Apple Grows Profit Ahead Of iPhone 6 Launch

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Apple posts stunning financials thanks to Chinese iPhone growth, but the iPad may have reached its peak

Apple continues to do what it does best: make a shed load of money. And the iPad maker also revealed in its latest financials that it is starting to gain serious traction in the Chinese market.

Yet despite its excellent growth, the results showed that iPad sales may have reached their peak, making Apple more reliant than ever on sales of its iPhone handset.

iPhone Growth

When examined, Apple’s latest financial results reveal another strong fiscal performance for the Cupertino, California-based company.

For the third quarter ending 28 June, Apple posted a profit rise of 6 percent to $7.7bn (£4.5bn) from $6.9bn (£4bn) in the same year ago quarter. There was equally good news on the sales side, with revenues up to £37.4bn (£21.9bn) from $35.3bn (£20.7bn).

“Our record June quarter revenue was fuelled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters,” said Tim Cook, Apple’s CEO. “We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce.”

Apple revealed that it had sold 35.2 million iPhones in the past quarter, up 12.7 percent. This is impressive, considering there is usually a slowdown in iPhone sales before the arrival of a new handset (the iPhone 6), expected sometime in the Autumn.

Apple said that its growth here was helped by the all-important Chinese market. The perception was that Apple had been struggling to make an impact in the Chinese market, due to the sheer quantity of more affordable Android-based handsets from Samsung and local manufacturers. But Apple signed a distribution deal with China Mobile earlier this year, and that has reportedly helped Apple to continue to gain traction in the Chinese market.

Tim-Cook-Apple-CEO-leadTim Cook was reported by Reuters as telling analysts on a conference call that Apple’s Chinese performance was “honestly surprising”. Apple’s revenue from this market apparently rose 28 percent to nearly $6bn (£3.5bn).

However, Apple is facing a real struggle against its rivals in the highly developed and over saturated markets of the United States and Europe. It forecast revenue of $37bn (£21.6bn) to $40bn (£23.4bn) in the current quarter, down on Wall Street’s expectations of $40bn or more.

Tablet Woes

And there was also sobering news regarding sales of its iPad tablets, which have slid for the second consecutive quarter, raising fears that Apple’s tablet faces a continual decline amid the growing competition from Android and Windows-based tablets.

The third quarter figures revealed that sales of the iPad have slumped to half their pre-Christmas high, with a 9.2 percent year-on-year fall in units sold in the past quarter. This comes after a 16 percent drop in iPad sales in the second quarter. In the same year, two years ago, iPad sales were up 84 percent.

On the Macintosh sales side, Apple still witnessed strong growth in the third straight quarter, as units rose 18 percent to 4.4 million units shipped.

What the Apple figures are telling observers is that customers are not replacing their tablets as often as their iPhones, which means that the iPhone remains a key growth driver for Apple in a saturated smartphone market.

Apple is widely expected to a larger-screen iPhone this Autumn, and could also reveal a wearable offering, dubbed the iWatch.

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