Is the Apple Watch a success?

Apple CEO Tim Cook says the Apple Watch is off to “a great start,” although the company did decline to provide specific sales figures for the watch in its third quarter report on Tuesday.

The company instead reported quarterly revenue of $49.6 billion and quarterly net profit of $10.7 billion, or $1.85 per diluted share, for the third quarter ended June 27. These results compare to revenue of $37.4 billion and net profit of $7.7 billion, or $1.28 per diluted share, in the year-ago quarter. Gross margin was 39.7% compared to 39.4% in the year-ago quarter. International sales accounted for 64% of the quarter’s revenue.

The growth was fueled by record third quarter sales of iPhone and Mac, all-time record revenue from services and the successful launch of Apple Watch, the company said.

“We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch,” said Cook. “The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.

“In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent,” said Luca Maestri, Apple’s CFO. “We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.”

Apple is providing the following guidance for its fiscal 2015 fourth quarter:

• 
  revenue between $49 billion and $51 billion


• 
  gross margin between 38.5 percent and 39.5 percent


• 
  operating expenses between $5.85 billion and $5.95 billion


• 
  other income/(expense) of $400 million


• 
  tax rate of 26.3 percent

In terms of the Apple Watch,the product may follow a well-worn script for Apple products: At first the device is too new and too expensive and people wonder whether they really need it. Over the next couple of years Apple makes the device even better. Eventually people figure out they can't live without the device, Apple lowers the price, and sales explode.

That script is also how Apple's retail store may have become so successful. Read what the Washington Post wrote about how Apple stores took over the world by clicking here.