Rising revenue can't halt first drop in Apple's profits in 10 years

iPhone sales top 37 million

Rising revenue can't halt first drop in Apple's profits in 10 years
Stronger than expected iPhone sales and an iPad that's still the dominant force in the tablet market wasn't enough to stop Apple's profits falling for the first time in a decade.

In the firm's latest quarterly report, Apple (NASDAQ: APPL) revealed revenue of $43.6 billion, up from the $39.2 billion the company posted during the same period in 2012.

Those revenues were largely powered by a rise in iPhone sales, which hit 37.4 million units across the quarter, and a dramatic surge in iPad sales, which hit 19.5 million units.

Growth opportunities

That's up on the 11.8 million iPads Apple sold in Q2 2012.

Nevertheless, profits dropped from $11.6 billion during the same period in 2012 to $9.5 billion in the latest quarter – a figure that sits above most estimates, but will do little to curb fears that Apple is going to struggle to grow its business in the quarters ahead.

Such fears have led to a stark fall in Apple's share price in recent months, with CEO Tim Cook admitting that the loss in shareholder confidence has been "frustrating".

"Though we've achieved a credible scale and financial success, we acknowledge that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012," added Cook in a conference call following the release of the financials.

"The most important aspect for Apple will be creating innovative products."

Share boost

Commentators have been quick to suggest that the squeeze in Apple's profits – coming despite rising revenue – is due to handset price cuts in certain markets and rising component costs.

Nevertheless, Apple's cash pile continues to grow, with the $8 billion amassed during the latest quarter bringing its total to $145 billion.

Tim Cook also announced that the company's board has approved plans to buy back $100 billion worth of shares by 2015 – a move that helped boost Apple's share price by 5.5 percent in after hours trading.

"We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad," concluded Cook.

"Our teams are hard at work on some amazing new hardware, software, and services and we are very excited about the products in our pipeline."

[source: Apple]

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.


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