Apple has reported its earnings for its fiscal third quarter. Analyst expectations were muted in comparison with previous quarters, blaming the saturation of the smartphone market and the popularity of Apple’s lower-cost products that offer the company smaller profit margins. 

However, Apple reported quarterly revenue of $35.3 billion and quarterly net profit of $6.9 billion, or $7.47 per diluted share. Revenue is slightly up on the year ago quarter when Apple reported revenue of $35 billion. In April Apple reported its second-quarter (January-March) earnings, with revenue of $43.60 billion, versus $39.19 billion a year earlier. 

Apple Revenue 

It was predicted that Apple would report revenue on par with what it was a year earlier - in fact, as we wrote earlier this week, about half of Wall Street analysts expected Apple to report the same revenue as quarter three of 2012. 

The lowest prediction of $32.8 billion came from Susquehanna's Caso compared to $38.3 billion predicted by the Braeburn Group's Ilari Scheinin. The average expectation was $35.24 billion which is pretty spot on where Apple was. Apple's Peter Oppenheimer announced expectation of £33.50 billion for the third quarter when announcing the second quarter results, so at least the reported revenue beat Apple’s own expectations. 

Had revenue declined it would have been the worst sales performance in ten years (in 2003 revenue declined 1.3 percent.)

The slight increase on last year’s figure may calm some fears, but investors will still be concerned about whether Apple can continue its rise with a market at saturation and with profits falling. 

Apple profits 

Speaking of profits, these were down from $8.8 billion to $6.9 billion. The average analyst estimate for the quarter’s earnings were around $8.15, according to our report earlier this week.   

Apple reported its first profit decline in a decade when it announced its second quarter profits back in April. In April net profit was $9.5 billion compared to profit of $11.6 billion in the same quarter of 2012. 

Apple Gross Margin 

Gross margin was at 36.9% compared to 42.8% in the year-ago quarter. Gross Margin was estimated at a high of 38.6% and a low of 36%. Apple's Peter Oppenheimer said he expected 36% to 37% when he reported earnings back in April. 

How many iPhones did Apple sell last quarter? 

Apple said it sold 31.2 million iPhones, a record for the June quarter, compared to 26 million in the year-ago quarter. The highest estimate for iPhone sales for the quarter was 30 million, the lowest 25 million. This means Apple beat estimates for iPhone sales, despite the naysayers fretting that the smartphone market has reached saturation, and despite expectations that Apple will launch the iPhone 5S (or iPhone 6) soon. 

How many iPads did Apple sell last quarter?

Apple claims it sold 14.6 million iPads during the quarter compared to 17 million in the year-ago quarter. The highest estimate for iPad sales for the quarter was 22 million, the lowest 14.49 million. In this case Apple was at the low end of expectations. 

How many Macs did Apple sell last quarter?

In the run up to the results, the highest estimate for Mac sales this quarter was 5.37 million, the lowest 3.41 million. Apple reported that it had sold 3.8 million Macs, compared to 4 million in the year-ago quarter. Again, on the low end of expectations. 

What is Apple doing for investors 

Apple’s Board of Directors has declared a cash dividend of $3.05 per share of the Company’s common stock. The dividend will be payable on August 15, 2013, to shareholders of record as of the close of business on August 12, 2013.

According to Peter Oppenheimer, Apple’s CFO the company generated $7.8 billion in cash flow from operations during the quarter and are pleased to have returned $18.8 billion in cash to shareholders through dividends and share repurchases

What is the good news? 

Apple’s CEO Tim Cook promised that the company is: “Laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014”. 

For the next quarter (the fourth of Apple's fiscal 201), Apple is predicting revenue between $34 billion and $37 billion,. In the fiscal fourth quarter of 2012 it had revenue of $36 billion. Apple expects gross margins to remain steady - between 36 and 37 per cent.

Apple's share price closed at $418.99, down from $426.31 at close of play on the 22 July. Within seconds of the results being announced, Apple's shares jumped in after-hours trading from $419 per share to $435.

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