Apple talks up pipeline of new products

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br Earns Apple Associated Press An Apple saleswoman in Florida holds an iPhone 5s. The most valuable company is working on larger-screen iPhones, a wearable device and an upgrade to Apple TV, according to insiders. Apple posted a 12 percent increase in net income in its third quarter. Photo: AP

Adam Satariano San Francisco

Apple has signalled that the long wait for new products is nearing an end.

With bigger-screen handsets in development, Apple said on Tuesday that shoppers were delaying buying new iPhones, which would weigh on sales in the current quarter ending in September. Rather than dissuade buyers from procrastinating, Apple stoked anticipation for new devices, with chief executive Tim Cook talking about an “incredible pipeline” that “we can’t wait to show you” and finance chief Luca Maestri declaring it would be a “very busy” autumn.

Looking ahead to new gadgets was the main reason investors barely reacted to Apple’s financial third-quarter results on Tuesday. The world’s most valuable company posted a 12 percent rise in net income to $7.75 billion (R82bn) and a 6 percent revenue increase to $37.4bn, with strong iPhone and Mac sales making up for a drop in iPad demand. Even so, the shares were little changed, rising 0.83 percent to close at $94.72 on Tuesday in New York.

Instead, investors were buzzing about Apple’s coming slew of products. The company, which has not released a new mobile device since last year, was working on larger-screen iPhones, a potential wearable device and an upgrade to Apple TV, people familiar with the plans said.

“You’d

have to live in a cave to not know that Apple is coming out with a big new batch of iPhones,” said Michael Binger, a senior portfolio manager at Gradient Investments. “We’re coming in to a big time for Apple in the back half of the year.”

Apple has released iPhones in September of each of the past two years.

Maestri, who took over as chief financial officer this year, said the trend of customers waiting for new releases was especially pronounced in English-speaking countries where more rumours were spread online about the product pipeline. He said Apple took that phenomenon into account when crafting its outlook for the current quarter. It projected sales of $37bn to $40bn, slightly below the $40.6bn estimated by analysts.

“We’re seeing some purchase delays and we’ve reflected that in our guidance,” Maestri said. “It happens. We have to live with that.”

In the most recent quarter, iPhone sales rose 13 percent to 35.2 million and Mac sales increased 18 percent to 4.4 million. That helped offset a second consecutive quarterly decline for the iPad, with sales dropping 9 percent to 13.3 million as the tablet market becomes saturated, especially in the US and western Europe.

The results reinforced the importance of the iPhone, which accounted for more than half of Apple’s revenue and about 70 percent of total profit, brokerage ISI Group said.

“Apple’s fortunes are tied to the iPhone,” said Binger.

Apple would release iPhones with 4.7-inch and 5.5-inch screens, people familiar with the plans said.

Apple is responding to a shift in consumer taste toward bigger-screen smartphones, a trend Samsung Electronics and others have capitalised on to grab market share. In China 40 percent of mobile gadgets sold based on Google’s Android this year had display sizes of more than 5 inches, Forrester Research estimated.

In China iPhone sales rose 48 percent in the quarter. Brazil, India and Russia also posted strong gains, with iPhone sales up 55 percent. – Bloomberg


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