iPad Slump Causes Apple a Difficult Q3

Apple AAPL looks to have let Wall Street down

iPhone and Mac sales led the way with nine and 13 percent year over year, respectively. On the other hand, iPad revenue slumped by eight percent compared to the same period last year. In terms of units, Apple sold 13 percent more iPhones, 18 percent more Mac’s and nine percent less iPads.

Globally, China led the way with a massive 28 percent year over year sales increase. On the other hand, sales in the Americas improved by just one percent.

As a whole, revenue missed analyst expectations by 1.5 percent at $37.4 billion versus $38 billion. This is a six percent year over year increase.

The silver lining of the report was that Apple was able to show its scale. Earnings increased by 19.6 percent on a six percent revenue boost. This figure is four percent better than analysts expected. Impressively, gross margins increased to 39.4 percent from 36.9 percent.

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Arguably the most bearish aspect of the report is disappointing sales guidance. Fourth quarter sales are expected in the of $37 billion to $40 billion, compared to the analyst estimate of $40.6 billion. Gross margins for the quarter are expected between 37 and 38 percent.

CEO Tim Cook commented, “Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters. We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce.”

Shares of Apple were last trading 0.5 percent lower at $94.25.