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   iPads, iPhones Propel Apple's $8.8 billion Q3 2012 Profit

   Michael E. Cohen

   Apple has reported slightly-lower than expected profits for many of its
   products during its Q3 2012 time period. With revenues of $35 billion
   and net profits of $8.8 billion ($9.32 per diluted share), the
   company's revenues are up 22.4 percent compared to the year-ago quarter
   (see '[1]Apple Reports Q3 2011 Record Financial Results,' 19 July
   2011). Although the results disappointed analysts, who had expected
   even higher profits, and drove Apple's share price lower in after-hours
   trading, Apple did record its highest June quarter earnings ever.

   During the quarter, Apple sold 4 million Macs, a 2 percent increase
   over last year, compared to a decline in PC sales during the quarter.
   This is the 26th consecutive quarter that Mac sales have outperformed
   competitors in the PC market. Moreover, Mac sales would have been
   higher in the quarter if the recently released Macs like the Retina
   MacBook Pro had come out earlier in the reporting period, according to
   Apple management. Portables represented about 75 percent of Mac
   education sales.

   Though iPod sales continue their slow decline in a saturated market,
   the decline was less than expected, with 6.8 million sold; analysts had
   predicted 5.9 million in iPod sales.

   iPhone sales increased 28 percent over the year-ago quarter with 26
   million sold (analysts had predicted 29 million iPhone sales), bringing
   in $16.2 billion. Sales of the device to Fortune 500 companies more
   than doubled. In the call with analysts after results were announced,
   both CEO Tim Cook and COO Peter Oppenheimer pointed to 'rumors and
   speculation' about new products, but the lower than expected iPhone
   sales figures can also be attributed to Apple's established timeline of
   iPhone releases. It's also impressive that 26 million iPhones were
   sold, even with the expectation that a new iPhone is likely to appear
   in the next three months; the iPhone 4S arrived in October 2011.

   iPad sales continued to shine, with 17 million sold as compared to 9.2
   million sold in the same quarter last year. iPad sales brought in $9.2
   billion in revenue. Sales of iPads to education purchasers, especially
   the low-cost model, were high: iPads outsold Macs in education by a two
   to one ratio. Apple's recent refocusing on education was also reflected
   in the 14 million downloads of the educationally oriented iTunes U app.

   Apple TV still remains 'a hobby,' said Cook, with 1.3 million sold
   during the quarter; 4 million of the devices have been sold this fiscal
   year. Cook said that Apple 'continue(s) to pull the string to see where
   it takes us. We're not ones to keep around products we don't believe
   in.'

   Overall, Apple sold 45 million iOS devices during the quarter, which is
   almost 11 percent of the 410 million iOS devices that have been sold
   since Apple started making them. This should please developers, who
   have already received $5.5 billion from App Store sales. The iTunes
   Store brought in $1.8 billion in sales.

   The retail Apple Stores saw slightly increased sales year over year,
   bringing in $4.1 billion in revenue. And, once again, the number of
   sales through the stores that were to first time Apple buyers was about
   50 percent.

   Apple ended the quarter with $117.2 billion in cash ($81 billion of
   which was held offshore), and, in an announcement that should please
   stockholders if not analysts, said that a quarterly dividend of $2.65
   per share would be paid out on August 16. Future dividend amounts and
   dates will be announced at the same time as quarterly results from now
   on.

   All in all, even in the face of a strong dollar (resulting in lower
   international revenues), and even with the anticipated Fall release of
   the next iPhone adversely affecting sales of the current model, it was
   yet another exceptional quarter for Apple.

References

   1. http://tidbits.com/article/12351

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