Mobile Devices

Apple’s Profit Decline Breaks 10-Year Streak

24 April 2013

Apple Inc. enjoyed a very good run. But it was inevitable that at some point growth would end. That day came on March 31, 2013 when Apple’s profits declined for the first time since 2003.

On Tuesday, Apple reported quarterly revenue of $43.6 billion and quarterly net profit of $9.5 billion for the period ended March 2013, compared with revenue of $39.2 billion and net profit of $11.6 billion in the first quarter of 2012. Gross margin was 37.5 percent compared with 47.4 percent in the year-ago quarter.

Still, the company reported that unit sales continue to climb: Apple sold 37.4 million iPhones in the quarter, compared to 35.1 million in the year-ago quarter. Apple also sold 19.5 million iPads during the quarter, compared to 11.8 million in the year-ago quarter. The company sold just under 4 million Macs, compared to 4 million in the year-ago quarter.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” said Tim Cook, Apple’s CEO. “Our teams are hard at work on some amazing new hardware, software and services and we are very excited about the products in our pipeline.”

“Our cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion,” said Peter Oppenheimer, Apple’s CFO.

Apple is one of the most valuable public companies in the world and one of the most closely watched. Recently, rumors have been swirling about next-generation iPhone flaws; a loss of Apple’s “coolness factor” and dissatisfaction with CEO Tim Cook. Apple rarely comments publicly about anything and never comments on rumors. The company has missed its earnings marks in the past, and some market-watchers largely dismiss the notion of Cook’s ouster.

Apple’s partners are also being impacted by a slowdown in demand for the “iProducts.” Manufacturing partner Hon Hai Precision Ltd., also known at Foxconn Technology, reported a monthly revenue decline in March reportedly associated with iProduct demand and LG Display, in spite of a profitable quarter, forecasts a lackluster calendar Q2.

Apple is providing the following guidance for its fiscal 2013 third quarter:

§ revenue between $33.5 billion and $35.5 billion

§ gross margin between 36 percent and 37 percent

§ operating expenses between $3.85 billion and $3.95 billion

§ other income/(expense) of $300 million

§ tax rate of 26%

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