July 22, 2014 Last Updated 5:54 pm

Apple grows revenue 6%, beats income estimates, but iPad sales fail to match previous year again

The Q3 Apple earnings were a mixed bag as the Cupertino tech giant grew revenue 6 percent in the quarter and managed to beat analyst profit estimates, and even grew iPhone and Mac sales, but saw iPad sales come in below the previous year’s level – the second quarter in a row that this has happened.

But unless you are a publisher, and you might be surprised to learn that there are those out there who are not, Apple appeared to have a good quarter.

Apple-iPad-sales-Chart3“Our record June quarter revenue was fueled 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.”

It will be interesting to see how the tech and business media report this quarter’s results. My guess is they will think they were pretty good, as income came in above expectations.

Net sales came in at $37.432 billion, up 6 percent – not a huge number, but remember that when your sales numbers get so large, it is hard to beat them by big percentages.

Net income came in at $7.75 billion, while income came in at $6.90 billion for the same quarter last year.

But then there are those iPad sales: 13.276 million units, below last quarter’s sales, and below the same quarter in 2013. Why is this happening? My guess is that the competition is simply producing alternatives that are far better than the alternatives available in years past. Apple is stuck in a product cycle where thinner and faster is the goal, while adding more storage, more add-on options is of secondary (or no) concern.

But we really need to remember that when Apple reported over 3 million iPads were sold in the first quarter the device was available in 2010 observers were amazed (as many of them, including a large number media gurus, predicted that the iPad would be a bust). Apple has now sold close to 225 million iPads.

The quarter proved pretty good for Mac sales as the company sold 4.413 million new Macs, most likely thanks to the lower priced iMac being introduced, as well as a few sales of those dream machines, the new Mac Pro. Nonetheless, it has been two years since Apple updated the Mac mini and owners are concerned.

iPhone sales, while below last quarter, did manage growth over the same quarter in 2013: 35.203 million units versus 31.241 million units. Apple will most likely be introducing a new model with a larger display in the fall, which should help sales for what is their Q1 of 2015 (Apple’s fiscal year starts in October.)

If there is a serious revenue concern, it might be that Apple’s growth in the Americas (as it defines it) has all but stopped, growing only 1 percent. Were it not for its revenue gains in China we might be talking about Apple’s failure to grow revenue at all (around 2.5 percent rather than 6 percent).


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