Apple’s record results to be hit by profit fears

APPLE is expected to report record quarterly sales this week, with the iPhone and iPad proving more popular than ever.

However, profits have taken a hit, with the company’s margins expected to be lower on the recently-released iPhone 5 and iPad mini than on previous models.

The two devices were released separately towards the beginning of the previous quarter and both saw record sales in their respective opening weekends, but Wednesday’s results will be the first indication of how sales have affected the Cupertino-based company’s profits.

Apple chief executive Tim Cook said shortly after the iPad mini’s release that it has lower margins than any other Apple product, and that the higher cost of making the iPhone 5, relative to the previous 4S model, would also hit profits.

Analysts are predicting quarterly revenues of $54.7bn (£34.5bn), up from $46.3bn in the same quarter last year, itself a record period. However, profits are likely to be less than the $13bn made last year.

Worries about the firm’s profits have forced Apple’s share price down from a summer high of more than $700 to $500 on Friday. Investors have raised questions about the iPhone’s continuing desirability, while incidents such as the rushed launch of Apple’s own maps software have dented its reputation.

It has faced increased competition from Korean firm Samsung in mature markets, and from increasingly affordable smartphones in emerging countries. Apple has even been rumoured to be designing a cheaper iPhone in a bid to gain a presence in these markets.