Apple Earnings Beat Expectations On 31.2 Million iPhones Sold

Apple today announced Q3 fiscal results. Revenues were $35.3 billion vs. $35 billion a year ago (up 1 percent). That was somewhat better than analysts expected. Profit was $6.9 billion vs. $8.8 billion a year ago. Non-US sales contributed 57 percent of revenue.

Here are the device and related sales numbers:

• 31.2 million iPhones (vs. 26 million a year ago). This was more than expected
• 14.6 million iPads (vs. 17 million last year). This was lower than expected
• 3.8 million Macs (vs. 4 million a year ago). This is slightly less than expected
• 4.5 million iPods (vs. 6.7 million a year ago)
• iTunes revenue: $4 billion
• Apple retail stores: $4.1 billion (flat vs. a year ago)
• $146.6 billion in cash ($106 billion offshore)
• Apple issued a dividend of $3.05 per share

Apples biggest market is “Americas,” followed by Europe, Greater China (including Hong Kong and Taiwan) and Japan. Here are the financials:

Apple shares were down for the day, but up in after-hours trading (3.6 percent) following these results.

The following are data, quotes and observations from the earnings call.

Apple CFO Peter Oppenheimer opened the call touting Apple’s success on various fronts, including the enterprise. He offered a number of stats about the quarter:

• iPad sales down 3 percent year-over-year. Mac sales were down 7 percent but this was better performance than the PC industry as a whole.
• Discusses school/education adoption of iPads
• 900K apps; 375K apps for iPad; 50 billion app downloads
• 320 million iCloud accounts
• 408 total Apple stores; 156 outside the US. ($10.1 million average revenue per store)

“We are on track to have a very busy fall.”

Apple CEO Tim Cook:

“We have lots of growth opportunities . . . I don’t subscribe to the common view that the higher end of the smartphone market has hit its peak.”

Re iPad sales decline: “It was not a surprise to us.” He cites Chitika data showing that iPad accounts for 84 percent of tablet web traffic. “If there are other tablets selling I don’t know what they’re being used for.”

Cook says iPhone sales were strong in both developed and developing markets. “We had several regions where iPhone sales actually accelerated from the previous quarter.”

Says that an Apple trade-in program is merely rumor at this point. There was also no suggestion of a rumored, cheaper iPhone.

Asked about China iPhone performance and sales declines, Cook responded that there are 500K mobile developers in China working on iOS apps. Cook added that Apple is going to double the number of stores in China. “China is a huge opportunity for Apple; I don’t get discouraged about a 90 day cycle.”

iPhone 5 is the most popular iPhone “by far.” However iPhone 4 has proven successful and popular with new smartphone owners — “significant growth year over year” — and in developing markets.

“If we focus on great products and do that really, really well the financial metrics will come.”

The financial analyst questions were chiefly concerned with the outlook for Apple in non-US markets, operating margins and related pressures and new products to generate growth.