Apple’s revenue is up, but profits fall

Still sat on a massive pile of cash, though
Darren Allan

April 24, 2013

Apple has revealed its latest financial results for fiscal Q2 2013, the quarter which ran up to the end of March, and while revenue hit new highs, the company’s actual profits slumped.

Profit margins being down is a first for Apple in a long time – although analysts were expecting something like this, and that’s the reason why Apple’s share price has been falling in recent times.

In fact, it’s down from a high of $705 in September of last year, to the $400 mark now, which is quite a crash since the launch of the iPhone 5. However, following the fiscal results Apple shares have risen slightly (2 per cent).

Total revenue was $43.6 billion, which was up from $39.2 billion the same time last year. However, profit was only $9.5 billion, down from $11.6 billion in the same quarter in 2012 – and that isn’t just a slight drop, either.

Both iPhone and iPad sales numbers were still up, but the iPhone only marginally at 37.4 million units compared to 35.1 million sold the previous year. iPads were up strongly from 11.8 million to 19.5 million, with Mac computer sales a touch down at “just under 4 million,” compared to bang on 4 million units in Q2 2012.

So where is Apple’s profit margin leaking away? Slower iPhone growth, and the fact that folks are looking to buy the budget models of the older iPhones, iPads, and iPods, rather than the latest device. Particularly given that the latest device can be disappointingly incremental in terms of technological advances.

The cheaper priced iPad mini will doubtless have taken a chunk out of iPad profits, too, despite the units shifted number being very healthy.

Tim Cook pointed to record quarterly revenue, and cash generation. Apple’s CFO, Peter Oppenheimer, commented: “Our cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion.”

That is indeed a lot of money to be sitting on, but Apple needs to find some way of investing it to ensure its stock, and future prospects, don’t further erode.

Because at the moment, the general buzz around Apple is leaning on the negative side. A new product, and associated hype-storm, is what’s required – whether that’s a smartwatch, or an Apple HDTV, or something entirely different, we shall have to see.

But Apple certainly needs something to crow about this year, and an iPhone 5S, or indeed a budget iPhone – if Apple will risk cutting those profit margins further – won’t be it.


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