Apple Sold 35.2M iPhones in Q3, Despite iPhone 6 Expectations

 
 
By Michelle Maisto  |  Posted 2014-07-22 Email Print this article Print
 
 
 
 
 
 
 
Apple iPhone 5C

Sales of iPhones, particularly older models, pushed Apple to strong results, during what's usually a sleepy, pre-launch quarter.

Apple announced the results of a "record" June quarter, during which it saw revenue of $37.4 billion, a net profit of $7.4 billion and its earnings per share grow to its highest rate in seven quarters.

Despite every indication that Apple will introduce new iPhones in September, it sold 35.2 million units (an increase of 13 percent from the same quarter a year ago). A strong percentage of these were iPhone 5 and iPhone 4S models, which were the most popular second-hand phone models in the country last quarter.

Even the iPhone 5C—the lower-cost model that was mocked in China, one of its intended markets, and has generally been thought of as a rare swing-and-a-miss for Apple—sold well during the quarter.

Apple CEO Tim Cook, on a July 22 earnings call, said in so many words that Apple sold more iPhone 5C units than it would have otherwise sold old iPhone 5S units.

He described Apple as "extremely happy" about the growth rate of the 5C.

Cook offered another you-might-be-surprised comment in regard to the iPad, of which it sold 13.3 million units during the quarter, down from 16.4 million the quarter before and 14.6 million units a year ago.

While Wall Street may have been disappointed in iPad sales, Cook said, sales met Apple's internal expectations.

"When you look at the category we created just over four years ago … we've sold more than 220 million iPads. More than anyone would have predicted, including ourselves, quite frankly," said Cook.

On Twitter, analysts shrugged at the idea of a product having moved past its peak adoption moment in developed markets—in China iPad sales grew by 50 percent during the quarter, and in the Middle East, they rose by 60 percent—and suggested that Apple's recently announced deal with IBM would help.

Cook meanwhile told listeners on the call, "What's most important to us is that customers are using their iPads and using them heavily."

While Apple's announced partnership with IBM came after the close of its fiscal third quarter, the deal was a topic of conversation during the call, and Cook called the partnership "a great marriage."

When asked whether the partnership could help Apple take a cut of IBM's analytics, Cook answered, "Generally speaking, each of us has revenue streams in the enterprise … we'll win if we can drive [our enterprise penetrate rate] from 20 to 60 percent. If that happened … the walls would shake."

He also said that Apple has no plans to try and take a cut of software sales made to enterprise customers, the way it does with consumer apps.

"Apple is going to allow it to continue, that enterprise can sell directly to the customer," Cook said. "We're all for taking friction out of the system, not adding it."

As for the two large-screen iPhone 6 models that Apple is expected to introduce in a matter of weeks, Cook said only that Apple is "incredibly excited" to release OS X Yosemite and iOS 8, "as well as other new products and services."

Its fourth-quarter guidance is for revenue of $37 billion to $40 billion.

"We are expecting a very busy fall," new Chief Financial Officer Luca Maestri said during the call. "We are excited about what we have in the pipeline."

Follow Michelle Maisto on Twitter.

 
 
 
 
 
 
 
 
 
 
 

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