Apple Releases Earnings

Apple released their 3rd Quarter earnings today, in a conference call conducted after the market closed. The company slightly beat analysts' estimates in terms of revenue, but did not show major growth. Revenue was $35.3 billion, versus $35 billion from last year. This increase is the smallest in six years, raising oncerns that Apple may be losing its talent for innovations that have boosted the stock to stratospheric prices. Since the release of the iPad in 2010, Apple has been unable to release a revolutionary product, instead releasing new generations and versions of old devices/software. The company's rate of growth has been slowing down considerably for the past few years, and is now almost zero.

Apple's report also showed a fundamental change in the source of earnings. iPhones showed huge growth this quarter. However, the growth was in older generation devices, and the average price of units purchased decreased from $608 to $581. This decrease in gross margin could potentially represent a problem later on.

While iPhones have shown growth, other sectors within Apple have not fared so well. iPads in particular have shown a decline in sales- down 14 percent from last year. iPods and Macs have remained relatively stable, with slight declines over the past few years. As Apple's profits become increasingly dominated by low-cost, older iPhones, the company could destabilize and run into trouble as competitors gain a larger hold on the market.

Apple is an amazing company, with a plethora of groundbreaking consumer products that have established the company as a tech giant. Its 3rd Quarter earnings show a solid performance, with continued dominance in the mobile market. Investors, however, should be wary of this stock. While the stock used to be extremely volatile, 3rd Quarter earnings indicate a steady stabilization of the company. This may prevent large growth in the future, at least until Apple releases a new groundbreaking product.

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