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July 23, 2014

Fiscal Third Quarter Results From Apple Are In

On July 22, 2014, Apple released the results of its second calendar quarter, which is its fiscal third quarter earnings. It seems that the iPhone is the key component that continues to make the company strong. A great number of its rivals, such as Samsung, are beginning to see a saturation point which is severely hampering sales. This does not seem to be the case with Apple.

The third quarter results show that Apple sold 35.2 million iPhones, which represents an increase of 13 percent from the same time a year ago. Although the total was slightly below analysts’ estimateswho had expected to see 36 million iPhones being sold, they were not off by much.

In yesterday’s live streaming of its third quarter 2014 financial results conference call, Apple CEO, Tim Cook mentioned that they were seeing very strong positive results from their BRIC sector. This is an area that includes Brazil, Russia, India and China. You may recall that at the beginning of the year Apple signed an agreement with China Mobile to sell its devices in China. Since China Mobile is considered to be the world’s largest carrier, it has been selling more than a fair share of iPhones; we can see why Apple is showing strong earnings.

Overall, Apple reported a profit of $7.75 billion for the quarter that ended on June 28, 2014. If there was any question as to the growth that Apple is experiencing, this represents an increase from last year’s third quarter of $6.9 billion. Revenue was $37.43 billion, which is up from $35.32 billion in same the quarter a year ago. According to a survey of analysts by Thomson Reuters, Wall Street analysts had expected to see revenue totaling $37.93 billion.

Another factor that added to a strong third quarter was favorable sales of Macs. Apple reported that it sold 4.4 million Macs, which is significantly higher than the 3.8 millionsold last year. In fact, analysts were predicting that Mac sales would only be around 3.9 million.

In response to this, Tim Cook said, “Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters. We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce.”

One feature that Cook mention during Tuesday’s conference call was the functionality between iOS 8 and OS X Yosemite. It seems that they will have a lot more interaction than ever before. According to Cook, you will be able to start creating an E-mail on your iPhone, using iOS 8 and seamlessly be able to complete it and send through your Mac. In fact, soon you will be able to make and answer calls sent to your iPhone on your Mac.

Unfortunately, it seems that there was a drop in iPad sales. The company sold 13.3 million iPads, which represents a drop of 9 percent from the year-ago quarter. Analysts were off when they predicted that Apple would sell an average of 14.4 million iPads. The small dip in iPad sales is not so bad because it is offset by higher iPhone sales. Apple’s gross profit margin was 39.4 percent, up 2.5 percentage points from the same quarter a year ago. 

Luca Maestri, who is Apple’s CFO, said “We generated $10.3 billion in cash flow from operations and returned over $8 billion in cash to shareholders through dividends and share repurchases during the June quarter. We have now taken action on over $74 billion of our $130 billion capital return program with six quarters remaining to its completion.”

All of this has led Apple’s board of directors to declare a cash dividend of $0.47 per share of the Company’s common stock. The dividend will be payable on August 14, 2014, to shareholders of record as of the close of business on August 11, 2014.





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