn’t be happier about that.”

Apple said its gross margin, was 39.9% in the December quarter, above the 37.9% reported in the year period. In October, Apple had forecast gross margin of 37.5% to 38.5% for the quarter.

For the current quarter ending March, Apple said it expects revenue of between $53 billion to $55 billion while retaining similar gross margins.

Apple said it sold 21.4 million iPads during the December period, an 18% decline from a year earlier. The sales were close to analysts’ expectations.

Apple said it sold 5.5 million Macs during the quarter, a 14% increase from a year earlier. Research firm IDC said overall PC shipments fell 2.4% during the fourth quarter. Competing researcher Gartner said quarterly shipments rose 1%.

The WallStreet Journal reported that in a quarter when Apple surpassed even the most bullish forecasts, the question hanging over the company is whether the strong iPhone 6 and iPhone 6 Plus sales are a one-time boost from pent-up demand for a bigger-display phone or whether Apple can maintain this momentum with the next batch of iPhones and new products such as the Apple Watch.

Over the past year, Apple shares have surged 40% due in part to expectations of a strong upgrade cycle from the bigger phones.

Apple announced its results after regular trading hours. In 4 p.m. trading, Apple shares fell $3.96, or 3.5%, as part of broader market selloff. In after-hours trading, Apple shares rose about 5%.

Apple said its new mobile payments service got off to strong start. The company said Apple Pay, which allows consumers to wave an iPhone near a wireless reader, accounted for two of every three dollars spent via contactless payments on Visa, MasterCard or American Express since its debut in October.

Apple Pay is being closely watched as a potential harbinger of a trend to paying for items using mobile devices. Apple didn’t break out Apple Pay in its results.