Apple posts record third quarter

Apple has posted a record third quarter as soaring demand for iPhones sent profits higher.

The technology giant sold 47.5 million iPhones in the quarter to 27 June, up 35% on a year ago, with Mac computer sales up 9% to 4.8 million.

The performance resulted in what chief executive Tim Cook called “an amazing quarter”.

Profits rose by 38% to $10.7bn (£6.87bn), while revenue was up 33% to $49.6bn.

The third quarter is typically the slowest for iPhone sales because many customers put off buying new phones, on the expectation of a new model.

Despite the strong results, shares fell 6.7%, or $8.85, to $121.89 in after-market trading in New York.

Analysts blamed the fall on disappointment about the company’s revenue forecasts for the fourth quarter, which were slightly lower than expected, as well as the firm’s profits being too heavily dependent on the iPhone.

‘Great start’ for Watch

Demand for its iPad tablets remained weak, with Apple selling 10.9 million, down 18% from a year earlier.

But Mr Cook also said the Apple Watch had had a “great start”, in the first indication of how well the company’s first piece of wearable technology was selling.

The Apple boss said last autumn that he did not want to reveal detailed figures for the watch, which went on sale on 24 April, to avoid giving competitors inside information.

But Apple said that revenue from “other products”, which includes the watch as well as products such as the iPod and its Beats headphones, came to $2.6bn – about $952m higher than the previous quarter.

Chief financial officer Luca Maestri said that revenue from the watch amounted to “well over'” that $952m increase.

Sales of the watch in the first nine weeks had exceeded those of both the iPhone and iPad after they were first launched, he added.

And Apple said its gross margin – the difference between the amount it spends on making the products versus how much consumers pay – was 39.7%, up slightly on a year ago.

Apple also continued to do well in the China market – defined by Apple as China, Hong Kong and Taiwan.

Sales doubled year-on-year and accounted for more than a quarter of the company’s total third-quarter sales.

iPhone ‘dependence’

The jump should help to reassure investors that demand in China remains robust despite fears the market is close to saturation point.

But Colin Gillis, an analyst for BGC Partners, told the BBC that the firm’s “complete dependence” on iPhone sales and growth in China was still a concern.

“Look at the PC market. People ask if that could ever happen to smartphones. Of course it could. And there are risks associated with its dependence on China,” he said.

However, Mr Gillis said that investors should put the results into perspective.

“Overall the results are stunning – it’s made $10bn in profit. But Apple is an outlier in many metrics, so you need to look at the performance relative to expectations,” he said.

The iPhone 6 and 6 Plus, which smashed iPhone sales records when they were launched last year, are now 10 months old.