Apple profits slip despite iPhone sales boost

Demand for Apple’s cheaper iPhone 5C model has helped lift sales of the smartphone brand to new highs in the last quarter, but it was not enough to prevent declining profit margins as competition from Samsung drove down prices.

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Demand for cheaper iPhone 5C model helped lift total iPhone smartphone sales to record highs in the last quarter.

The technology company revealed revenue jumped 4 per cent year to $37.5bn (£23.3bn) in the three months to 28 September spurred by sales of almost 34 million iPhones, a new record for the smartphone range in the quarter. The costs of making the devices dented margins, however, with the business posting a 8.6 per cent year-on-year drop in profit of $7.5bn (£4.7bn).

Apple’s iPad shipments in the quarter totalled 14.1 million, rising slight from the 14 million a year ago. The company unveiled new tablets earlier this month including the latest version of the iPad Mini as it looks to bolster its share of the growing tablet category amid mounting competition from cheaper alternatives. The tech giant said the updates to its product lineup would make it an “iPad Christmas”.

The company’s earnings have now declined quarter-on-quarter three consecutive quarters after a decade of  growth. The shift has come in direct contrast with rival Samsung, which posted another another record quarter earlier this month. The South Korean tech firm, which generates the most growth from  its Galaxy range of smartphones, revealed a net profit increase of 26 per cent to 8.24 trillion won (£4.7bn) and a record 59.08 trillion won (£34.3bn) in revenue in its third quarter.

Apple chief executive, Tim Cook said the company’s foray into new categories in 2014 would spark renewed growth into the business.

He said: “In terms of new product categories, specifically, if you look at the skills that Apple has from hardware, software, and services, and an incredible app ecosystem, these set of things is very, very unique, I think no one has a set of skills like this, and 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.”

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