The iPad Air has been warmly received but is Apple losing its bite?

As growth falters and gizmos dry up, there are concerns the tech firm's boss is failing to do enough to hold off its rivals

On the face of it, it was as robust an earnings report as investors could have hoped for. Apple's latest set of quarterly numbers, posted after the market close on Monday, brought news of record iPhone sales and net profits of $7.5bn (£4.6bn) over the three months to the end of September on revenues of $37.5bn. The figures were better than what Wall Street's finest had pencilled in for the tech behemoth, which went on to forecast a strong performance over the crucial holiday selling season, anticipating revenues of between $55bn and $58bn in the three months to December.

"We are winning with our products in all the ways that are most important to us, in customer satisfaction, in product usage and in customer loyalty," Apple's chief executive, Tim Cook, crowed in a subsequent call with analysts. "Our relentless focus on providing innovation that enhances our customers' lives is evident in the extraordinary list of products that we've launched in just the last couple of months."

And yet, questions linger about the pace of growth at the business, for while the profits were strong, they were not as strong as the result during 2012. Analysts, to be sure, were expecting worse, forecasting $7.93 in earnings per diluted share. Apple delivered $8.26, which is significantly better. Nonetheless, it failed to match the $8.67 per share performance it booked in the three months to September, 2012. To add to the concern was the news that gross margins had retreated to 37 per cent from 40 per cent. They could slip lower during the holiday quarter, the company said, forecasting gross margins in the range of 36.5 per cent to 37.5 per cent. Last year, the company managed margins of 38.6 per cent during the same period (and that figure was itself lower than the 44.7 per cent result in 2011).

The comparison with past performance highlights a question that has been dogging Apple ever since Mr Cook succeeded the late Steve Jobs: can Apple, which for years delivered quarter after quarter of record growth thanks to a string of ground-breaking new products, innovate and get back on the path to growth or must investors brace themselves for further declines in performance as competitors lure fickle consumers seduced by the latest shiny-new-thing?

The issue came up during the phone call on Monday evening, when Sanford Bernstein analyst, Antonio Sacconaghi, queried Mr Cook's upbeat statement about new products. "Tim, you commented in your initial remarks about new product categories. I think this was also something you were explicit about in your April quarterly conference call where you said that consumers and investors should expect new products, including new product categories in the second half of this year and first half of 2014... can you reiterate that we should have that expectation?... I just want to make sure I understand the semantics of what you referred to as a new category?"

Mr Cook responded by referring to the new line of iPhones, the 5C and the more pricey 5S, and the new iPad Air, saying: "What I have said is – I have said that you would see some exciting new products from us in the autumn of this year and across 2014. And I obviously stand by that and you've seen a lot of things over the last couple of months."

But he did not offer anything specific on new categories, which is both understandable – Apple would not advertise a new gadget on a call with analysts – and, for the bears, potentially troubling, as Apple under Mr Cook hasn't yet branched out into a new area. Rumours of an Apple Television to take on Samsung's Smart TVs, or an Apple-branched watch, have thus far proved to be just that – rumours.

While those on the outside await more details on prospective product launches, the delay could further motive shareholders such the activist investor Carl Icahn, who want Apple's management to draw on the company's giant cash reserves to increase the scope of its share buyback plans.

Mr Icahn outlined his thinking in a letter addressed to Mr Cook last week, saying: "While the board's actions to date ($60bn share repurchase over three years) may seem like a large buyback, it is simply not large enough given that Apple currently holds $147bn of cash on its balance sheet, and that it will generate $51bn of [earnings before interest and tax] next year," he wrote, quoting consensus forecast figures and adding that "there is nothing short term about my intentions here".

(The call sparked a row of sorts of between Mr Icahn and Bill Gross, the influential co-chief investment officer at Pimco, who tweeted: "Icahn should leave #Apple alone & spend more time like Bill Gates. If #Icahn's so smart, use it to help people not yourself").

For now, Apple appears to be sticking to its guns on the buyback. But with margins falling and no sign of new gizmos, it might face additional pressure to relent in the months ahead, the forecast-beating results notwithstanding.

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
ebookA unique anthology of reporting and analysis of a crucial period of history
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Tovey says of homeless charity the Pillion Trust : 'If it weren't for them and the park attendant I wouldn't be here today.'
Rhys Williams
commonwealth games
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little