Apple reports huge profit but sales disappoint

iPhone and iPad sales were both slower than expected

Apple has racked up another hugely profitable quarter on sales of iPhones and Macintosh computers, though its revenue growth was slower than expected.

Apple on Tuesday reported a profit of US$7.7 billion for the April-to-June quarter, up 12 percent on the same period last year and ahead of analyst estimates of $7.5 billion, according to Thomson Reuters.

Revenue was $37.4 billion, 5 percent higher than last year and a new record for Apple, but it was still below analyst expectations of $38 billion. Apple had told investors to expect revenue of between $36 billion and $38 billion for the quarter.

Apple CEO Tim Cook attributed the revenue growth to "strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem."

The company sold 35.2 million iPhones in the period, another quarterly record, though analysts had been expecting sales of 35.9 million units.

IPad sales continued their slide, to 13.3 million, down 9 percent from a year earlier and just over a million units below analyst estimates.

"IPad sales met our expectations but we realize they didn't meet yours," Cook said on a conference call. He blamed inventory problems and slower demand for tablets overall among consumers in the U.S. and Europe.

Mac computers were a bright spot. Apple sold 4.4 million of them in the quarter, up 18 percent from the same period in 2013.

Apple's growth was strong in Greater China, where China Mobile began selling the iPhone earlier this year. Revenue in the country surged 28 percent, far outpacing other markets, to $5.9 billion.

"I'm especially happy about our progress in the BRIC countries," said Cook, referring to Brazil, Russia, India and China. Sales of iPhones jumped 55 percent in those markets combined, he said.

Apple expects revenue for the current period, from July to September, to be between $37 billion and $40 billion. In the same quarter last year, Apple recorded revenue of $37.5 billion.

"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," Cook said in a statement.

Apple is expected to announce a successor to the iPhone 5s, presumed to be the iPhone 6, in the coming months. Apple typically launches iPhone models in mid-September, in time for the holiday shopping season.

While it's yet to announce details of the phones, The Wall Street Journal has reported that Apple will launch two models: one with a 4.7-inch screen and one with a 5.5-inch screen. The current iPhone has a 4-inch screen, and internal Apple studies, highlighted during a recent court trial, have shown larger screens are the single most wanted feature for future models.

Apple executives are scheduled to provide more details on the quarter during a conference call scheduled for 2 p.m. Pacific time.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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