Cook Calls iPad Sales Decline 'Speed Bump' As Apple Posts Record Q4

Apple reported strong results for its fourth quarter ended Sept. 27 led by sales of its iPhone, even as demand for the iPad continued to decline.

The Cupertino, Calif.-based tech giant reported September quarter revenue up 12.4 percent to $42.1 billion, beating out Street expectations of $39.9 billion.

The company reported net income for the quarter up 12.7 percent from the year-ago period to $8.5 billion, which equated to $1.42 per share and beat analyst expectations of $1.31 per share.

[Related: iPad Air 2: Did Apple Do Enough To Turn Around Dipping Sales? Partners Say Apple Pay Is Key]

Apple sold 39.3 million iPhones in the quarter, aided by the release of its iPhone 6 and 6 Plus in mid-September. That's up from the 33.8 million iPhones it sold a year ago.

"We are in the early going, and we are selling everything we are making, but I've never felt so great after a launch before," Apple CEO Tim Cook said of the iPhone 6 sales. "That is the best way to summarize it all."

The company has had to deal with a supply shortage of the iPhone 6 models since their release, which Cook addressed Monday.

"Today we are not nearly balanced," he said. "We're not close; we're not even on the same planet. At this point it is very difficult to gauge what the true demand is. ... It's a good problem to have."

The iPhone 6 sales helped offset the continued decline in iPad sales, which totaled 12.3 million for the quarter, down 13 percent from the year-ago period. That marks three straight quarters now of declining iPad sales.

Apple launched the iPad Air 2 and iPad 3 Mini on Friday. Both are Apple's thinnest tablets to date and feature the company's Touch ID platform and Apple Pay, which launched Monday with the iOS 8.1 update.

More details also surfaced Monday during the company's conference call with analysts on Apple's partnership with IBM, announced earlier this year, to deploy iOS devices into the mobile enterprise in a move Cook said would help offset sinking iPad sales.

IBM and Apple's enterprise-focused apps will be ready to launch at the beginning of November, Cook said.

"Instead of looking at this thing from each 90 days, if you back up and look at it, we've sold 237 million in just over 4 years. That's about twice the number of iPhones we sold in the first four years of iPhone," Cook said during the call in response to the negative iPad numbers. "If you look at the last 12 months of iPad, we sold 68 million. … To me, I view it as a speed bump, not a huge issue. That said we want to grow. We don’t like negative numbers. Looking further in the data, I know there is a view that the market is saturated, and I don’t see that."

Next: Cook Says Apple Pay Will Lead To More Device Sales

Apple Pay was another area Cook hit upon during the conference call, when he said the company's new mobile payment platform will help it sell more devices.

"We wanted to have ease of use, security and privacy and maximize all three. By doing so, we think we will sell more devices because we think it's a killer feature," Cook said. "It's far better than reaching into your pocketbook and trying to find the cards that you're looking for and half the time it not working. We don't charge the customer for the benefit. We don’t charge the merchant for the benefit. However, there are commercial terms between Apple and the issuing bank."

Many Apple partners have been calling Apple Pay the most exciting announcement of the many Apple has made in the past six weeks, saying the security advancements in Touch ID and the e-commerce aspect of it will be attractive to consumers.

"I think Apple Pay is really going to take off, maybe even faster with online purchases than it will with in store purchases," said Raul De Arriz, national government sales manager at Waitsfield, Vt.-based Apple specialist Small Dog Electronics. "Many places accepted it immediately, but it will take time to install hardware at merchants for it to have a widespread acceptance. I think we'll see the e-commerce side of Apple Pay grow pretty quick."

The company's strong quarterly results also included the sale of 5.52 million Macs, up about 20 percent from a year ago -- an accomplishment Cook seized upon given declining global PC sales.

"On the Mac, it was just an absolutely blow away quarter. Our best ever," Cook said. "It was our highest market share since 1995. In back-to-school season, the Mac won and carried the day. It is clear that all the work we put into our notebooks in the hardware and software side, is resonating with customers. I think if you went out to college campuses about now, you'd see a lot of Mac notebooks based on the sale. Being up 21 percent as the market is shrinking, it doesn’t get better than that."

PUBLISHED OCT. 20, 2014