News Column

Fall is Apple's season to shine

July 22, 2014

By Jon Swartz, @jswartz, USA TODAY

Brace yourselves for the fall of Apple.

Not the decline of the empire that Steve Jobs & Co. built, but the resurgence of Apple during the fall season -- starting with the expected news of iPhone 6 in early September, followed by a new iPad and the long-rumored watch.

Judging from Apple's third-quarter financial results, the product barrage can't come soon enough. Apple racked up $37.4 billion in sales and a quarterly net profit of $7.7 billion, or $1.28 per diluted share -- topping analyst estimates. However, sales of its franchise smartphone and tablet lines are cooling, suggesting hints of consumer fatigue. IPhone sales topped 35.2 million, up 13% from the year-ago quarter, but clearly in need of a new version. IPad sales dipped 9%, to 13.3 million, from the same quarter a year ago.

The Macintosh, ironically, is outpacing unit shipments of iPhone and iPad, percentage-wise. Mac units rose 18%, to a modest 4.4 million, in the quarter.

Apple's slice of the U.S. smartphone market continues to grow, but at a slower rate. It is expected to be 40.5% this year, compared with 40% in 2013 and 36.5% in 2012. Android, meanwhile, is 50% this year, from 49.5% in 2013 and 43.5% in 2012, according to eMarketer.

And while the number of iPad users continues to increase, Apple is losing share to others entering the market. Apple's share of U.S. tablet users is expected to decline to 51.8% this year, from 54.5% in 2013, says eMarketer.

Although the second quarter is typically slow for smartphone sales, Apple's partnership with China Mobile kept iPhone sales humming. The long-term narrative of Apple rides heavily on China, where faster communications networks bode well for Apple.

Apple's refreshed product line, on the heels of its startling business partnership with IBM, underscores a new, more aggressive posture by CEO Tim Cook.

"(Cook) speaks quietly through actions and understatement," Forrester analyst Frank Gillett says. "Despite Jobs' ego, the ethos of Apple is letting its product speak" for the company.

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Source: USA Today

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