Apple (AAPL) beat its own forecasts, but not those of analysts with its third quarter financial results. The company earned $8.8 billion, or $9.32 per share, on revenue of $35 billion. Institutional analysts were expecting more than $37 billion in revenue and earnings per share of $10.33.
Apple said it sold 17 million iPads during the April-June quarter, making tablet sales the only area in which Apple surpassed expectations. Apple’s iPhone sales came in below predictions at 26 million devices, down from 35.1 million last quarter. Of course many of the company’s customers are waiting for next iteration of the iconic device, which is expected later this year.
Apple CEO Tim Cook said the company’s decision to reduce the price of the previous generation iPad 2 to $399 had proven to be a good choice and had driven sales of the popular tablet. Cook said he was particularly pleased with the rate at which school districts are buying the devices. “The adoption rate of iPad in education is something I have never seen from any technology product in history,” he said.
Apple’s iPhones also come to market at attractive price points, but the company requires carriers to pay hefty subsidies in order to carry the phone and meet consumer price expectations. When asked about subsidies with respect to the upcoming iPhone during Tuesday’s earnings call, Cook replied, “It is important to remember that the total subsidy they pay is fairly small relative to the monthly fee they collect over a two-year contract period … and carriers are focusing on shared data plans, and an iPhone customer is more likely to have a tablet … Also, our engineering teams are very commited to finding efficient ways to deal with data.”
Apple said that macroeconomic trends did not seem to negatively impact its U.S. sales, but that Europe’s economic troubles did hurt sales there. Within Europe, the company said that France, Italy and Greece had weak sales and that Germany was basically flat. Apple said that United Kingdom sales were strong, up 30% from year-ago levels.
China is one of Apple’s most important markets and the company said that sales there were down significantly. Apple sold 5.7 million iPhones in China during the most recent quarter, down from 7.9 million units in the previous quarter. But Apple CFO Peter Oppenheimer said the slowdown was due to “changes in channel inventory, not underlying sell through … we did not see something that we would attribute to the economics in China.” He pointed out that Apple launched the iPhone in China in January, implying that much of the pent-up demand for the smartphone was expressed during the first three months of the year.
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