Apple’s iPhone sales beat expectations

Apple prove wrong skeptics who suggested that the best years of smartphone growth were behind it, as iPhone sales beat expectations, despite a sharp drop in third-quarter earnings. The tech giant explained that price cuts and better distribution network helped iPhone 4 version of the flagship smartphone to outperform its rival Samsung Galaxy S4.

Sales of 31.2 million iPhones in the quarter ended in June, up 20% over the previous year, comfortably topped analysts’ consensus of around 27 million units. CEO Tim Cook, stated he doesnt believe the smartphone market has reached its highest point – “I don’t subscribe to the common view that the higher-end smartphone market has hit its peak,” he said, citing distribution improvements that helped increase iPhone volumes in India, Turkey and the Philippines. “We saw very strong sales in many of the emerging markets.”

However, the data posted by Apple showed some weaknesses. Chinese sales sank by 14% overall, which Mr Cook explained by its slowing economy and a sharp drop in Hong Kong demand.
The iPad suffered from increasing competition and delay of the new version of tablet, with revenues falling 27% from a year ago. iPad unit sales of 14.6 million were almost 4 million below expectations. Apple had to make 5% discount and diminish margin to 36.9% from 42.8%, something the tech giant hasnt done for as long as 6 years.

Analysts at Stifel said Chinese sales were “notably weak” but said Apple’s outlook, while below forecasts, was not as bad as some had feared: “We believe expectations given the timing of the company’s product cycle were fearing a worse outlook.”

Investors are intrigued of Apples launching the new iPhones and iPads – with its finance chief promising a “very busy fall”. Its outlook for sales of between $34 billion and $37 billion was below most analysts’ forecasts, in a quarter that investors hope will be the low point of the product cycle. Mr Cook said other new devices would be introduced sometime next year.

The iPhone 4 could be banned from import after the US International Trade Commission found that it infringed a Samsung patent. The two-year old version of the flagship smartphone is one of the best-selling products for the company and would be painful for sales if the commission prove Apple guilty in this case.

It has been 9 months since the last new product came out from Apple. Most analysts are excited to see how the tech company and its new CEO Tim Cook would deal with the unfavorable position of slowing sales and contracting market share.

Apples share price sank by 1.72% yesterday piling on more than 20% loss year to date.