Apple results: Don't expect new products until Fall

Apple CEO Tim Cook continued to talk about "new product lines" the company "can't wait" to share, but these promises couldn't disguise relative flatness in the company's Q3 results.


Hitting expectation

That's not to say they were awful -- Apple's biggest surprise for Wall Street were that results were in the middle of its customarily conservative expectations. Apple usually exceeds these.

Revenue came in at $37.4 billion against company guidance of between $36 billion and $38 billion. Gross margins reached 39.4 percent in contrast to the 37-38 percent the company had predicted. In the event Q3 margins hadn't exceeded expectation the company would have delivered to the low side of revenue guidance.

Apple achieved quarterly net profit of $7.7 billion, up from $6.9 billion in the year ago quarter. Reflecting the challenging international economic outlook, international sales accounted for 59 percent of the quarter’s revenue, down from 66 percent in the year ago quarter, with the exception of BRIC nations.

Apple admitted that iPhone, Mac and "ecosystem revenue" fuelled its quarter. Cook said: “We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce,” he said.

No products yet

It seems we will be waiting at least until Q1 FY2015 for Apple's "new products and services" to land. Apple's guidance for its fiscal 2014 fourth quarter remains relatively flat with revenue between $37 billion and $40 billion.

It seems unlikely these predictions would be so conservative if Apple expected to deliver new product momentum within the current quarter.

This suggests Apple intends driving its business forward in the current quarter with its customary Mac refresh cycle and a focus on service/ecosystem income.

(As an Appleholic, I'd note that the iPad range now seems to need a refresh in order to prevent further decline, though Cook assures that this isn't a worry to the company.)

BRIC in the wall

Looking beneath the top line numbers, Apple's quarter has clearly been driven by success in the BRIC markets, particularly Brazil, India, Russia and especially, China -- iPhone sales climbed 48 percent in the BRIC, Cook told the WSJ. China (including Hong Kong and Taiwan) revenues climbed 28 per cent to $5.94 billion.

iPhone and Mac sales told the rest of it story while iPad sales declined 9 percent year-on-year. iPod sales are now in steep decline (down 36 percent year-on-year).

Mac and iPhone sales saw 35.2 million iPhones and 4.4 million Mac shift. Despite some decline, iPad sales hit 13.2 million, down from 14.6 million in last year's quarter. You can see some useful visual representations of Apple's numbers here.

Cook discussed the company's achievements across the quarter with analysts, but many observers complained the discussion featured an extensive recap of events at WWDC.

That may be a fair criticism, but it reinforces the importance of iOS 8 and OS X Yosemite have to the company's future product release plans.

Cook has confirmed that Apple has completed 29 acquisitions since the beginning of FY2013, including 5 in the just gone quarter - not including the Beats purchase. More notes from the fiscal call available here.

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