Apple announced earnings for the June quarter (Apple's fiscal Q3) of US$6.9 billion on revenue of $35.3 billion. Apple's earnings per share (EPS) of $7.47 beat consensus estimates of $7.30 per share, while revenue beat estimates of $35 billion.
Both beats are good and come at the high end of Apple's guidance, but the company's revenue was effectively flat year-over-year, while earnings were markedly lower. Apple reported earnings of 8.8 billion in Q3 2012 (EPS of $9.32) on revenue of $35 billion.
"We are especially proud of our record June quarter iPhone sales of over 31 million and the strong growth in revenue from iTunes, Software and Services," Apple CEO Tim Cook said in a statement. "We are really excited about the upcoming releases of iOS 7 and OS X Mavericks, and we are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014."
Apple CFO Peter Oppenheimer added, "We 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."
Apple reported gross margins of 36.9 percent. This also beat estimates of 36.6 percent, and were also way off of last year's gross margins of 42.8 percent—this is why earnings were down, too.
Apple sold 31.2 million iPhones, a June quarter record for Apple. That's not bad for a platform that many critics keep insisting is dying despite all evidence to the contrary. Apple sold 26 million iPhones in the year-ago quarter, and analysts had only been expecting 26.6 million iPhones.
The company sold just 14.6 million iPads. That's down from the year ago quarter of 17 million iPads, and it's down from consensus estimates of 17.6 million iPads.
Apple sold 3.8 million Macs, down from 4 million year-over-year. Context is king, because the PC industry as a whole dipped far more than Apple's 0.5% decline during the quarter, meaning that Apple continued to gain share in this market. Analysts had been expecting sales of 3.8 million Macs.
Apple provided guidance of between $34 billion and $37 billion for revenue, with gross margins between 36 and 37 percent. The company is expecting operating expenses (opex) between $3.9 billion and $3.95 billion, with other income of $200 million and a tax rate of 26.5 percent.
$AAPL leaped in after hours trading. As of this writing, shares were trading at $439.51, a gain of 20.52 (+4.90 percent). Apple's conference call could well change that—it begins at 2:00 PM PDT (5:00 PM EDT).
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.