Apple Reports Fourth Quarter Results
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
iPhone sales reach record level, company predicts new iPad releases will be prominent this holiday season
Today, Apple announced its fourth quarter financial results for the fiscal quarter ending September 28th. Q4’13 results revealed the company earned $37.5 billion in revenue, an increase from Q4’12 when the company announced $36 billion in revenue. Net profit for the 2013 quarter amounted to 7.5 billion. The company says that 60 percent of the quarter’s revenue came from international sales. However, the company also reported that iPhones sales reached 33.8 million, a record number for this quarter and 6.9 million more units sold than the 26.9 million in Q4’12. In addition to iPhones, the company sold 14.1 million tablets and 4.6 million mac computers during Q4’13.
In the future, Apple is projecting that Q1’14 will be stronger than Q4, taking into account the upcoming holiday season. The company projects it will earn between $55 billion and $58 billion in revenue, with gross profit margins equaling 36.5 to 37.9 percent.
Expected Gross Profit Margin Draws Attention
However, the company’s expected gross profit margin for the December quarter has analysts a bit concerned, according to ISI analyst, Brian Marshall. Analysts were calling for a gross profit margin of 37.9 percent in Q1’14. The company’s outlook was the first topic of conversation during the post-earnings conference call, during which CFO Peter Oppenheimer said that the margin guidance is facing pressure because Apple is deferring revenue. Walter Piecyk, an analyst at BTIG, says, “There was some consternation about the margin guidance initially, but the company addressed the impact from changes in revenue recognition which alleviated some of those concerns.”
While the company’s shares have fallen more than 10 percent in the last year, which analysts attribute to a lack of innovative new products to rival the iPhone and iPad, Apple CEO Tim Cook remains optimistic about the future. During the conference call Monday, Cook suggested that there are new products in the works for Apple. He says, “We see significant opportunities ahead of us in both current product categories and new ones.”
Company Hopeful About New Products
In fact, Apple recently announced the release of several new product offerings that will be key players in the company’s holiday sales. Two of the most talked about releases include the new iPad mini with Retina Display along with the iPad Air. These new releases come at a time when analysts are increasingly pessimistic about the growth in tablets. Many analysts expect few surprises from this technology and are concerned about a decrease in unit sales reported during Apple’s third quarter—and indeed, a general decrease worldwide in tablet sales. Similarly, considering increasing competition from cheaper Samsung and Amazon devices, there is a lot of pressure riding on Apple’s new products to earn holiday shoppers’ attentions.
Regardless of analyst pessimism over the fate of tablets, these new iPad releases are expected to do well. For instance, Canto Fitzgerald analyst, Brian White said in a note, “We believe this will be the most important refresh of the iPad franchise for Apple since the first iPad went on sale on April 4, 2010. We believe this iPad launch will help put a bottom in the iPad sales cycle that reached negative territory in Q3’FY 13 for the first time in the history of the iPad.”
Cook also remains optimistic, saying, “Both of these products are going to do really well. I think it’s going to be an iPad Christmas.” While the CEO acknowledges that only time will tell, he and the rest of the company remain confident that these new releases will help make for a stronger holiday season and first quarter.