Apple iPhone sales up - but iPad sales and net profit down - in third quarter

Cheaper Apple iPhone 4 boosts entry-level sales, but cuts average selling prices

Apple has reported revenues of $35.3bn and net profit of $6.9bn in its fiscal third quarter results to the end of June 2013.

However, revenues were up only marginally - from $35bn - compared to the same quarter a year ago, while profits were down from $8.8bn, a decline of 21.6 per cent. Gross margin also fell from 42.8 per cent to 36.9 per cent.

In a conference call, the company attributed the falling margins and profits to the lower average selling price resulting from the cut in price, and subsequently popularity of, the iPhone 4.

The company is using the iPhone 4 as a stop-gap entry-level phone until the launch of a budget model, which had been slated for July, but which will now probably appear in September or October.

The iPad Mini, launched last autumn, also carries lower margins than the rest of the iPad range, while the price of the iPad 2 was also cut at the time of the iPad Mini's launch.

However, the iPhone 4 price cut combined with the popularity of the new iPhone 5 helped Apple to sell 31.2 million iPhones, compared to 26 million in the third quarter of 2012. However, iPad sales were down, from 17 million to 14.6 million, over the same period.

That fall in iPad sales is partly attributable to the lack of a new iPad model for some nine months, since the October 2012 launch of the iPad Mini. Apple iPads have generally sold best around and just after launch.

The company also sold 3.8 million Mac desktop and laptop PCs, down from four million sold in the same quarter last year, but its decline was half that of the rest of the (overwhelmingly Microsoft Windows-based) PC market.

Apple CEO Tim Cook naturally sought to emphasise the good news and the product lines enjoying higher sales, as well as promising "amazing" new products in the autumn and throughout 2014.

"We are especially proud of our record June quarter iPhone sales of over 31 million and the strong growth in revenue from iTunes, Software and Services," said Cook.

Indeed, sales in Apple's iTunes online music and content store increased by 29 per cent and now accounts for almost seven per cent of the company's total sales.

He added: "We are really excited about the upcoming releases of iOS 7 and OS X Mavericks [for the Mac desktop and laptop], and we are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014."

Those "amazing new products" might variously include a budget iPhone, a "smart watch", or the long-fabled Apple television - an initiative that has been stalled due to the reluctance of programme makers to concede to Apple's agenda.

While Apple's third quarter sales increased only marginally, they beat well-managed expectations. However, compared with third quarter sales from as recently as 2009 or 2010 they illustrate how far the company has come: in 2009, sales weighed in at $8bn, doubling in 2010 to $16bn.