Apple fiscal Q3 2014: $37.43bn revenue; sales of 35.2m iPhones, 13.3m iPads

Apple today announced its financial results for the third quarter of its 2014 fiscal year (the second quarter of the calendar year). The company reported revenues of $37.43bn, bringing in net profitof $7.7bn. 

Here are some of the highlights from today's announcements: 

  • Sales of iPhones were roughly in line with expectations - 35.2m were sold, just slightly below the anticipated figure of around 36m. Even so, iPhone sales were up 12.8%
  • iPad sales were below expectations - 13.3m were sold, although investors and analysts were expecting this figure to be in the 14 to 15 million range. 16.35m iPads were sold last quarter, so this represents a significant drop 
  • 4.4m Macs were sold - an increase of 18% 
  • Earnings per share of $1.28 - a little above the predicted figure of $1.23 
  • Revenues were slightly below expectations of around $38bn
  • ​Gross margin of 39.4% (up from 36.9% in the same quarter last year)

Apple outperformed the market with its Mac sales - that 18% increase is an incredibly strong performance in a broader PC market that is still struggling. 

Tablet sales continue to be slightly problematic for Apple, despite the company essentially defining this segment of the market with its seminal iPad. After massive sales which its competitors could only dream of, this is the second consecutive quarter in which iPad sales have dropped. Nonetheless, the company is still selling iPads in large numbers, despite this decline, and with considerably higher margins than other manufacturers can achieve. 

The company issued guidance for the ​next quarter, anticipating revenue of around $37bn to $40bn and gross margin of roughly 37-38%. Next quarter will be a big one for Apple, with major new products expected to launch, including larger iPhones, ahead of the holiday season. Rumours also persist that the company will finally makes it long-awaited entry into the wearables market, but this is not expected to launch until October

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iPad sales are down because you don't need to upgrade every year and because people pass their old iPads on. Apple has a really good 30 billion iPad problem!

As far as I am concerned they are going to drop slightly because everyone has bloody got one!!
There will be the obvious ones for broken replacement but its going to get to the stage its going to plateau because everyone has one who is going to get one.

"Apple outperformed the market with its Mac sales - that 18% increase is an incredibly strong performance in a broader PC market that is still struggling. "

So apple marginally increases Mac sales which are trailing PC sales by a huge ratio anyway and this is great news, Windows Phone is vastly increasing sales by a far greater number and this continues to be bad?

How does Apple manage to continue to spin and twist their bad number as if they are fantastic. Mac sales trail PC sales by a margin of about 1:8 if not worse..

So where do they even get that PC sales are down? Is that due to OEM sales? If so thats no news...A lot of people keep buying new parts to swap out but meanwhile I doubt much of Apple owners are doing it.

PC OEM sales will drop as long as they keep making crap.

alwaysonacoffebreak said,
So where do they even get that PC sales are down? Is that due to OEM sales?
They are, but at around 225M units/yr they're still way ahead of whatever Apple is selling and will be forever. Macs are really just custom build mid-high range PCs with a very steep price tag running a customized freeBSD variant as OS. You can run the same OS just as well on home built hardware at about half the price using similar of not the same components.

But Macs are really irrelevant today. Apple is a ship floating on one egg and that is iOS.. The egg cracks (someday sooner than later) and they're done. The story and attempt at marketing hype is great and all but they will _never_ catch MSFT in the enterprise market especially now that MSFT would seem to have their multiple baskets with multiple eggs all lined up and ready to go full steam ahead to further tighten their grip on that market. I see both Apple and Google try and throw another antitrust accusation in their way to tray and hold MSFT back again. It's important to realize that MSFT has been on a leash for many years and this is one of the (main) reasons why others were able to jump ahead.

Edited by paulheu, Jul 23 2014, 4:44pm :

Apple: Revenues $37.43 billion: Earnings $7.70 billion: Margin: 21%
Microsoft: Revenues $23.38 billion: Earnings $6.48 billion: Margin: 28%

The numbers don't lie. Microsoft is a significantly more profitable company than Apple.

Major_Plonquer said,
Apple: Revenues $37.43 billion: Earnings $7.70 billion: Margin: 21%
Microsoft: Revenues $23.38 billion: Earnings $6.48 billion: Margin: 28%

The numbers don't lie. Microsoft is a significantly more profitable company than Apple.


What's more amusing is the people that say Apple is dying because they are losing market share..

The numbers don't like, Apple couldn't care less if they have 1% or 100% of the market, so long as every year the sales go up along with the profits. iPads are down, but will be up again next release cycle, as they always do.

iPads may be approaching their saturation point. Until the existing users need to replace theirs, sales will likely never be as high as they were.

Amazing results. It just proves the risk/reward model of high margins. If you nail it, you are laughing all the way to the bank, but the risk is if your sales drop, it hits you harder than if you run a high turnover/small margin business

I find it a little funny that Neowin and The Verge are comparing iPad sales to last quarter's, while iPhone sales are being compared to the same quarter a year ago (which we should be doing). Both iPhone and iPad sales are down compared to the last quarter, but the iPad is the only one being dinged for it.

Its down close to 9% year to year. In case you wanted the number.
I think the reason it is being reported is it was expected to be more sold, but still a drop quarter to quarter.

Slightly funny that Microsoft technically sold more phones than Apple this quarter. Granted, it was 30 million low profit dumb phones and 5.8 million Lumias.

Competition is always good for consumers. It keeps everyone on their toes. It gives us consumers a choice. This is basic knowledge. I'm not sure how you can argue against that.

Edit: What dead.cell just said ^

JHBrown said,
Competition is always good for consumers. It keeps everyone on their toes. It gives us consumers a choice. This is basic knowledge. I'm not sure how you can argue against that.

Edit: What dead.cell just said ^

Apple eats up most of the profits on smartphones from the rest of the industry because it gets more carrier subsidies than any other OEM. Apple gets to sell its phone to end users for the exact same price as other OEMs, while Apple charges carriers $100 to $200 more per device than other OEMs do. All of the subsidies are passed on equally to all subscribers whether they use an iPhone or not. This is horrible for non-iPhone users and bad for competition.

TMYW said,

Apple eats up most of the profits on smartphones from the rest of the industry because it gets more carrier subsidies than any other OEM. Apple gets to sell its phone to end users for the exact same price as other OEMs, while Apple charges carriers $100 to $200 more per device than other OEMs do. All of the subsidies are passed on equally to all subscribers whether they use an iPhone or not. This is horrible for non-iPhone users and bad for competition.

Android seems to be doing just fine!

shockz said,

And yet every unique feature Apple comes out with in a phone is replicated somewhere else. I'd say that's good competition.

What unique feature? Like NFC? Like microSD slot? Like large displays? Like removable batteries? Like eye-tracking sensor? Yeah, I forgot about all of those!

LOL!

JHBrown said,
Competition is always good for consumers. It keeps everyone on their toes. It gives us consumers a choice. This is basic knowledge. I'm not sure how you can argue against that.

Edit: What dead.cell just said ^


Not only that, but Microsoft saw growth with Bing, which is the default search engine for iOS. Surely, it helps contribute to the growth of Microsoft, coupled with the promotion of 365 being available on iOS and a version of Office built just for the iPad.

Microsoft is only Apple's number one software developer. Wanting Apple to fail is basically wanting Microsoft to fail, along with the many companies that thrive from their partnership and exist solely because of the products they provide Apple and their customers with.

TL;DR: The business world couldn't care less about the petty arguments. Money talks.

JHBrown said,
Android seems to be doing just fine!

What is this company called "Android"? How much did it make in profit last quarter?

TMYW said,

What is this company called "Android"? How much did it make in profit last quarter?

You know what I mean. Come on man!

JHBrown said,
You know what I mean. Come on man!

Actually, I don't know what you mean.

Anyway, let me frame this a different way. Do you think it's healthy for technology and the economy as a whole that a company has so dominated a single technology sector that it's able to accumulate a $170 billion cash hoard and become the highest market-capitalized company in the world largely due to sales of a single product? Try to digest that for a second. A single product that is largely a non-essential, nice-to-have product (Yes, you can live without a smartphone. You did it before.) is the primary reason Apple is $570 billion company, employing a mere 80K employees. That's over twice the market cap of a company like Wal-Mart that employs over 2 million workers or GE that employs over 300K workers.

TMYW said,

Actually, I don't know what you mean.

Anyway, let me frame this a different way. Do you think it's healthy for technology and the economy as a whole that a company has so dominated a single technology sector..........................due to sales of a single product?

You mean like Microsoft's Windows?

JHBrown said,
You mean like Microsoft's Windows?

At least it lets me do what I want.

If I want some damn spyware on my machine, that's my choice! :p

Raa said,

At least it lets me do what I want.

If I want some damn spyware on my machine, that's my choice! :p

2005 called, and it wants its joke back.

This is 100% true. This is the main reason I dislike Apple.

If cellular subsidies go away, Apples' revenue will crumble. Just look at every Apple product that is not subsidized. They sell much, much less in volume than their competitors do. Every single one.

dead.cell said,

Competition is good. Do we not understand basic economics or what?

Stop trying to use common sense to get in the way of pointless fanboyism and trolling.. sheesh..

Raa said,

I wasn't really kidding...

Then you must be doing some REALLY idiotic things on your computer, and no OS can be protection from that level of idiocy.

Or you're just using hyperbole like most anti-Microsoft trolls do.

TMYW said,

Then you must be doing some REALLY idiotic things on your computer, and no OS can be protection from that level of idiocy.

Or you're just using hyperbole like most anti-Microsoft trolls do.


Neither.
For point 1 : I see a silly things on any device.
And point 2 : No. I'm just pro-freedom.

Raa said,

Neither.
For point 1 : I see a silly things on any device.
And point 2 : No. I'm just pro-freedom.

I don't care what you are. I'm telling you what you sound like when you make hyperbolic statements.

Win4Ever said,
4.4m Macs were sold - an increase of 17% ??? How is that possible? Everyone is saying PC is dead.

Not exactly dead, but the PC market *is* down by 2% . The Mac is the exception there.

iPads won't make big sales till they start making some of them obsolete. iPad 2 will still be able to run iOS 8. They were still selling them earlier this year until they replaced them with the iPad 4 for the entry level full sized iPad.

iPad sales down yet again. How long until hack tech journalists start preaching "The iPad is Dead"? They didn't hesitate to do it with PCs when the PC sales were down by a much smaller percentage than 9.5%.

The iPad isn't anywhere close to being dead.. Especially with IBM coming in.. They are down, because hasn't been a release cycle

Lord Method Man said,
iPad sales down yet again. How long until hack tech journalists start preaching "The iPad is Dead"? They didn't hesitate to do it with PCs when the PC sales were down by a much smaller percentage than 9.5%.

Apple shot its load with the iPad. They've essentially maxed out the thinness and resolution.There's nowhere left to go with it unless they want to start producing 7" and 12" devices. The lower sales should be awfully disconcerting to Apple execs.

Lord Method Man said,
iPad sales down yet again. How long until hack tech journalists start preaching "The iPad is Dead"? They didn't hesitate to do it with PCs when the PC sales were down by a much smaller percentage than 9.5%.
iPad sales are only down because it's at the end of a release cycle. Those numbers shoot right back up when a new product is released. Furthermore, sales will inevitably slow down as everyone and their momma's have an iPad these days.

Lord Method Man said,
iPad sales down yet again. How long until hack tech journalists start preaching "The iPad is Dead"? They didn't hesitate to do it with PCs when the PC sales were down by a much smaller percentage than 9.5%.

"Down" doesn't mean "dead"

The iPad is down 9.5% from this same quarter a year ago. But they still sold 13.3 million iPads in 3 months. That's over 140,000 every day... and they make a healthy profit on every one.

They might be knocked down to 2nd place behind Samsung in tablet sales... but Apple would still be far ahead of Asus, Lenovo and Amazon.

The time for Apple to panic would be when they sell ZERO iPads... but I can't imagine that happening in my lifetime.

JHBrown said,
iPad sales are only down because it's at the end of a release cycle. Those numbers shoot right back up when a new product is released. Furthermore, sales will inevitably slow down as everyone and their momma's have an iPad these days.

The sales are down year-over-year, and it's the second consecutive quarter that that's been the case.

TMYW said,

The sales are down year-over-year, and it's the second consecutive quarter that that's been the case.

It was explained nicely above by Michael Scrip ^

Referring to Michael's 3rd statement in his above post: his explanation sucks. The time for Apple to panic is when their iPad sales are down close to 50%. Michael is dreaming.

jesseinsf said,

Referring to Michael's 3rd statement in his above post: his explanation sucks. The time for Apple to panic is when their iPad sales are down close to 50%. Michael is dreaming.

How about this:

iPad sales are down compared to iPad sales the same quarter a year ago.

But the iPad is still the best selling tablet line in the world.

Maybe that's why tech journalists aren't preaching "The iPad is Dead"