Apple Reports Record Revenue Despite Drastic iPad Sales Drop

Apple's quarterly figures have once again beat Wall Street expectations, despite iPad sales falling more than 16% compared to the same period last year.

Strong iPhone sales, up 18% on the same three months in 2013, made up for the drop in iPad revenue, with Apple reporting $45.6 billion (£27.2bn) and quarterly net profit of $10.2bn or $11.62 per diluted share.

The company had been expected to see a slight fall in quarterly revenue, with analysts from Thomson Reuters projecting revenue of $43.54bn. In the same quarter last year, Apple earned $43.6bn.

"We're very proud of our quarterly results, especially our strong iPhone sales and record revenue from services," said Tim Cook, Apple's CEO. "We're eagerly looking forward to introducing more new products and services that only Apple could bring to market."

"Very bullish on iPad"

Apple sold 16.35 million iPads down from 19.5 million the company sold in the first three months of 2013. Addressing the drop in sales, Cook said in a conference call with analysts that the iPad was the fastest-growing product in Apple's history and over the same period, the device had sold twice as many units as iPhone, and seven times as many iPods

Cook added that he was "very bullish on iPad" and that it was dominating the education sector, saying "student achievement is higher with iPad."

Conversely, the company sold 43.7 million iPhones, well up on the 38 million predicted by Wall Street and 6.3 million more than it sold in the same quarter last year. One of the big areas for growth for Apple in this areas was converting Android users to its lower-end models.

Cook said that 62% of iPhone 4s buyers - a phone which is usually free (or cheaper) on contract - and 60% of iPhone 5c buyers were switching from Android.

iPod down, Apple TV up

Looking at some of the smaller categories for Apple, the Mac line saw sales rise year-on-year to 4.1 million computers, with the company continuing to gain market share while the rest of the PC market struggles.

Apple's iPod business continues to decline. The company sold just 2.8 million music players in the three months to the end of March, which represents a 50% drop from the 5.6 million it sold in the same period in 2013.

One of the surprises of the evening was the announcement that Apple had sold 20 million Apple TV units in the period, a figure Apple doesn't typically reveal. Tim Cook also revealed that it was a billion dollar business for the company now, meaning it is no longer just a "hobby" as the company had previously referred to it.

One of the biggest announcements from Apple this evening was the announcement of a seven-for-one stock split, a rarely-seen move which is aimed at addressing calls to share more of its cash hoard (which now stands at $156 billion) while making the stock more appealing to smaller investors.

Apple also approved another $30bn in share buybacks until the end of 2015.

"Closer than ever" to new products

In the conference call following the release of Apple's latest financial results, CEO Tim Cook said the company was "closer than ever" to releasing new product categories.

Chief amongst these is likely to be the iWatch, which Apple has been working on for a couple of years now, which would represent the first completely new product from Apple since the iPad was launched four years ago.

Apple will likely launch the iPhone 6 in the autumn with a larger screen to compete with the larger-screened Android smartphones which make up a significant chunk of the market. There have been numerous reports that Apple is developing iPhones with screens ranging from 4.7in in size to 5.5in in size - or indeed both.

There is also speculation surrounding an iWatch, which would be the first time a completely new product has been launched by Apple since the iPad was launched four years ago.