Growth slows, profits decline at Apple
Apple sold nearly seven million more iPhones during its fourth quarter, but total revenue growth was up only 4.2% and profits were below prior year levels.
Total revenue for the fourth quarter ended September 28, increased to $37.5 billion from $36 billion while net income declined to $7.5 billion, or $8.26 a share, from net income of $8.2 billion, or $8.67 a share. The company’s gross margins also took a hit, declining to 37% of sales from 40% in the year ago period.
The company sold a record 33.8 million iPhones during the fourth quarter compared to 26.9 million in the year ago quarter. Growth of iPads was anemic however with sales of 14.1 million iPads up marginally from 14 million last year. Sales of Macs declined to 4.6 million units from 4.9 million.
The lack of growth, compressed margins and drop in profitability didn’t discourage Apple CEO Tim Cook and the company said it expects to see strong holiday sales.
“We’re pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34 million iPhones,” Cook said. "We’re excited to go into the holidays with our new iPhone 5c and iPhone 5s, iOS 7, the new iPad mini with Retina Display and the incredibly thin and light iPad Air, new MacBook Pros, the radical new Mac Pro, OS X Mavericks and the next generation iWork and iLife apps for OS X and iOS.”
The company also announced plans to give shareholders and early gift, announcing a $3.05 a share dividend to shareholders of record on November 11.
“We generated $9.9 billion in cash flow from operations and returned an additional $7.8 billion in cash to shareholders through dividends and share repurchases during the September quarter, bringing cumulative payments under our capital return program to $36 billion,” said Peter Oppenheimer, Apple’s CFO.
For the company’s first quarter which includes the holiday season, Apple said it expects sales to total between $55 billion and $58 billion and gross margins in the range of 36.5% and 37%.