Apple Profit Tops Estimate

(RTTNews) - Apple Inc. (AAPL) said Tuesday after the markets closed that its third quarter profit fell 22% from last year, hurt mainly by weaker margins even as revenue grew slightly on the back of strong sales of its iPhones.

However, the company's quarterly earnings per share breezed past Wall Street expectations and its quarterly revenue narrowly beat analysts' estimate.

At the same time, the company forecast fourth quarter revenue slightly below analysts' current consensus estimate.

"We are especially proud of our record June quarter iPhone sales of over 31 million and the strong growth in revenue from iTunes, Software and Services," said Tim Cook, Apple's CEO. "We are really excited about the upcoming releases of iOS 7 and OS X Mavericks, and we are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014."

Apple also declared a cash dividend of $3.05 per share, payable on August 15 to shareholders of record on August 12.

Apple shares are currently gaining 4.30% in after hours trading after closing the day's regular trading session at $418.99, down $7.32 or 1.72%. The company's shares have fallen 40.57% since reaching their all time high of $705.07 on September 21, 2012.

Apple's results, particularly the iPhone sales figures, came as a surprise to many, since analysts had already predicted that smartphone sales were nearing saturation.

The company sold 31.2 million iPhones in the third quarter, up 20% from 26.0 million in the same quarter last year.

However, iPad sales for the quarter slumped 14% to 14.6 million units from 17.0 million a year ago.

The company sold 3.75 million Macs in the quarter, down 7% from 4.02 million in the year-ago quarter.

Third quarter sales of the company's iPod music players dropped 32% to 4.57 million units.

The company's America revenue surged 12% year-over-year, while Europe revenue fell 9% and Greater China revenue slipped 14%. Japan revenue surged 27%, while rest of Asia-Pacific revenue dropped 18% from a year earlier.

Nevertheless, investors are waiting for a major product launch in the near future that could boosts Apple's sagging stock price. The last new product line Apple launched was the iPad in 2010.

Last month, Apple unveiled iOS 7, the much-awaited revamp of its mobile operating system which the tech giant touts as one of the most significant updates. The company also announced iTunes Radio, its free Internet radio service.

For the third quarter ended June 29, 2013, the Cupertino, California-based computing and electronics company reported net income of $6.9 billion or $7.47 per share, compared to $8.8 billion or $9.32 per share for the year-ago quarter.

On average, 48 analysts polled by Thomson Reuters expected the company to earn $7.32 per share for the third quarter.

This marks the second consecutive quarter of year-over-year profit decline.

Gross margin for the quarter shrank to 36.9% from 42.8% in the prior year quarter, while operating margin for the quarter narrowed to 26.0% from 333.0% a year earlier.

Revenue for the third quarter grew 0.6% to $35.32 billion from $35.02 billion in the same quarter last year. Forty-four analysts had a consensus revenue estimate of $35.01 billion for the third quarter.

Looking forward, the company forecast fourth quarter revenue of $34 billion to $37 billion. Analysts currently expect the company to post revenue of $37.11 billion for the fourth quarter.

Gross margin for the fourth quarter is expected to be between 36% and 37%.