Apple profits drop for third quarter despite iPhone sale boost

29/10/2013

Apple's fourth-quarter profits fell 9%, despite selling 26% more iPhones than in the same period last year, as more consumers opt for lower priced Apple devices.

The financial results, annohnced by CEO Tim Cook yesterday, mark the third consecutive quarter that its earnings have dropped compared with the previous year.

Apple said it had sold 33.8 million iPhones, 14.1 million iPads and 4.6 million Mac computers between July and September.

iPhones sales were up 26% on the same time last year, but the cheaper 5C model has helped lower the average sale price of the handset.

Quarterly revenue was still a huge $37.5bn (£23.2bn) however, meaning that overall profits at Apple were $7.5bn (£4.3bn).

That compares with $36bn (£22.3bn) and $8.2bn (£5bn) for the same time last year.

Nonetheless, Apple boss Tim Cook insisted that "business was stronger than ever" on an earnings call.

Rival profits lower

By comparison, rival Samsung expects to see a profit of £5.8bn for the past three months as its smartphones outsell Apple globally, shipping around 85 million devices, compared to some 35 million iPhones.

The South Korean electronics giant is expected to post a record operating profit of 10.1trn won (£5.8bn) in the third quarter of this year.

Google has reported a profit of $2.97bn (£1.84bn) during the July -September period, marking a 36% rise in profits compared to the same period last year.

Revenue for Google’s third quarter rose 12% from last year to $14.9bn. After subtracting commissions paid to Google's ad partners, Google's revenue stood at $11.9bn.

Huge reserves

Peter Oppenheimer, Apple's chief financial officer, explained that this was partly because it cost more to manufacture the company's new iPads and Macbooks and that prices weren't boosted accordingly.

The company also said it had more than $146.8bn in cash on hand, adding to its considerable reserves.

It indicated that it would be returning more of that money to shareholders in the coming weeks.
Apple's stock briefly slid before recovering in after hours trading. It remains down by more than 13% for the year

However, Apple now heads into the lucrative Christmas period with an updated iPad range and is predicting revenues of between $55bn (£34bn) and $58bn (£36bn) the next time it reports.

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