Apple earnings smash expectations on strong iPhone sales- but iPad volumes slip

Apple sold 39.2 million iPhones compared to 12.3 million iPads in third quarter

Apple posted quarterly revenue of $42.1 billion and net profit of $8.5 billion, up from revenue of $37.5 billion and net profit of $7.5 billion in the year-ago quarter (Reuters)

Apple’s latest quarterly performance beat Wall Street’s expectations on Monday and the world’s biggest company by stock market value also gave a strong outlook for the crucial holiday sales quarter coming up.

On the day that Apple officially launched its Apple Pay digital payments system, the company reported a 12 per cent increase in revenue to more than $42 billion for the period ended September 27 amid increased sales for some of its main products including iPhones and Mac computers. iPad sales, however, slowed.

In the quarter, Apple sold 39.2 million iPhones, 12.3 million iPads, and 5.5 million Macs.

Apple handsomely beat analysts’ forecasts by posting quarterly revenue of $42.1 billion and net profit of $8.5 billion, or $1.42 per share, up from revenue of $37.5 billion and net profit of $7.5 billion, or $1.18 per share, in the year-ago quarter.

Apple gave guidance that revenue for the current quarter will be between $63.5 billion and $66.5 billion, higher than many analysts had been forecasting. Apple shares rose in after hours trading in New York.

“Our fiscal 2014 was one for the record books, including the biggest iPhone launch ever with iPhone 6 and iPhone 6 Plus,” said Apple chief executive Tim Cook.

“With amazing innovations in our new iPhones, iPads and Macs, as well as iOS 8 and OS X Yosemite, we are heading into the holidays with Apple’s strongest product lineup ever.

“We are also incredibly excited about Apple Watch and other great products and services in the pipeline for 2015.”

Apple has been under pressure from activist shareholder Carl Icahn to speed up and increase its massive share buyback programme.

In April, Apple increased its share repurchase authorisation to $90bn from the $60bn announced last year, with Apple calling it “the largest single share repurchase authorization” in history.

Luca Maestri, Apple’s chief financial officer, said on Monday: “We continued to execute aggressively against our capital return program, spending over $20 billion in the quarter and bringing cumulative returns to $94 billion.”

Maestri added: “Our strong business performance drove EPS (earnings per share) growth of 20 percent and a record $13.3 billion in cash flow from operations in the September quarter.”