Historic drop in Apple profits but iPhone sales please investors

 
Tim Wallace
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APPLE’S year-on-year profits fell for the third quarter in a row, the technology giant revealed yesterday, as weak computer sales and falling margins ate into its fourth quarter finances.

But healthy iPhone sales meant the results were better than expected and shares held steady in after-hours trading.

Profits came in at $7.5bn in the fourth quarter, down from $8.2bn in the same period of 2012 and the company’s first fall since 2001.

However, revenues were better than expected at $37.5bn, up from $36bn a year ago.

Analysts had been concerned that the cheaper iPhone 5C model would perform poorly, but overall sales of the iconic smartphone ranges came in at 33.8m in the fourth quarter, up 26 per cent on the year.

The 5C’s lower price meant Apple’s gross margin slipped a touch from 40 per cent to 37 per cent. But the company said margins should hold steady in the coming quarter, at an estimated 36.5 per cent to 37.5 per cent.

Meanwhile iPad sales edged up to 14.1m, from 14m in the same period of 2012.

Executives said they are continuing to give cash back to investors.

“We generated $9.9bn in cash flow from operations and returned an additional $7.8bn in cash to shareholders through dividends and share repurchases during the September quarter, bringing cumulative payments under our capital return programme to $36bn,” said chief finance officer Peter Oppenheimer.