Apple’s iPhone 5S a bright spot in overall earnings decline

Apple Inc. has released sales numbers for the fourth quarter of 2013, saying it has sold 33.8 million iPhones, 14.1 million iPads, and 4.6 million Macs.

Compared to the same period last year, the biggest upswing is in iPhones, as Apple sold just 26.8 million of them back then. In iPads, there wasn’t a huge difference, with 13 million sold in the same quarter last year, and 4.9 million Macs sold during that period.

On Monday, Apple CEO Tim Cook, CFO Peter Oppenheimer, and corporate controller Luca Maestri were present for an earnings call with financial analysts after the closing bell. They provided some figures for Q4 of this year, ending Sept. 28, 2013.

While we still don’t know how many iPhone 5S models Apple has sold, compared to the lower-priced 5C, it seems as though the iPhone 5S has been going like hotcakes. Even so, investors didn’t seem too impressed, with Apple’s stock falling about two per cent just after the numbers were released.

The company’s gross margin was down about 40 per cent from last year, with its gross margin now at about 37 per cent, meaning consumers might be shooting for lower-priced options and not paying a premium price for Apple’s more expensive products.

Still, Cook and co. seemed optimistic, saying the company considers its iPhone 5S its high-end offer, while the 5C is really its mid-tier option. The 4S is the entry offer, he said, contrary to what some may have thought about the 5C when it was first announced.

This was also the first time Apple was able to sell the iPhone in China during its first round of sales, thanks to working things out with Chinese carriers and the country’s government, Cook added. Nor were the latest product launches forgotten.

“We believe this will be an iPad Christmas,” he said, citing last week’s announcements around the iPad Air and the iPad Mini. He added iPads have also taken about 94 per cent of market share in tablets used for education, hugely overtaking any other tablet.

Apple's consolidated statements of operations. Click to enlarge.
Apple’s consolidated statements of operations. Click to enlarge.

Still, sales figures weren’t really a surprise, said Carolina Milanesi, an analyst for research firm Gartner Inc.

“Sales came in pretty much as expected with iPads doing OK, considering that many consumers would have been sitting and waiting for the new products launching this quarter and a subsequent price decline of the existing line,” she said in an email.

“The price on iPhone declined only marginally quarter over quarter, showing that the 5S already made a difference for Apple, despite not selling for the full quarter.”

She also noted Apple is taking steps to keep consumers coming back, as it recently announced it would be giving Mac users Mavericks OS X for free. Its iOS7 update was also free for iPhone users.

“Software and hardware together deliver the ultimate Apple experience and as hardware technology is slowing down for the whole smartphone market, a lot of the innovation is delivered through software and apps,” she wrote.

“Not only that, but more importantly, higher engagement of the users – that brings higher loyalty – is given through software. So Apple has taken a necessary step more than a bold one in delivering software for free.”

For the first quarter of 2014, Apple predicts it will hit revenues from $55 billion to $58 billion with operating expenses of between $4.4 billion and $4.5 billion.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Candice So
Candice So
Candice is a graduate of Carleton University and has worked in several newsrooms as a freelance reporter and intern, including the Edmonton Journal, the Ottawa Citizen, the Globe and Mail, and the Windsor Star. Candice is a dog lover and a coffee drinker.

Featured Story

How the CTO can Maintain Cloud Momentum Across the Enterprise

Embracing cloud is easy for some individuals. But embedding widespread cloud adoption at the enterprise level is...

Related Tech News

Get ITBusiness Delivered

Our experienced team of journalists brings you engaging content targeted to IT professionals and line-of-business executives delivered directly to your inbox.

Featured Tech Jobs