Apple Q4 2013 earnings: 33.8M iPhones, 14.1M iPads, $37.5B revenue!


As expected, Apple is out with its financial report for Q4 this afternoon. It’s an important one, as the company began selling two new handsets simultaneously last month, and Wall Street is dying to know how the strategy is working thus far.

Well, so far so good. Apple announced today that during its fourth quarter of 2013, it sold 33.8 million iPhones, beating Wall Street expectations of 31 million. It also sold 14.1 million iPads and garnered $37 billion in revenue. More after the fold…

Here is the full breakdown:

  • Revenue: $37.5 billion
  • EPS: $8.26
  • iPhones: 33.8 million units
  • iPads: 14.1 million
  • Mac: 4.6 million units

And here are some comments from CEO Tim Cook and CFO Peter Oppenheimer:

“We’re pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34 million iPhones,” said Tim Cook, Apple’s CEO. “We’re excited to go into the holidays with our new iPhone 5c and iPhone 5s, iOS 7, the new iPad mini with Retina Display and the incredibly thin and light iPad Air, new MacBook Pros, the radical new Mac Pro, OS X Mavericks and the next generation iWork and iLife apps for OS X and iOS.”

“We generated $9.9 billion in cash flow from operations and returned an additional $7.8 billion in cash to shareholders through dividends and share repurchases during the September quarter, bringing cumulative payments under our capital return program to $36 billion,” said Peter Oppenheimer, Apple’s CFO.”


Apple’s earnings call will start in just a few minutes. If you’d like, you can listen to a live webcast of the call via the the investors portal. Or, as usual, you can check back with iDB later this afternoon for commentary and major announcements.

Two Years After Steve Jobs’ Death, Is Apple a Different Company?

How does one follow in the footsteps of a genius?

That’s the question Apple CEO Tim Cook has faced in the two years since his predecessor, revered Apple co-founder Steve Jobs, died after a long battle with cancer. Cook, a 52-year-old operational wizard from Robertsdale, Ala., took over as Apple CEO a few months before Jobs died on October 5th, 2011. His challenge has been to maintain the momentum at the world’s largest and most famous technology company, following a decade-long period of turn-around and innovation with few parallels in corporate history.

Over the last year, Apple’s once-high flying stock price has shed a quarter of its value, as Wall Street analysts and investors alike have begun to openly question whether the firm’s greatest days are in the past. Indeed, it’s hard to imagine any executive, no matter how talented, matching Jobs’ track record. Over his career, Jobs radically disrupted at least eight industries: personal computing, computer operating systems, music, mobile phones, publishing, tablet computers, and Hollywood animation. The iPod, the iPhone, and the iPad transformed or created their respective markets, and a first generation iPod is on display at the Museum of Modern Art in New York City. Jobs was named the CEO of the decade in 2009 and, for many, he was the CEO of the century.

Jobs, with Cook by his side as chief operating officer, turned Apple into a $440 billion juggernaut partly by developing a sophisticated supply chain—cornering the market for flash memory in the mid-2000s, for example, well before it became clear that technology would become a staple of devices ranging from phones to laptops—as well as by aggressively releasing glitzy new devices, even if they risked cannibalizing sales of best-selling products. As recent books like Inside Apple and Walter Isaacson’s biography, Steve Jobs, have shown, that’s how Jobs and company essentially created the world’s largest, most successful startup. The 1998-2011 period in Apple’s history is likely to become an object lesson in avoiding the so-called “innovator’s dilemma.”

At the heart of the discussion about Apple’s future now is a debate about radical innovation versus incrementalism. Apple investors, consumers, and analysts grew accustomed to watching the company unveil stunning new products with great fanfare. But since the introduction of the iPad three years ago, none of the breakthrough products—atelevision or smartwatch—the company is rumored to be working on have materialized. In a recent interview with Bloomberg BusinessWeek, Cook made a clear argument for incrementalism, but he couched that argument in terms of innovation. “Some people see innovation as change, but we have never really seen it like that,” Cook told the magazine. “It’s making things better.”

Then there’s the question of whether Apple’s advantages are starting to erode. Apple enjoyed a head start in the smart phone market with the iPhone and in tablets with the iPad. But there are clear signs that the company’s rivals are beginning to catch up. Samsung, the South Korean electronics titan, has surged to become the largest handset maker in the world. Google’s Android operating system has racked up massive global market-share and is now the world’s top mobile OS. Still, Apple accounted for 69% of the smart phone industry’s 2012 profits, according to Canaccord Genuity analyst T. Michael Walkley. Apple generates more than $1 billion per month from iPhone sales, which account for more than half of the company’s revenue.

Apple has a winning product in the iPad tablet, but that device faces emboldened competition, most notably from new Google, Samsung and Microsoft products. The iPad remains the most popular tablet, but the field is growing increasingly crowded. In the second quarter of the 2013, Apple shipped 14.6 million iPads, down from 19.5 million in in the first quarter, according to research firm IDC. Part of that decline was driven by the fact that Apple didn’t launch a new tablet in the first quarter, as it has in past years, but increasing competition also played a role. For example, second-place Samsung shipped 8.1 million units in the second quarter, a whopping 277% increase from 2.1 million units shipped in the same period in 2012. And in terms of tablet operating systems, Android is now the top platform, with 62.6% market share, compared to 32.5% for Apple’s iOS platform.

Naturally, Apple shareholders and Wall Street analysts focus on the company’s stock price, and over the last year, Apple has shed more than $100 billion in market capitalization. Cook doesn’t seem too worried about that, though he’s said that he’s not thrilled about his company’s stalling stock price. Although Cook has taken actions to stem the decline, including a robust stock buyback program, Apple shares are down 10% this year, even as the tech-heavy NASDAQ index has soared by more than 20% (as has Google’s stock price).

Apple’s Wall Street woes have attracted some sharks, most notably Carl Icahn, the 77-year-old activist investor who made his name as a corporate raider. Icahn, who is worth an estimated $20 billion, has a long and colorful history of taking large positions in companies that he believes to be undervalued and then agitating for change. Apple is Icahn’s latest target, and he’s called for the company to return more of its massive cash hoard to investors. Icahn wants Apple to take advantage of low interest rates to borrow a whopping $150 billion at 3% interest, to be used to buy back its own stock. On Monday, Icahn, who owns more than $2 billion worth of Apple stock, met with Cook in New York City to discuss the matter. The meeting was “cordial,” Icahn later tweeted, but he added in an interview with CNBC that things did get a little “testy.” Icahn told CNBC: “I can promise you that I’m not going away until they hear a lot more from me concerning this.”

Still, despite the stock slump, Apple’s core business continues to power ahead. The new iPhones are a huge hit. Last Monday, Apple said it sold a record nine million units of the latest versions during the first weekend they were on sale. In a now-familiar scene, consumers lined up for hours at Apple stores across the country. Cook clearly commands great respect on Wall Street and in Silicon Valley. Though he has yet to bring entirely new products to market, Cook has shown that he’s willing to shake up Apple’s management if he deems it necessary, including firing long-time mobile software head Scott Forstall and Apple Store chief John Browett, who simply wasn’t a good fit with the company’s corporate culture.

Cook doesn’t have to look far to see what can happen when a tech giant rests on its laurels. But the lingering question is whether incremental improvements to existing products will be enough to power Apple earnings over the next 5 years—venture capital titan Marc Andreessen’s baseline for technology innovation—or whether the company will need new breakthrough products.

Apple announces record 9 million iPhone sales over first three days, 200 million iOS 7 updates

Apple has just announced first-weekend sales figures for the iPhone 5s and 5c. Sales for both phones total 9 million. In comparison, the iPhone 5 shipments topped 5 million in the same period. These numbers come in at the higher end of analyst estimates, with many predicting bearish sales similar to the iPhone 5 launch last year. As expected, Apple did not reveal the breakdown of sales between the different iPhone models.

Alongside phone sales, the company’s press release also highlights iOS 7′s successful launch. Apple has announced that 200 million devices have been updated to iOS 7 since it was released last Wednesday. This is double the rate at which iOS 6 was adopted.

“This is our best iPhone launch yet―more than nine million new iPhones sold―a new record for first weekend sales,” said Tim Cook, Apple’s CEO. “The demand for the new iPhones has been incredible, and while we’ve sold out of our initial supply of iPhone 5s, stores continue to receive new iPhone shipments regularly. We appreciate everyone’s patience and are working hard to build enough new iPhones for everyone.”

Apple says that demand for the 5s has exceeded  supply and is working to get “new iPhones for everyone”.  Off the back of these strong sales, Apple has now informed investors (through their 8-K filing) that gross margin is expected to hit in the higher end of their predicted range for this quarter, at around 37%. In addition, Apple expects revenue to reach the higher end of their estimated range of $34 – $37 billion dollars.

In addition to iPhone sales, Apple also commented on iTunes Radio.

Over 11 million unique listeners have already tuned in to iTunes Radio since launch with the most listened to song being “Hold On, We’re Going Home” by Drake.

Despite being only available in the US at the moment, iTunes Radio seems to have been received well by users, with Apple reporting 11 million unique listeners to date.

Images of “Budget iPhone” surface

Apple is rumored to be working on a more affordable iPhone for quite some time and even Tim Cook’s denial of its existence isn’t slowing down the gossip train. Today, purported images of the low cost iPhone have been spotted in China, pointing to a curvy plastic body in unison with previous reports.

The images of the low budget iPhone have been obtained from two different sources, but have a similar design. Both leaked images have a curved back, similar to what was earlier seen in the iPhone 3GS.

The Weibo user, who leaked the images claims to have got its hands on the device and the user, confirms that the new design provides a good feel in the hands.

Both images show the smartphone in a bumper case, so it’s uncertain if the smartphone has a metal frame like its high-flying sibling. However, the image reveals the presence of 3.5mm audio jack, lightning port and a speaker.

Two new Apple iPhone models coming next quarter, Samsung Galaxy Note 3 to launch as soon as July?

Apple CEO Tim Cook appeared at D11 on Tuesday night and gave an explanation why Apple doesn’t release more than one variation of the Apple iPhone each year. On the other hand, the executive seemed to open the door a little, to the idea that more than one version of the phone could be launched at the same time.

Nonetheless, we suggest that you grab your salt shaker and take with a grain of salt the report from those all-knowing industry sources in Taiwan. These guys are saying that Apple will be launching not one, but two Apple iPhone models in the third quarter of this year.

The phones could be launched as early as next month and will include “a revised version” of the Apple iPhone 5 (which would probably be called the Apple iPhone 5S) and a low cost model of the device. The latter would have hardware specs similar to the Apple iPhone 4S, but with a lower resolution screen and a less powerful processor.

Shipments of the new Apple iPhones are expected to peak in August and September after starting at the end of June. All together, 100 million to 120 million units of all iPhone models are forecast by these industry sources to ship in the second half of 2013. If Apple is indeed this close to launching two new versions of the iPhone, we are surprised by the lack of any leaked photographs of either or both devices. No one has left a prototype in a bar for some time, although it did happen to the Google Nexus 4 last year.

And with that segue to Android, the same report says that Korean OEM Samsung could be looking at aJuly-August launch for the Samsung Galaxy Note 3. Considering that Samsung’s J.K. Shin has stated that the phablet would not be introduced until September’s IFA show in Berlin, we would tell you to start shaking that salt. The Samsung Galaxy Note 3 is rumored to have a 13MP rear-facing snapper with OIS support. There is also speculation that Samsung has reduced its target of shipping 70-80 million smartphones in the current quarter although it might hit the higher figure by the end of the next quarter

15 interesting points from Tim Cook’s D11 interview

  • Apple sold 85 million iPhones and 42 million iPads in last two quarters
  • iOS devices account for 59% of mobile web usage
  • It’s sold more than 13 million Apple TVs all together—half of that came in the last year
  • Cook thinks Apple has “incredible ideas” and has “several more game changers” in it
  • When pressed about Apple’s plans for the living room, Cook said “there is a grand vision.”
  • Cook said he sees wearables space as “a very important branch of the tree,” and thinks Apple will be “very involved” in it
  • Jony Ive is in fact working on iOS 7 “We recognized Jony had contributed significantly to the look and feel of Apple over many many years, and he could do that for our software as well.”
  • On making multiple iPhones at different price points, Cook said “we haven’t [done it] yet, but that doesn’t shut it out for the future.”
  • On the idea of an iPhone with a larger display, Cook said “a large screen today comes with a lot of tradeoffs” and Apple won’t go that route while those tradeoffs still exist.
  • iMessage delivers 2 billion messages per day.
  • Cook said rumors of Apple making a bid for Waze were vehemently false
  • Apple has acquired 9 companies since last October—typically does 6-7 per year
  • On major acquisitions, Cook said “We’re not currently looking at a big one, but we’re not opposed to doing that.”
  • Apple will soon be opening up much more of its iOS API to developers
  • Cook said Apple has ‘no religions issue’ with porting its apps or services to Android