On Monday, January 27th, Apple announced results for the company’s December quarter (FQ1 2014). The company reported year-over-year revenue growth of $5.65% to $57.594 billion and earnings per share of $14.50 versus $13.81 in the prior-year quarter. Net income at $13.072 billion was lower than the results in FQ1 2013 by $6 million. Earnings per share rose 5.0% due to 45.765 million fewer shares in the fully diluted share count.
The Demise of the iPod Line
Contributing to Apple’s unimpressive revenue growth rate in the December quarter was a 54.60% year-over-year decline in iPod revenue on a 52.29% decline in unit sales. The iPod touch, which represents greater than 50% of the product line’s revenue, was last updated in September 2012. iPod sales have been subsumed by the popular iPhone line with iPod capabilities and there is declining consumer demand for specific-use digital music players. Year-over-year, iPod revenue fell by $1.17 billion dollars.
The Resurgent Macintosh
In the midst of Apple’s 30th anniversary Macintosh celebration, the product line turned in a strong 19.11% unit growth rate against a soft prior-year comparison. The 4.837 million units sold was the fourth highest quarterly unit sales total in the product line’s history and the highest unit sales performance in two years. For the quarter, the Macintosh delivered 11.10% of Apple’s reported revenue.
Apple’s Reliance on the iPhone and iPad
No matter the strong Macintosh unit sales numbers for the quarter, Apple’s reliance on the iPhone and iPad lines for growth continued to rise in the December quarter. The graph below illustrates the fact that 76.34% of reported revenue in the quarter was sourced from iPhone and iPad sales.
iPhone and iPad Unit Sales Growth
On a combined basis, iPhone and iPad unit sales rose 9.07% in the December quarter and combined revenue rose 6.37% net of the impact of the increase in deferred revenue per unit sold.The graph below illustrates the combined unit sales for the iPhone and iPad lines over the most recent seventeen fiscal quarters. Among the challenges for Apple is the fact iPhone and iPad unit sales growth rates have begun to slow dramatically.