Apple Profit Climbs 38% On Strong IPhone Sales

(RTTNews) - Apple Inc. (AAPL) said Tuesday after the markets closed that its third quarter profit rose 38% from last year, driven by strong sales of iPhone and Mac as well as all-time record revenue from services and the successful launch of Apple Watch.

The company's quarterly earnings per share also came in above analysts' expectations as did its quarterly sales. However, the company forecast fourth quarter sales slightly below analysts' current consensus estimate.

"We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch," said Tim Cook, Apple's CEO. "The excitement for Apple Music has been incredible, and we're looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall."

Apple shares are currently losing 6.82% in after hours trading after closing the day's regular trading session at $130.75, down $1.32 or 1.00%. On April 28, the company's shares hit a 52-week high of $134.54. Apple replaced AT&T Inc. (T) in the Dow Jones Industrial Average after the close of trading on March 18.

Apple sold 47.5 million iPhones in the third quarter, up 35% from 35.2 million in the same quarter last year. The company in September 2014 unveiled two new bigger smartphones, iPhone 6 and iPhone 6 Plus, which went on sale on September 19 with record breaking performance.

The company sold 4.80 million Macs in the quarter, up 9% from 4.41 million in the prior year quarter.

However, iPad sales for the third quarter fell 18% to 10.9 million units from 13.3 million units a year earlier. In October 2014, Apple unveiled the next iteration of its tablets-- iPad Air 2 and iPad mini 3, with both sporting Touch ID fingerprint sensor found on the iPhone.

The company started shipping Apple Watch on April 24, its first all new hardware product since it launched the iPad in 2010.

For the third quarter, the company's America revenue surged 15% year-over-year to $20.2 billion and Europe revenue increased 19% to $10.3 billion, but its Greater China revenue jumped 112% to $13.2 billion. Japan revenue rose 9%, while rest of Asia-Pacific revenue increased 26% from a year earlier.

For the third quarter ended June 27, 2015, the Cupertino, California-based computing and electronics company reported net income of $10.7 billion or $1.85 per share, compared to $7.7 billion or $1.28 per share for the year-ago quarter.

On average, 39 analysts polled by Thomson Reuters expected the company to earn $1.81 per share for the third quarter.

This marks the sixth straight quarter that the company has reported year-over-year profit increase following four quarters of profit declines.

Gross margin for the quarter improved to 39.7% from 39.4 in the prior year quarter.

Net sales for the third quarter rose 33% to $49.61 billion from $37.43 billion in the same quarter last year. Thirty-six analysts had a consensus revenue estimate of $49.31 billion for the third quarter. International sales accounted for 64% of the quarter's revenue.

iPhone revenue for the quarter jumped 59% year-over-year to $31.4 billion.

Looking forward, the company forecasts fourth quarter revenue of $49 billion to $51 billion. Analysts currently expect the company to post revenue of $51.05 billion for the fourth quarter.

Gross margin for the fourth quarter is expected to be 38.5% to 39.5%.