Tomahawk, WI 7/25/2013 (Basicsmedia) – Apple Inc. (NASDAQ:AAPL) announced its 3Q2013 earnings results on July 23, 2013. The sales climbed marginally to $35.3 billion and earnings per share were $7.47. These numbers were higher than market expectations of $35.01 billion in sales and $7.32 a share in profits. However, gross margin declined to 36.9%, in line with analysts’ forecasts. Apple has provided a sales guidance of $34 to $37 billion for 4Q2013 and gross margin guidance of 36% to 337%.

Apple revealed that the sales of iPhones were 31.2 million in 3Q2013, compared to 26 million in the same quarter last year. Analysts had been expected iPhone sales around 26.4 million units. On the other hand, sales of iPads were 14.6, declining from 17 million in the year ago period. Analysts anticipated iPad shipments of 17.8 million units. Tim Cook, chief executive officer of Apple, mentioned that the decline in sales of iPads was due to lower inventories in 3Q2013.

Apple shares climbed to $440.51 a share at the close of July 24, 2013, gaining sharply from $418.99 a share on July 23, 2013 after the more than anticipated results. However, the shares have dropped significantly in the past one year after hitting a high of $702.10 in September 19, 2012. The sales of iPhones have been stronger due to a reduction in the price of iPhone 4 and the company believes it will be doing much better in 4Q2013. Still, analysts believe that the pressure on the prices of iPhones will be continuing and sales will slow down in developed markets. Further, competitors are offering smartphones with all the features of iPhones at much lower prices. If Apple reduces iPhone prices further, it will definitely impact on the profit margin of the company significantly.

Analysts point out that the overall sales of Apple have remained flat year over year and the profit margin has been continuing to decline. They mention that no new product has been released by Apple in the last 9 months, the largest gap in recent times. However, they anticipate that Apple is likely to bring out a latest version of iPad and a cheaper iPhone in 4Q2013. There is also some news that Apple will be releasing its own television and probably a ‘smartwatch’ next year but the company has not mentioned anything about these new products.

The weak sales of iPads in 3Q2013, declining 14% from the previous year was mainly due to the collapse of iPad sales in greater China. The major growth markets for tablets and smartphones have been the emerging markets of China, Brazil and India. However, the present products of Apple are more expensive for majority of the prospective buyers in these markets, where people are more sensitive to prices than just going by brand name or brand loyalty. Hence, Apple has to come up with new products and manage the pricing pressure. Otherwise, the revenues and profits are going to be a concern for Apple. Analysts believe that the CEO of Apple, Tim Cook, will be under extreme pressure to provide tangible results before the year ends, failing which he may lose his job as CEO.

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