Apple revenues hit $35 billion in lower than expected, but still record third quarter

Apple has posted third quarter results on the low end of expectations, selling 26 million iPhones, 17 million iPads, 6.8 million iPods and generating $35 billion in revenue for the quarter. The company’s quarterly net profit was $8.8 billion, up 20.3 percent percent year-over-year. Earnings were $9.32 per diluted share. The company also announced it would pay a cash dividend of $2.65 per share.

While Apple didn’t meet Wall Street’s expectations, Apple’s chief financial officer Peter Oppenheimer said the company had posted its best-ever June quarter, surpassing its own goals for both iPhone and iPad sales.

Prior to today’s announcement, analysts had estimated the company would earn anywhere from $46.2 billion in revenue on the high end to $35.08 billion on the low end. Overall Apple sold 49.8 million iOS devices during the quarter that ended on June 30,2012, down from Q2 2012 when the company sold 54.6 million iOS devices.

During the previous March quarter, the company posted $39.2 billion in revenue and $11.6 billion in net profit. Overall Apple’s profit was down 24.1 percent quarter-over-quarter.

Although iPhone sales were up 28 percent year-over-year, they were down 25.9 percent from Q2’s figures, when the company sold 35.1 million iPhones. Apple blamed the decline in iPhone sales on what it called “rumours and speculation” surrounding a new iPhone.

Last year Apple experienced a similar downturn in iPhone sales as consumers held off on their purchases in anticipation of what turned out to be the iPhone 4S. Pent up demand for a new iPhone allowed Apple to sell more than 4 million iPhone 4S’ during its launch weekend, which likely means today’s dip is a precursor for another record quarter in the fall.

iPod sales also continued to decline, falling 13.2 percent quarter-over-quarter and 10 percent year-on-year.

iPad sales proved to be the star of Apple’s third quarter, rising 44 percent over Q2’s figures and 84 percent year-on-year. Apple credited the increase to strong sales of the new iPad, the reduced price of the iPad 2 and growth in the educational sector.

Apple’s gross margin for the quarter was 42.8 percent, up from 41.7 in Q3 2011, but lower than the 47.4 percent gross margin Apple reported last quarter.

International sales accounted for 62 percent of the quarter’s revenue. Japan was the region with the strongest growth, posting a 33 percent increase in revenues year-over-year to $2 billion in sales of 173 million units. Apple’s most profitable region was the Americas, where revenues rose 26 percent year-over-year to $12.8 billion.

Although regional revenues did increase on year-over-year basis, they all fell on a quater-over-quarter. Apple’s revenues in the Asia Pacific region fell by 22 percent quarter-over-quarter, dropping from $10.1 billion to $7.8 billion as sales decreased by 23 percent — the biggest regional drop Apple reported. The company blamed the quarterly drop on the new iPad, which was not available in China at launch.

Apple finished Q3 with an additional $7.9 billion on hand in cash, bringing its total reserves to $117 billion. According to a statement provided by chief financial officer, Peter Oppenheimer, Apple is predicting fourth quarter revenues of $34 billion and diluted earnings per share of approximately $7.65.

Apple’s stock fell by 5.45 percent on the news in after hours trading, dropping $32.74 to $568.18, although the stock closed officially at $600.92.