As predicted, Apple's profits continue to weaken, as buyers go for the less expensive option of the iPhone 4 or 4S over the latest iPhone 5. Still with nearly $7 billion in quarterly profit, it can afford to wait to roll out new product lines, despite the latest year-over-year decline. 

Apple Still in the Money

Critics keep waiting for Apple to stumble, yet time after time the company continues to surprise with big profits, despite its overall continued slowdown in growth. Apple's 3Q13 results saw revenue of $35.3 billion and quarterly net profit of $6.9 billion. These results compare to revenue of $35 billion and net profit of $8.8 billion, this time last year.

Gross margin, the critical figure for Apple's massive profits was 36.9 percent compared to 42.8 percent last year, with international sales now accounting for 57 percent of the quarter’s revenue. Apple sold 31.2 million iPhones (with the iPhone 5 still the company's most popular model), 14.6 million iPads during the quarter, and 3.8 million Macs. the phone figure was a third quarter record while Mac and iPad sales were both down. 

iPhone continues to drive the company's profits, accounting for almost $20 billion worth of activity. However sales have declined for two quarters now as the company's slow refresh rate continues to let other devices hog the spotlight. 

Preparing For Launch

Even so, Apple continues to claim massive brand and customer loyalty and satisfaction. With iOS 7 on the way and new iPhones and iPads approaching production, we can expect another blockbuster first quarter for 2014, after the current July-September period is out of the way.

For the next quarter, Apple's guidance is as follows:

  • revenue between $34 billion and $37 billion
  • gross margin between 36 percent and 37 percent
  • operating expenses between $3.9 billion and $3.95 billion

And, as interest wanes in phones and tablets, even as Apple toys with new sizes and models, and with Samsung's huge range of devices making it the more profitable phone firm, it has its next big things closely under wraps in its development labs. The iWatch and iTV could be the devices that propel the company forward for the next five years, which explains the rabid interest in any hint about them. 

On the follow-up conference call, Apple highlighted some more big numbers with over a million iPads sold into education, over $11 billion dollars in App Store sales, and iTunes generating $4.3 billion in the last quarter, and accelerating with the store's best week ever at the tail end of the quarter.