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Apple’s iPhone drives record quarterly profits

Warwick Ashford

Apple has reported revenues of $37.4bn and profits of $7.75bn for the quarter ended 28 June 2014, an increase of 12% compared with the same period last year.

Tim Cook, Apple chief executive, said the record profits for the quarter were mainly driven by strong sales in iPhones and Macs.

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The company sold 35.2 million iPhones from March to June, an increase of 13% from the same period in 2013.

Apple reported strong growth in Brazil, Russia, India, South Africa and China, where iPhone sales rose by 48%.

Thanks to a distribution deal with China Mobile, which now sells iPhones to its customers, revenues surged 28% in China to nearly $6bn. Performance in America was flat, but Europe grew 6% to $8bn.

However, Apple reported that sales of its iPad tablet computer fell for a second quarter in a row, down 9% to 13.3 million.

In a new conference on the financial results, Cook said: “We still feel the category is in its early days and there is significant innovation we could bring to the iPad,” but gave no further details.

Looking to the future, Cook said he was “incredibly excited” about the upcoming releases of new operating systems for Apple’s mobiles and Macs, as well as “other new products and services”.

During the past two years, Apple launched a new iPhone in September, and this year, analysts are expecting phones with bigger screens, according to the BBC.

The iPhone remains a key product for Apple, as it is currently responsible for generating more than half the company’s revenue.

Some analysts were surprised by strong iPhone sales in the quarter, with the release of the latest version of the device on the horizon. Apple’s spending on research and development in the quarter was 4.3% of revenue, a level not reached since before the iPhone launch, according to Macworld.

The publication speculates that much of that spending has been on developing the next iPhone and Apple’s much-rumoured wearable device.

In a call with analysts, Cook explained the reasoning behind Apple’s recently announced deal with IBM.

He said Apple’s theory has always been that the tablet market will eventually surpass the PC market, and the deal with IBM was aimed at boosting tablet sales to businesses as PC sales decline.

“That theory is still intact. I just think we have to do some things to get the business market moving at a faster trajectory,” said Cook.


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