Apple Q4 Revenue Healthy But Projections Humble

Apple beat analysts' expectations Monday, with the company reporting successful sales of its latest iPhones. Meanwhile, activist investor Carl Icahn received some bad news on the company's fourth-quarter analysts call, during which Apple CEO Tim Cook denied Icahn the satisfaction of any immediate change in the company's cash return program.

Apple's quarterly revenue totaled $37.5 billion compared to the $36 billion reported in the year-ago quarter, surpassing many analysts' expectations. Apple sold 33.8 million iPhones, a record for the September quarter. Additionally, Apple sold 14.1 million iPads, a slight increase over the year-ago quarter despite the fact new iPads were widely expected to be revealed in October.

"Overall it was a great quarter for Apple," said Van Baker, lead Apple analyst at Gartner. "They beat their revenue estimates by a healthy amount."

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When pressed to comment on Apple's intentions to bring new, not-yet pioneered products to market, Cook expressed confidence in the Cupertino, Calif.-based company's ability to innovate without giving specifics.

"We obviously believe that we can use our skills in building other great products that are in categories that represent areas where we do not participate today," Cook said.

Baker said he has confidence Apple is still "well within the time window" to bring a new product to market, but said concern will grow if Apple is unable to pull it off within the next calendar year.

The quarter's big releases, the iPhone 5C and iPhone 5S, hit shelves in September.

Cook clarified three levels of iPhones, the entry-level iPhone 4S, intermediate-level iPhone 5C and high-end iPhone 5S. Despite public expectation that the iPhone 5C would be released as a budget iPhone, Cook said that was never Apple's intentions.

"Our goal is to overall have growth, but within that we want to have each of those categories grow," Cook said in reference to the three "tiers" of iPhones. According to Cook, when dividing the iPhones into three tiers, each of the tiers reported quarterly growth.

Though numbers leaned in favor of the iPhone 5S rather than the 5C, prompting skeptics to believe the 5C may not have been the successful mid-tiered smartphone Apple was aiming for, Baker said the numbers are not a surprise.

"Even though the call confirmed that sales have been heavily skewed toward the 5S, it is not a surprise. The early buyers are the real fans of Apple. They are the ones who are going to be buying the latest and greatest," Baker said.

Further questions were framed around Apple CFO Peter Oppenheimer's revenue projections for Apple's next quarter, which will include the holiday sales season. With a slew of new product releases, analysts expected projections to be high moving in to the next quarter. Instead, Oppenheimer reported humble revenue of $55 billion to $58 billion and a gross margin between 36.5 percent and 37.5 percent.

"The market has gotten much more competitive," Baker said. "You would expect some pressure."

As far as Icahn, Cook said investors would have to wait until the beginning of 2014 for any adjustments relating to shareholders.

PUBLISHED OCT. 28, 2013