The iPad arrested its long slide in Apple’s fiscal third quarter

Apple announced its financial results for the third quarter of its fiscal 2017 today. The company took in $45.4 billion in revenue, up 7% year-over year, and posted operating income of $10.8 billion, up 6.6% from a year ago. Net income rose 11.8% to $8.7 billion, up from $7.8 billion a year ago. Gross margin was 38.5%, up slightly from a year ago.

iPhone sales grew 2% to 41 million units, up from 40.4 million a year ago. iPhone revenue totaled $24.8 billion, up 3% on the year. iPad sales grew for the first time in recent memory. The company moved 11.4 million units, up from about 10 million a year ago. The 15% increase in unit shipments arrested a long series of double-digit declines for the product line, possibly thanks to a more powerful and more affordable entry-level iPad. iPad revenues only grew 2% over this time last year to $5.6 billion, however. Mac unit shipments grew 1% to 4.2 million, and Mac revenues increased 7% to $5.6 billion.

Services remain one of Apple's fastest-growing businesses by revenue. The company made $7.3 billion off its various digital subscriptions and storefronts, up 22% from a year ago. Other Products revenue also increased a healthy 23% on the year to $2.7 billion. For its fiscal fourth quarter of 2017, Apple expects revenue between $49 billion and $52 billion and a gross margin of between 37.5% and 38%.

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    • willmore
    • 2 years ago

    As a parent of school age children, let me throw something out there. The iPad2 has just been dropped from the most current version of the OS. So, schools are dropping it from their ‘supported’ lists. This leaves parents looking for a new tablet for their kids. They could get a refurbished Air or they could get a new 2017 9.7″ iPad. Most will opt for the latter as it is likely to have a longer support life–we don’t want to have to buy a new iPad any sooner than necessary.

    After using my 2017 Nexus 7 for so many years, these iPad2’s are horrible. They weigh a ton and the display looks like you’re looking through a screen door.

    • HERETIC
    • 2 years ago

    The world today-and apple.
    I read this-
    [url<]http://wccftech.com/apple-tax-break-indian-government/[/url<] as apple wanting tax payers to subsidize it's suppliers because that $261.5 Billion cash pile just isn't growing fast enough.........................

    • HERETIC
    • 2 years ago

    That’ll help pay the $2Billion to Nokia
    [url<]http://www.fudzilla.com/news/44192-apple-surrenders-and-agrees-to-pay-nokia[/url<]

    • tipoo
    • 2 years ago

    I’ll bet 10 bucks against a blueberry it was more the 329 dollar iPad ___ rather than the more expensive Pro, as cool as the latter is. Whoda thunk a price drop would boost sales, eh Mac division? 😛

    15% increase in sales, only 2% in revenue, definitely from the cheaper model then.

      • dyrdak
      • 2 years ago

      “rather than the more expensive Pro, as cool as the latter is”
      Cool? Rather ungainly. I just had to spend few minutes setting up a 12″ Pro and holly smoke, that thing was ginormous. And funny enough, the size made the touch keyboard use more difficult that on iPhone. Enough reason to stick to normal sized, non-Pro models (assuming someone really needed a tablet).
      I’d guess that part of uptick in sales is eventual demise of non-easily-replaceable battery and customers using some of recent promotions meant to revitalize the market. We’ll see if the trend continued.

        • tipoo
        • 2 years ago

        10.5, which is the hot item, though the 12 did get the same update.
        [url<]https://www.apple.com/ca/ipad-pro/[/url<] The 10.5 is nearly the same size as the 9.7, since the bezels shrunk.

          • tay
          • 2 years ago

          Based on 15% unit sales rise with a 2% revenue rise, it looks like the cheaper iPad took the bulk of new sales, but there was a significant uptake of the 10.5 Pro as well. Great news all around for Apple. I think next quarters guidance is actually based on increasing iPad revenue and that iPhone will be flat yoy until the new models are out at the end of this quarter.

          • blastdoor
          • 2 years ago

          When I heard about the 10.5″, I assumed that’s what I’d get to replace my first gen iPad Air.

          But when I saw them all in person I went with the 12.9″. That big screen is just too gorgeous and the quad speakers are really impressive. Yet it weighs about the same as the original iPad.

      • MOSFET
      • 2 years ago

      The $329 iPad was the impetus for me to upgrade from a 2nd gen iPad (2011). The old 512MB A5 tablet was just pathetic browsing the web, or opening Spotify, and pretty much anything else. GarageBand was about the only thing working smoothly at the end (which is a bit mystifying.)

    • davidbowser
    • 2 years ago

    The iPad upgrade cycle has started to even out to be a 3-4 years instead of 2 years for smartphones. I am JUST starting to look at upgrading my iPad Air which I got in early 2014.

    Unfortunately, we will continue to see Chicken Little headlines (the TR headline is NOT) until it is truly accepted that iPads will see long lulls between releases and upgrades, but that the numbers will ultimately be either steady (no or slow growth). Apple might talk about replacing PCs with iPads, but I don’t see it.

      • Tom Yum
      • 2 years ago

      True, though you’ll need more than a quarter worth of data to invalidate the much longer trend. More concerning to me is that apple were only able to extract a 2% revenue increase from that 15% unit shipment increase. That tells me the unit shipment increase is largely attributed to lower ASP, and as Apple cam’t keep lowering prices, it is more likely that the existing trend will resume once consumer appetite at this lower price is exhausted.

        • davidbowser
        • 2 years ago

        My feeling is that the tablet market exists, but that it is 3rd tier behind smartphones and PCs. I would consider it 4th tier if you broke apart laptops and desktops into separate categories. I am more bullish on the long term, in that I think it will slowly grow and scavenge the casual computer people that figure out they truly don’t want/need a laptop/desktop outside of work.

        And yeah, Apple’s pricing for iPads has been absurd forever, and the competitive proliferation of Chromebooks in education (my local public highschool is making them standard for all students) is going to setup Google for the next generation.

          • blastdoor
          • 2 years ago

          I love desktops but I hate laptops. I acknowledge that there are many things that could be done on a laptop that can’t be done on an iPad, but I don’t want to do those things on anything other than a desktop.

    • chuckula
    • 2 years ago

    Show me the money!
    So when is iPhone [current number + 1] due?

      • adampk17
      • 2 years ago

      New iPhones have been announced and available in September for the last several cycles and that’s the expectation is year. Although this year the speculation is that the 7s and 7s Plus will be joined by the iPhone 8 as well. The latter may not be available until later in the year.

      • derFunkenstein
      • 2 years ago

      2018. 2017 is iPhone [currentNumber + ‘S’] most of the time.

      It *is* the 10th anniversary so all bets are off. It could very well be it’s just The New iPhone.

    • Fonbu
    • 2 years ago

    Sorry to bug, but “Phone sales grew 2% to 41 million units, up from 40.4 billion a year ago”. Maybe should be “Phone sales grew 2% to 41 million units, up from 40.4 million a year ago”.

      • Jeff Kampman
      • 2 years ago

      Fixed.

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