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Apple results good – but stable Featured

Apple has reported its fourth quarter and annual results. It made a profit of US$7.5 billion in the last quarter alone, on revenues of $37.5 billion.

This compares to a profit of US$8.2 billion on revenues of $36 billion for the same quarter last year. That means Apple’s gross margin is 37%, compared to 40% last year. The figures were ahead of most analysts’ forecasts, and the stock closed on US$529.88, up a little on the day – but way below the heady heights of a year ago, when it briefly peaked above US$700.

But shares have fallen sharply in after hours trading as CEO Tim Cook lowered expectations for the next quarter.

These are figures most companies would die for, but they do indicate that Apple’s years of massive growth are coming to an end. The company sold 33.8 million iPhones, a record for the September quarter, compared to 26.9 million in the year-ago quarter. But the lower margins indicate that iPhone profitability is down.

iPad sales are barely growing, hit by cheap Androids. Apple sold 14.1 million iPads during the quarter, compared to 14 million in the year-ago quarter. And Mac sales are declining, as are PC sales everywhere – Apple sold 4.6 million Macs in the quarter, down from 4.9 million in the year-ago quarter.

US sales accounted for 40% of the quarter’s revenue – Apple does much better at home than it does internationally. It is trying hard to increase sales in China, now the world’s largest smartphone market, but with mixed success. China was up 6%, after declining last year,

Apple of course puts the best light possible on the results. “We’re pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34 million iPhones,” said Cook.

“We generated $9.9 billion in cash flow from operations and returned an additional $7.8 billion in cash to shareholders through dividends and share repurchases during the September quarter, bringing cumulative payments under our capital return program to $36 billion,” said Peter Oppenheimer, Apple’s CFO.

Apple is providing the following guidance for its fiscal 2014 first quarter:

  • Revenue between $55 billion and $58 billion
  • Gross margin between 36.5 percent and 37.5 percent
  • Operating expenses between $4.4 billion and $4.5 billion.

In his conference call with financial analysts after announcing the results, Cook alluded to new products on the drawing board. “In terms of new product categories, if you look at the skills that Apple has in hardware, software and services these set of things are unique. No-one has a set of skills like this and we obviously believe we can use our skills in building other great products that are in categories where we don’t participate today.”

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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