Apple Inc. turned in another whopper of a quarter, with more than $10 billion in profit, but sales of its latest smartphone -- the iPhone 6 -- disappointed by failing to meet the most optimistic analyst projections. It’s a product that Apple has increasingly relied on, even as it looks to gain momentum with its newest gadget, the Apple Watch.
Apple posted earnings of $10.7 billion on $49.6 billion in revenue, edging past analyst projections of $10.3 billion in profit and $49 billion in revenue. Apple also beat its own guidance from April, which placed revenue at $46 billion to $48 billion and gross margins at 38.5 percent to 39.5 percent.
“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,” Apple CEO Tim Cook said in a news release. “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.”
Apple's iPhones, led by the iPhone 6, drove most of its revenue, with 47.5 million iPhones sold in the quarter, up 35 percent from the 35.2 million units sold in the same period of the previous year. Yet as good as those numbers are, they came in lower than the 50 million target analysts had put on iPhone sales. Still, it was an unusually strong June quarter for Apple, especially since many Android manufacturers tend to launch their new devices during this time.
"The main feedback that we got from industry participants is Apple sales have been so strong that they stole away from high-end Android sales," said Canaccord Genuity Managing Director Michael Walkley, in a previous interview. "They usually wait until the June quarter to launch their product and there just wasn't the high-end demand for Android given the very strong sales that continue for the iPhone 6 models."
The U.S. is still Apple’s largest market, but China is becoming an increasingly strong No. 2, pulling in $13.2 billion in revenue, up 112 percent from the $6.2 billion in the same period in 2014.
Apple’s Macs continued to buck the trend of the rest of the PC market, with marginal growth to 4.8 million, up 9 percent from the 4.4 million Macs sold in the same period last year. For Apple’s iPads, the story has hardly changed, with unit sales falling to 10.9 million, down 18 percent from the 13.3 million units sold in the same period last year. Overall, the global tablet market is expected to fall to 221.8 million units, down 3.8 percent from 2014 shipments, according to International Data Corp.
Apple has remained silent on the specifics of the Apple Watch. However, its “other products” category surged to $2.6 billion, up 49 percent from the same period last year. Analysts estimate Apple shipped between 3 million and 5 million watches in the June quarter. Since the Apple Watch launch in April, the company has expanded its sales to more countries and in-store pickups from the original nine launch countries and markets.
Apple’s fiscal 2015 fourth-quarter guidance places revenue at $49 billion to $51 billion and gross margins at 38.5 percent to 39.5 percent. The next dividend of 52 cents a share will be payable Aug. 13 to shareholders of record by the close of business Aug. 10.