Apple earnings boom again thanks to record iPhone sales, and growth in China
iPad sales continue to fall, however, with 10.9 million units were sold; Apple Watch sales get dumped into Other Products along with the iPod and Beats units
This afternoon Apple reported third quarter 2015 earnings, reporting another amazingly profitable quarter. Apple reported net income of $10.7 billion, versus $7.7 billion from the same quarter a year earlier, and revenue rose to $49.6 billion. Once again it was iPhone sales that is to be credited with the record performance.
As expected, iPad sales fell, to 10.9 million units versus 13.3 million units last year. This is the third Q3 drop in a row.
Apple played a little coy with its Apple Watch number, throwing them in with Other Products, a category which is bulging with items including the iPod, no longer worthy of being broken out, the Apple TV, and Beats. But CEO Tim Cook said Apple Watch sales were better than the first quarter of sales for the iPad when it was first launched in 2010. (I wish I had made a bet he’s say that as it was fairly predictable, as well as meaningless considering the incredible marketing effort the company put behind the damn thing.)
The other thing that is carrying Apple these days is sales in China. Revenue there grew 12 percent to $13.2 billion. China continues to be a far bigger market for Apple than Europe. Maybe sales are plunging in Greece?
Investors had taken the stock sharply up in anticipation of another blow-out quarter, and so are now profit taking in after hours trading, with the stock down around 7 percent early on.
Going back to the iPad, Apple is rumored to be launching a larger, so-called Pro model in the fall. If all that is significantly different about it is a larger screen (and, of course, it being thinner, thinner, thinner), then one wouldn’t expect it to move the needle much. Apple is charging more for the iPad than its competitors, for the most part, so I would expect a larger model to be more in competition for the small Macbook, which wouldn’t be that much more expensive, yet have far better specs. Apple needs to rethink why customers want an iPad and break out of its rut. More storage and RAM is a must.
Here is Apple’s earnings statement for Q34 of its fiscal 2015 year:
CUPERTINO, California — July 21, 2015 — Apple® today announced financial results for its fiscal 2015 third quarter ended June 27, 2015. The Company posted quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion, or $1.85 per diluted share. These results compare to revenue of $37.4 billion and net profit of $7.7 billion, or $1.28 per diluted share, in the year-ago quarter. Gross margin was 39.7 percent compared to 39.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.
The growth was fueled by record third quarter sales of iPhone® and Mac®, all-time record revenue from services and the successful launch of Apple Watch™.
“We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,” said Tim Cook, Apple’s CEO. “The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.”
“In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent,” said Luca Maestri, Apple’s CFO. “We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.”
Apple is providing the following guidance for its fiscal 2015 fourth quarter:
- revenue between $49 billion and $51 billion
- gross margin between 38.5 percent and 39.5 percent
- operating expenses between $5.85 billion and $5.95 billion
- other income/(expense) of $400 million
- tax rate of 26.3 percent