Apple’s revenue falls, but top Wall Street estimates

SAN FRANCISCO - The Associated Press

Apple reported slightly better-than-expected fiscal third quarter revenue. REUTERS photo

Apple’s sales of older, less expensive iPhones climbed in its latest quarter, highlighting the challenges facing the world’s most valuable technology company as it tries to reverse a recent decline in its earnings and prove that it can still innovate.

The results announced on July 23 topped the projections of analysts who steer the way investors tend to react to financial reports. That helped lift Apple’s stock by $14.61, or more than 3 percent, to $433.60 in extended trading after the numbers came out. The shares still remain down more than 35 percent since the latest model of the iPhone came out 10 months ago.

The downturn largely reflects the intensifying competition in the smartphone and tablet computer markets. Apple defined and then dominated for several years to propel the company into a hyper-growth phase that enthralled Wall Street. But there are now signs that Apple’s once seemingly irrepressible growth is stalling as rivals such as Google, Samsung and Amazon make inroads largely by undercutting Apple’s prices. The competitive pressure has prompted Apple to sell older models of its iPhones at prices below the newest model and introduce a smaller, less expensive version of its iPad.

The impact of that shift can be seen in Apple’s fiscal third quarter, a three-month period ending in June.

It marked the second straight quarter that Apple’s earnings have fallen from the previous year after a decade of steadily rising profits. The company earned $6.9 billion, or $7.47 per share, in its fiscal third quarter, a 22 percent drop from $8.8 billion, or $9.32 per share. Apple’s revenue during the quarter barely budged from last year, resulting in the smallest gain since the Cupertino, California company unleashed a mobile computing revolution with the iPhone’s debut six years ago.

Revenue totaled $35.3 billion in the latest quarter versus $35 billion a year ago.