October 29, 2013
Despite 150 Million iPhone Sales In 2013, Apple Profits Slip
Michael Harper for redOrbit.com - Your Universe Online
IPad and iPhone sales were up this year over last year, but Apple reported lower year-over-year profits yesterday during its fourth quarter earnings call. All told, the company reported $7.5 billion in profits on $37.5 billion in revenue, a year-over-year increase. In Q412, Apple earned $8.2 billion in profits on $35.9 billion in revenue.
ITunes also continued to be a significant contributor to Apple’s numbers, adding a total of $4.26 billion in the last quarter for a total of $16 billion in 2013. Finally, Mac sales declined year-over-year and quarter-over-quarter, a trend which Apple’s Chief Financial Officer Peter Oppenheimer blames on a dying PC market. Yet as Mac sales continue to decline — selling 16.5 million in 2013 versus 18.15 million in 2012 — their piece of the market share continues to grow.
“We’re off to a great start in fiscal year ’14. We continue to be very confident in Apple’s future, and we see significant opportunities ahead of us in both current product categories and new ones,” said CEO Tim Cook in his opening remarks to investors, as cited by MacWorld.
“We’re participating in large and growing markets…We’re continuing to invest in R&D and distribution, we’re expanding our geographic coverage, and we are building upon a phenomenal (but still very young) retail store presence,” Cook added.
As they’ve only been on the market since mid-September, Cook had plenty to say about the iPhone 5S and iPhone 5C. Though it was previously thought to be Apple’s entry-model iPhone, Cook says the colorful plastic iPhone 5C is actually Apple’s mid-level phone.
“I realize that some people were reading rumors that our entry-level iPhone was the 5C, but that was never our intent. Entry level phone was iPhone 4S,” said Cook. He didn’t address, however, the rumors of lagging 5C sales.
Though the company proudly announced it had sold nine million iPhones during opening weekend, they did not break down these sales by device, and it’s since been assumed the bulk of those nine million were iPhone 5S or iPhone 4S.
Since opening day, iPhone 5S supply has struggled to meet demand, especially where the new gold iPhone is considered. Cook only briefly acknowledged this “significant” backlog before mentioning the company's goal to make the 5S available in 100 countries by the end of the calendar year. Cook also mentioned the new iPhone’s 64-bit architecture, calling it the “front end of a long roadmap.”
Though iPad sales increased from 58.3 million to 71 million, the revenue Apple earned from these tablets did not reflect this same type of growth. This is likely due to the tech giant's introduction of the iPad mini last year, a tablet which started at $329. Apple also recently announced improvements to its iPad line, including a thinner and lighter iPad Air and a new iPad mini with a Retina Display. It’s expected these tablets will sell very well during the upcoming holiday quarter, thus improving sales and revenue numbers.
Finally, while there are other portions of Apple’s business that can fluctuate quarter after quarter, there is one business area that has been on a steady incline since 2011: iTunes, Software and Services. Apps, books, music and more brought in $2.14 billion in revenue at the beginning of 2011. According to last night’s numbers, this portion of Apple’s business is bringing in $4.26 billion after a slight slip in 3Q13. IOS devices such as iPad, iPhone and iPod Touch are huge driving factors in these sales numbers, and even slight, seasonal fluctuations in these numbers seem to not impede iTunes revenue.