Apple Reports Increased Profits in Third Quarter

Apple news update: Profit reports from technology company Apple indicate better than expected profits as sales of their flagship product the iPhone spike.

Shares in the technology company Apple rose by almost 5% following the announcement that their third quarter profit reports had returned with better results than was predicted. This has been attributed to a recent increase in iPhone sales and is set to at least delay Apple having to answer questions regarding their slowing growth rate.

The second quarter – the three months leading up to June – showed that Apple made $6.9bn in profit, again because of an increase in iPhone sales. The reports showed that Apple had sold 31.2 million iPhones; exceeding the 26 million that they sold during the same quarter the previous year.

This is the second consecutive year that profits have been down in comparison to the same quarter the previous year; a clear indication that confidence in the company is waning.

Comparisons against the profit however were not so pleasing. It was reported to be down 22% from the same period and its profit margin went from 42.8% to 36.98%. Also, the average sale price was lower – reading $581 as opposed to $608 the year before.

Another positive comparison came from reports of Apple’s revenue: it was up $0.3bn from the year before to read $35.3bn.

With fears that Apple’s growth rate was a little on the slow side, this spike in iPhone sales may help to just calm those asking questions; at least for a little while.

Part of the reason Apple have suffered a dip in their sales in recent years is quite simply down to competition. Rival manufacturers such as Samsung have experienced a peak in popularity and are now the world’s biggest mobile phone maker.

Interestingly, it could be argued that there is a correlation between Apple’s 4% drop in sales in the Chinese market and the respective launch of low-cost smartphones made by Chinese manufacturers.

With research indicating that two-thirds of smartphone sales in China next year will cost less than $200 the Apple iPhone is looking rather expensive. Although there will always be the argument that you get what you pay for, i.e. spending a bit more on the iPhone should ensure you receive a higher quality product, this does not calm the fears of those questioning Apple’s growth rate.

Apple must remain competitive to maintain their presence in the market. Sales of Apple’s tablet, the iPad, dropped by 14% compared with the same quarter last year.

Samsung once again prove to be a threat to Apple as the latter fail to offer their customers any innovative, new products and Samsung take advantage of the gap in the market.

Confidence in the company has dropped significantly and following a peak in shares in September 2012, the company has now seen their shares drop by 40% since then.

Emphasis is now on the creation and development of new products; they cannot survive in the market much longer if they do not make themselves competitive once again. Apple’s CEO Tim Cook has reassured the world that they will be releasing new products soon.

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