Apple’s less than perfect Q3: iPhone sales up, iPad sales down

Things seem to have hit a wall at Apple Inc. The company’s latest financial report for the quarter ending June shows that its sales are up only one percent from last year to US$35.3-billion, landing the company a net profit of US$6.9 billion, or US$7.47 per diluted share.

“These results compare to revenue of US$35-billion and net profit of US$8.8-billion, or US$9.32 per diluted share, in the year-ago quarter. Gross margin was 36.9% compared to 42.8% in the year-ago quarter. International sales accounted for 57 percent of the quarter’s revenue,” says the company.

According to Apple’s report, iPhone sales went up with 31.2-million sales at the end of the quarter compared to 26-million in the year-ago quarter. iPhone sales seems to be the only major hardware sales spike for the company with iPad sales down with 14.6-million sold during the quarter, compared to 17-million in the same time last year. The company also saw a slight drop in Mac sales, selling 3.8-million compared to 4-million in the year-ago quarter.

“We are especially proud of our record June quarter iPhone sales of over 31-million and the strong growth in revenue from iTunes, software and services,” said Tim Cook, Apple’s CEO. “We are really excited about the upcoming releases of iOS 7 and OS X Mavericks, and we are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014.”

This decline in Apple’s profits is not surprising as it has been slowly dropping in the last year. Apple saw a great profits in 2011-2012, when Apple’s sales grew 73%, then the company suffered a sharp drop to 59%. Since then it has been a bit of a wobbly slope with 23%, 27%, 18%, 11%, and now one percent. Now it seems Apple expects growth ranging from three percent to a five percent year-over-year decline.

Part of Apple’s recent decline can be attributed to the fact that the company has not launched any major hardware players this year. But rumours of a low-end iPhone in the company’s future could change the game dramatically.