Apple Revenue Flat, Profits Down, but Shareholders OK With It

Apple, which hasn’t released a major new product for 10 months and only five secondary products in all of 2013—as opposed to a total of 24 products in 2012—reported its quarterly earnings July 23. The top-line numbers were flat, and they were generally aligned with Wall Street expectations.

For the fiscal 2013 third quarter that ended June 29, Apple posted quarterly revenue of $35.3 billion and quarterly net profit of $6.9 billion, or $7.47 per share. These results compare with revenue of $35 billion and net profit of $8.8 billion, or $9.32 per share, in the year-ago quarter.

Gross margin was 36.9 percent compared with 42.8 percent in the year-ago quarter. International sales accounted for 57 percent of the quarter’s revenue, the company said.

Stock Unaffected by the Report

The stock was up about 4 percent to $435 in after-hours trading following the earnings call after closing 2 percent down at $418. Thus, it appeared that shareholders aren’t concerned about much, if anything, including the fact that profits nose-dived 22 percent (or $1.9 billion) from a year ago.

The best news for the company was that it continues to sell increasing numbers of the iPhone 4, 4S and 5. In total, Apple sold 31.2 million iPhones, a record for the June quarter, compared with 26 million a year ago.

Apple does not break out individual categories of its phone sales, so it is not known how many iPhone 5s were sold compared with older iPhones. CEO Tim Cook said on the conference call to analysts and journalists that the iPhone 5 is still the most popular phone the company makes.

Chief Financial Officer Robert Oppenheimer acknowledged that the average selling price for the iPhone overall is lower than a year ago, reasoning that some of it was discounting and some was sales of the iPhone 4.

iPad, Mac Sales Slip a Bit

The Cupertino, Calif.-based device maker also sold 14.6 million iPads during the quarter, compared with 17 million in Q3 2012, and it sold 3.8 million Macs, down from to 4 million in the year-ago quarter.

Because it has released only a modicum of new products this year, Cook was asked if Apple will be announcing new products—namely, the rumored new Apple TV and the connected watch—that can significantly move the needle. Cook played it safe and said, as he does in almost every earnings call, “We are excited, and we will announce when we are ready.”

Apple’s board of directors declared a cash dividend of $3.05 per share of common stock. The dividend is payable on Aug. 15, 2013, to shareholders of record as of the close of business on Aug. 12, 2013.

Apple provided the following guidance for its fiscal 2013 fourth quarter:
—revenue between $34 billion and $37 billion
—gross margin between 36 percent and 37 percent
—operating expenses between $3.9 billion and $3.95 billion.